Only making the minimum repayment
While you may jump for joy at the minimum amount your are eligible to pay each month, do not give in to this temptation. By only paying the minimum amount, you run the risk of not being able to pay off the debt by the time the interest-free period ends, and winding up paying interest at the higher revert rate.
Moving debt around
Aha, you think you’ve found the answer to escaping the dreaded revert rate? Does it involve moving from one BT card to another? Not so fast. Yes, you will avoid paying interest on your debt, but jumping from one card to another can hurt your credit score, especially if your application is declined. Plus, this doesn’t fix the problem of your debt - it just delays having to deal with paying off your balance.
Using those rewards points for spending
Remember those misconceptions we mentioned earlier? This is one of them. Your balance transfer card is designed to help you climb out of debt, not make the hole deeper. If you use your card to make purchases, you will have to pay off this spending first, before moving onto other debt. And if you withdraw money using the card, you will have to pay the cash advance rate from the day you make the withdrawal until it’s paid off in full.
Forgetting about your old card
First of all, it’s important to keep in mind that balance transfers usually take up to 2 weeks to complete, so you’ll still need to continue making repayments on your old card in the meantime. Otherwise, you may face a late payment fee. Another trap to avoid is leaving your old card account open and either paying an annual fee for a card you’re not using, or falling back into the habit of spending on it and starting the debt cycle all over again.
Paying transfer fees
Balance transfer fees typically range between 1% - 3% of the balance you’re transferring and are usually charged for BT cards with longer interest-free periods, like 18 - 24 months. This can add up over time if you find yourself often moving debt around, or if you’re transferring a hefty balance.
But the good news is, balance transfer fees are avoidable you just need to look for a BT card offer with no transfer fees.