Step 1: Hash out the details
Going into anything blind is never a good idea so make sure to be specific with how long you intend to use the balance transfer card for. The general time period for these cards starts at 6 months and can be upwards of 24 months, that is, before the revert rate kicks in. Just remember, the larger the debt, the longer you’ll need to hang onto the card.
Step 2: Compare your options
Now comes the time to get specific with the type of card you want. There are a number of different balance transfer cards floating around, which can be overwhelming when you only need to pick one. Luckily, Mozo’s balance transfer comparison tool makes it easy to compare features of different cards, helping you find your new plastic match. It’s a good idea to look for a card with a lengthy BT period, low annual fee and low revert rate.
Step 3: Go hard or go home
Your main mission in life is to now blast debt within the BT period. Although you do have the option of making the minimum repayment each month, this is generally not a good idea as you still may have a heap of debt left over once the BT period ends. You’ll need to work out how much you can afford to repay each month (our debt repayment calculator can help you there) while still being able to stay on top of other bills and everyday spending.
One way to stay consistent and never miss a repayment is by setting up a direct debit, which subtly forces you to pay debt off faster.
Step 4: Leave the card at home
A balance transfer card is designed to help you ditch debt, not bring on any more. Do yourself a favour now by not spending with the BT card to prevent the following:
- Going further into debt as you’ll need to pay of these new purchases first before tackling past spending
- Acquiring new debt will be charged at the card’s purchase rate, which can hit over 20%
Step 5: Seriously, leave the card at home
Withdrawing money on your BT card also spells trouble - you’ll have to pay the cash advance rate from the day you make the withdrawal until it’s paid off in full.
Step 6: Remember the revert rate
All good things must come to an end and that includes your BT card’s interest-free period. This rate will be much higher, so you’ll need to be financially ready just in case you think that you won’t pay off the debt in time. Another way to combat this by selecting a balance transfer card with a low revert rate.
Step 7: Stay put
Moving debt around from one card to another is not good for your credit score. So stay put, pay off the balance in full each month and kiss credit card debt goodbye.