The 5 biggest balance transfer traps to avoid in 2018

Ceyda Erem

09 Jan 2018

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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

  • Apply By 30 April 2019

    Qantas Money Qantas Premier Platinum

    0% p.a. for 18 months and then 21.99% p.a.

    19.99% p.a.

    $299 $149 in the first year

    Receive 70,000 bonus Qantas Points when you spend $3,500 within 90 days of card approval, and an additional 30,000 bonus points after the first anniversary of the card. $299 per year. Special Offer- $149 annual fee for the first year, offer ends 30 April 2019.

    • 0% p.a. for 18 months and then 21.99% p.a.

    • $299 $149 in the first year

    • 19.99% p.a.

    • 55

    • 21.99% p.a.

    • 3%, min $3.00

    • Points are automatically credited to the Qantas Frequent Flyer program.

    Read our Mozo Review to learn more about the Qantas Premier Platinum

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  • Apply By 30 April 2019

    Woolworths Everyday Platinum Credit Card

    0% p.a. for 14 months and then 21.99% p.a.

    19.99% p.a.

    $49 $0 in the first year

    Perfect for practical spenders, pay no annual fee in the first year and save up to $50 on your Woolies shop each month. Plus new cardholders can score a $50 Woolies eGift Card when you spend $150 a month for the first 3 months. Too easy!

    • 0% p.a. for 14 months and then 21.99% p.a.

    • $49 $0 in the first year

    • 19.99% p.a.

    • 55

    • 21.99% p.a.

    • 3%, minimum $5

    • Woolworths Money Shopping Card sent every 4 months if enough points have been accrued.

    Read our Mozo Review to learn more about the Everyday Platinum Credit Card

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  • Apply By 31 March 2019

    Citi Platinum (Balance Transfer Offer)

    0% p.a. for 26 months and then 21.74% p.a. (1.50% balance transfer fee)

    20.99% p.a.

    $199 $0 in the first year

    Reward yourself with up to 200,000 bonus points! By spending $1,000 each statement period for 20 months, you can rack up 10,000 bonus points a month. Plus with tonnes of travel redemption options, you'll be booking that family holiday before you know it.

    • 0% p.a. for 26 months and then 21.74% p.a. (1.50% balance transfer fee)

    • $199 $0 in the first year

    • 20.99% p.a.

    • 55

    • 21.74% p.a.

    • 3.5%, min $3.50

    • Transfer points to a range of airline programs or redeem your points for travel, cashback, gift cards, retail rewards and shopping gift cards.

    Read our Mozo Review to learn more about the Platinum

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  • Bankwest Zero Platinum Mastercard

    2.99% p.a. for 9 months and then 17.99% p.a.

    17.99% p.a.

    $0

    This card boasts no annual fee and the option to pay with the Bankwest Halo payment ring. Plus, with no foreign transaction fees and complimentary travel insurance its a great pick for spending on your globetrotting adventures.

    • 2.99% p.a. for 9 months and then 17.99% p.a.

    • $0

    • 17.99% p.a.

    • 55

    • 21.99% p.a.

    • 2%, Min $4.00

    Read our Mozo Review to learn more about the Zero Platinum Mastercard

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  • ANZ Low Rate

    0% p.a. for 15 months and then 21.74% p.a.

    12.49% p.a.

    $58

    With a low interest rate on your purchases and 0.0% p.a. on balance transfers for the first 15 months (T&Cs apply), this card makes for easy everyday spending. Apply online in just five minutes, and receive an answer in 60 seconds.

    • 0% p.a. for 15 months and then 21.74% p.a.

    • $58

    • 12.49% p.a.

    • 55

    • 21.74% p.a.

    • 2%

    Read our Mozo Review to learn more about the Low Rate

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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.

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