3 of the Worst Mistakes With Balance Transfer Credit Cards

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Credit card debt is a serious financial issue. The average credit card interest rate is a staggering 22.76%, according to Federal Reserve data. Because of how high rates are, credit card debt is both hard to pay off and can cost you a large amount of money in interest.

A balance transfer card can be a powerful tool to get out of debt. This type of credit card has a 0% intro APR on balance transfers, giving you time to pay what you owe interest-free. If you're planning to get a balance transfer card, watch out for the following expensive mistakes.

1. Taking too long to transfer your balances

After you get a balance transfer card, you should transfer your balances over right away, for a few reasons. First, the 0% intro APR is temporary. If your card has a 0% intro APR for 18 months, it makes sense to use as much of that as possible to pay down your debt. If you wait three months to make your balance transfers, you'll miss out on three months when you could've been avoiding interest charges.

Many balance transfer cards put a time limit on qualifying balance transfers. For example, the 0% intro APR may only apply to balance transfers made in the first 60 or 120 days. If you make a transfer after that, it won't qualify for the 0% intro APR.

The balance transfer fee may also depend on when you make your balance transfers. Some cards charge an intro balance transfer fee of 3% for transfers made in the first 60 or 120 days. After that, the fee goes up to 5%. On $5,000 in debt, that's the difference between paying $150 and $250.

2. Getting a balance transfer card with the same card issuer where you have debt

Credit card companies normally don't let you transfer a balance from one of their cards to another. Let's say you have a balance on a Bank of America credit card. You could transfer that to a Wells Fargo card or a Chase card. But you couldn't transfer the balance to another Bank of America card.

This can make it tricky if you have balances spread across multiple cards from various card issuers. Luckily, there are lots of cards with a 0% intro APR on balance transfers. For help finding one, check out The Ascent's list of the best balance transfer credit cards .

3. Only making minimum payments

A balance transfer is a great opportunity to pay down debt. When you're not getting charged interest, you can pay off debt more quickly and at a lower cost.

Not everyone takes full advantage of this. Some people relax once they've transferred their balances and aren't being charged interest. Since their debt isn't costing them money, they lose the sense of urgency to pay it off. They don't pay as much as they could, and they may even start to spend more on their credit cards.

A balance transfer card only benefits you if you use it to make progress on your debt. Pay as much as you can toward your debt during the 0% intro APR period. The best-case scenario is that you pay off your debt before the intro period ends. If you can't do that, at least pay it down as much as possible.

If you have credit card debt and you can qualify for a balance transfer card, it makes sense to apply for one. A 0% intro APR is as good as it gets, and is much lower than what most credit cards charge. Just make sure you get a balance transfer card from a different card issuer than your current cards, that you transfer your balances right away, and that you pay all you can toward your debt during the 0% APR period.

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