The 5 biggest balance transfer traps to avoid in 2018

Ceyda Erem

09 Jan 2018

Bt traps content

Choosing to transfer debt onto a balance transfer credit card is often a no-brainer for many Aussies because of the alluring 0% interest rate. But with this handy zero interest offer comes a lot of misconceptions about how it can be used effectively, leading many card holders to fall into dangerous balance transfer traps.

If you are thinking of using a balance transfer credit card to crush debt, here are the five biggest balance transfer traps to avoid.

5 balance transfer credit cards to help crush debt

Rates updated daily. Advertiser disclosure.

  • Virgin Money Virgin Australia Velocity Flyer Card - Balance Transfer Offer

    0% p.a. for 28 months and then 20.99% p.a.

    20.74% p.a.

    $129 $0 in the first year

    Get in the air with a $129 Virgin Australia Gift Voucher each year. 0% p.a. for 28 months on balance transfers.

    • 20.74% p.a.

    • -

    • 0% p.a. for 28 months and then 20.99% p.a.

    • 20.99% p.a.

    • 55

    • 0.0

    • 3.30%

    • $129 $0 in the first year

    • $30.00

    • 2.7%, Min $2.70

    Read our Mozo Review to learn more about the Virgin Australia Velocity Flyer Card - Balance Transfer Offer

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  • Virgin Money Virgin Australia Velocity High Flyer Card

    0% p.a. for 12 months and then 20.99% p.a.

    20.74% p.a.

    $289

    Earn up to 100,000 bonus Velocity Points (minimum spend applies) plus snag a $129 Virgin Australia Gift Voucher and two free Virgin Australia domestic Lounge passes each year to kickstart your travel adventures.

    • 20.74% p.a.

    • -

    • 0% p.a. for 12 months and then 20.99% p.a.

    • 20.99% p.a.

    • 44

    • 3.30%

    • $289

    • $30.00

    • 2.7%, Min $2.70

    Read our Mozo Review to learn more about the Virgin Australia Velocity High Flyer Card

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  • Westpac Low Rate

    0% p.a. for 28 months and then 21.49% p.a. (1.00% balance transfer fee)

    13.74% p.a.

    $59 $0 in the first year

    Enjoy a super low rate of 13.74% with 55 days interest free plus 0% balance transfer for up to 28 months at 1% BT fee. No annual card fee for the first year, $59 thereafter. New Cards only. Offer ends February 24th 2022. T&C's and exclusions apply.

    • 13.74% p.a.

    • -

    • 0% p.a. for 28 months and then 21.49% p.a. (1.00% balance transfer fee)

    • 21.49% p.a.

    • 55

    • 0.0

    • 3.00%

    • $59 $0 in the first year

    • $15.00

    • 3%

    Read our Mozo Review to learn more about the Low Rate

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  • Bankwest Breeze Mastercard

    0% p.a. for 15 months and then 9.90% p.a.

    0% p.a. for 15 months then 9.90% p.a.

    $49 $0 in the first year

    Enjoy 0% p.a on balance transfers for 15 months then 9.90% thereafter. No annual fee for the first year. Limited time only. Other fees, T&Cs apply. New Breeze Mastercard customers only.

    • 0% p.a. for 15 months then 9.90% p.a.

    • 0% p.a. for 15 months

    • 0% p.a. for 15 months and then 9.90% p.a.

    • 21.99% p.a.

    • 55

    • 0.0

    • 2.95%

    • $49 $0 in the first year

    • $25.00

    • 2%, Min $4.00

    Read our Mozo Review to learn more about the Breeze Mastercard

    Details Close

  • Apply By 24 February 2022

    Bank of Melbourne Vertigo - Balance Transfer Offer

    0% p.a. for 32 months and then 21.49% p.a.

    13.99% p.a.

    $55 $0 in the first year

    0% p.a. for 32 months on balance transfers requested at card application. 0% balance transfer fee applies. Rate then switches to applicable variable cash advance rate. No annual fee for the first year, $55 thereafter. New cards only, Eligibility criteria and T&Cs apply. Offer ends February 24th 2022.

    • 13.99% p.a.

    • -

    • 0% p.a. for 32 months and then 21.49% p.a.

    • 21.49% p.a.

    • 55

    • 0.0

    • 3.00%

    • $55 $0 in the first year

    • $15.00

    • 3%

    Read our Mozo Review to learn more about the Vertigo - Balance Transfer Offer

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^See information about the Mozo Experts Choice Credit cards Awards

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.