Credit card issuers are offering ever better deals on balance transfers these days, which can only be good for the customer. However when you use your credit card for both balance transfers and spending this can be surprisingly expensive.

Essentially credit card providers insist that borrowers always repay the least expensive debt first, known as the ‘repayment hierarchy’. What this means is that if you take up a 0% balance transfer deal for 12 months and then spend on the same card in that time, your purchases will be charged at the standard rate (usually around 16%) while any repayments you make will only discharge your 0% debt.

By the time you have repaid your balance transfer you could have potentially incurred some significant interest charges.

So how do you avoid this pitfall? Simply take out a card specifically for the balance transfer deal, and then don’t touch it again! The golden rule is – use one credit card for balance transfers and a separate card for spending.

If you want a credit card to spend with, get a card with a low APR if you don’t always clear your balance, or a card with a cashback or rewards if you do. Problem solved!