Balance transfers are a great way to pay off debt faster – as long as you do it right

Paying off a credit card could be a top priority for many of us in 2025.

According to the latest data from the Reserve Bank of Australia (RBA), Aussies have some $40.9 billion owing on their credit cards as of November last year, and almost half of that – $19.6 billion – is accruing interest.

There are some sensible ways of tackling credit card debt if you feel it’s spiralling out of control – cutting back on your number of credit cards (and cutting them up if necessary), setting up a direct debit or paying bigger chunks are all options on the table.

Another method is to apply for a balance transfer credit card. These cards allow you to move an existing debt from one card over to another, and reward you for doing so with a low or 0% interest rate for a limited time.

Here’s what you should know about them before signing up.

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

Balance transfer credit cards give you a low or 0% interest rate for a limited time. This introductory interest rate can last anywhere between six to 30 months, and once it ends, any debt you still owe will be hit with a much higher interest rate.

When you compare balance transfer credit cards, take note of which providers are offering lengthy balance transfer periods, as these can give you the maximum amount of time to pay off your debt with a low or 0% interest rate.

You should always aim to pay off your debt before the end of your balance transfer period, so plan ahead and make your payments on time to avoid any late fees.

Watch out for the balance transfer fee

A lengthy balance transfer period can grab your attention, but make sure to check for a balance transfer fee before applying.

This fee is usually calculated as a percentage of the balance you are transferring over, and it can range between 1-3%. However, there are some providers who waive this fee altogether.

Because the fee is worked out as a percentage of the debt you’re transferring, it may shake out to be marginal on a smaller balance with a 1% fee.

Larger debts with a 3% fee attached may work out to be quite hefty, so shop around and calculate how much the fee will cost you at various banks.

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

Balance transfer credit cards offer a low or 0% interest rate on your transferred debt – it does not apply to new purchases.

We strongly recommend you don’t use your balance transfer credit card on new purchases. If you do, you’ll be charged the regular interest rate right away, and it could be much higher.

At the time of writing, the average credit card interest rate in the Mozo database is 17.69% p.a., so you’ll want to avoid adding to your existing debt if you can.

If you feel unsure of where to start your search for a balance transfer credit card, our editors curate the best credit cards in the market every month.