Learn the 3 golden rules of balance transfers to beat debt in 2023

woman on yellow background choosing between balance transfer credit card and low rate credit card

If you’re trying to stay on top of your finances in 2023, you might have been wondering how to get on top of any credit card debt you’ve been carrying. So just how can you use balance transfers to stay debt-free this year - and what are the traps to avoid?

What is a balance transfer and how can it help me?

If you haven’t read one of our more comprehensive guides to balance transfers, the idea can be a little bit confusing. Surely you have to pay off your credit card before you get a new one with a lower interest rate, right? Not exactly.

That’s the crux of a balance transfer credit card. If you’re paying your credit card balance with a high purchase rate, you can transfer the money owing to a card offering a lower rate on the balance transferred for a predetermined amount of time. 

Consider the average credit card interest rate in the Mozo database, which is currently 17.13% across all cards (or a higher 20.12% for rewards credit cards). That credit card balance is really going to start to add up as interest compiles. It can be harder and harder to pay down debt with a high interest rate, particularly if you’re only making the minimum repayments (read up on why that’s a trap).

You’re probably going to have a much easier time cutting away at debt if it’s not continually growing. 

Of course, there are some ways to make sure you’re taking advantage of a balance transfer card - and not fall into any traps.

3 golden rules of balance transfers

When they say rules were meant to be broken, they definitely weren’t talking about these.

  • Pay off your balance by the end of the balance transfer period

Most low balance transfer rates come with a timer. This is a period in which they offer their low rate - often 0% - while you pay off the balance that has been transferred over from another card. After you pay this, you’ll pay a much higher rate of interest on any remaining balance - often upwards of 20%. 

Check to see which balance transfer cards are offering the longest offers, or make sure you have a plan to pay down your balance in the set time period. Otherwise, you could end up paying a higher interest rate than you moved away from on another credit card!

  • Watch out for the balance transfer fee

The length of the balance transfer offer is not the only thing to watch out for: it’s also important to check if you have to pay a balance transfer fee. This fee is usually calculated as a small percentage of the balance you are transferring over, between 1% and 3%. 

Some cards allow you to make a balance transfer without a fee on top. Look for cards that list a 0% balance transfer fee to find this. 

Remember that because the fee is dependent on the balance that you are transferring, the fee may be marginal on a smaller balance. If you find a balance transfer deal that suits you, don’t necessarily be put off by a 1% fee - work out what it will equate to, and whether or not it outweighs the offer you’re looking at.

  • Don’t spend on your card while you’re paying down your balance

It’s easy to get wrapped up in the low balance transfer rate of these cards, and feel tempted to do your spending on the same card. Don’t get stuck, though - those low rates do not apply to new purchases. 

If you do new shopping on a balance transfer card, you’ll get charged a regular purchase rate for it, which could potentially be much higher. If what you need is a low rate credit card, that’s a whole different story!


Think a balance transfer might be the right move for you? Check out some current offers below.

If you’re still shaking off the debt of 2022, check out these 9 steps to clearing credit card debt. Find more credit card options with our picks for the best credit cards.