It pays to stay focused on financial goals -- especially for cardholders using balance-transfer credit cards to pay off debt with a 0% introductory APR offer. 

Prospective balance-transfer cardholders should avoid making one mistake that could really set them back financially. Motley Fool analysts Michael Douglass and Nathan Hamilton discuss the details in the video below.

Michael Douglass: So let's talk about paying down debt. The fact of the matter is a lot of people have a hard time paying down debt...

Nathan Hamilton: Yes...

Douglass: ...and so if you are in the spot where you're having difficulty paying down debt, or you're living paycheck-to-paycheck, then you may be making this particular credit card mistake.

Hamilton: Yes, and it's a rather straightforward mistake when you think about it. A balanced transfer card, if you are indeed using that strategy to pay down debt, is meant to pay down debt, not increase your balances.

Douglass: Right.

Hamilton: So the one thing to avoid, or the one trap, is essentially looking at what's available with credit cards and spending to get those rewards.

Douglass: Mm-hmm.

Hamilton: So there are credit card sign-up bonuses. Say you have to spend whatever threshold to get a cash bonus.

Douglass: Sure.

Hamilton: That's flying in the face of what you're using that balance transfer credit card for, and gets at the problem. The reason that you're not able to pay down debt is your spending habits aren't aligned with your budgeting goals. That's a big thing to pay attention to, because it is very enticing to see a credit card offer and say, "OK, I can transfer my balance and get that offer." But if you look at it, I sort of see it as focus on what you need, and give 100% of your attention to it, and sort of ignore everything else. It will help you reach your goals easier and just make sure that you're more successful paying on debt.

Douglass: Yeah, it's important to prioritize. You have to basically decide what you're trying to do and then make that happen, and then everything else is secondary. And there are nice opportunities, there, but you really want to focus on your core thing, which is paying down that balance, particularly before your balance transfer 0% introductory APR expires.

NATHAN HAMILTON:

Yeah, because after that promo period, many balance transfer cards actually have very high interest rates. So if you have a 21-month introductory APR, or 15 month, or whatever the term is, you need to make sure that you're focusing on making those monthly payments as much as you can. And I've said it before, but don't dip your toes in when you're trying to pay down debt. Go all in, disrupt your finances and make sure you're hitting that goal.

Douglass: Absolutely. And at fool.com/credit-cards, we actually have a list of the best balance transfer cards, so if you're thinking about using the strategy and want to make sure that you are taking control of your debt, and also avoiding some of these mistakes that we've talked about...

Hamilton: [crosstalk 00:02:14]

Douglass: ...it's a great place to go full of resources and again, that list of the best balance transfers. Nathan, thanks much.

Hamilton: Thank you.

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