0% Balance Transfer Credit Cards Canada: If you have a balance on a regular credit card, you’re paying around 20% interest. At that rate, it can be difficult to keep up with payments and your debt can grow quickly.
Transferring your credit card debt to a balance transfer credit card can help you pay off the principal faster by giving you access to a lower regular interest rate. Many balance transfer cards offer a welcome bonus with extra low (and sometimes 0%) rates for a limited time. Check out our picks for the best balance transfer credit cards in Canada.
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What is a balance transfer?
A balance transfer lets you save on existing high-interest debt by transferring your balance to a card with a lower interest rate or to a card that pays 0% APR on balance transfers. Sometimes there is a balance transfer fee for moving a loan from one card to another, usually between 3% and 5% of the amount transferred.
These fees will add to your debt burden, so do the math before deciding to transfer your debt to another card. If the amount you’re paying in balance transfer fees is more than the amount you can save on interest by transferring, it’s probably not a good money move.
How To Choose a Balance Transfer Credit Card
When looking for the right balance transfer card for your situation, ideally you’ll look for a balance transfer card with low or no balance transfer fees to reduce costs when transferring.
Note that you need to choose a card from an issuing bank other than the one you want to transfer the loan from, as banks will not allow you to transfer loans from one of their cards to another.
Finally, consider the duration of your balance transfer. The longer it is, the longer it will take to pay off your loan before interest starts accruing, but cards with the longest 0% APR offers may also have higher balance transfer fees.
Credit score: You may not qualify for some cards if you have less than stellar credit.
Zero-interest or low-interest: While it may be tempting to jump on a zero-interest balance transfer offer, if you need a longer runway to pay off your debt or think you’ll usually carry a balance, the card with you currently has a low-interest offer. Could be a better option.
Longest introductory offers: If you’re looking for a short-term break to work on balances, consider which cards come with the longest introductory offers and do the math to see which card has the lowest 0% period. But a low balance transfer fee will be the least expensive way to pay off your debt.
Long-term value of credit cards: It may be useful to consider whether a balance transfer card will be useful after you pay off debt. Some cards with balance transfer offers come with rewards and other perks, some of which go beyond introductory APR offers.
What is a 0% balance transfer credit cards
A 0% balance transfer is when you transfer debt to a card that offers a promotional 0% interest rate on the amount you transfer. This can save you money as any payments made towards the balance on the 0% card will go towards paying off the full principal rather than accruing additional finance charges.
These offers are not unlimited and usually last from six months to about two years. Once the 0% APR promotion period ends, any balance will be subject to the card’s regular interest rate. Note that 0% balance transfers may not be completely free as balance transfer fees may apply.
How does a balance transfer work?
The main goal of a balance transfer is to save money on an existing loan. A balance transfer card can save you money by allowing you to transfer your debt to a new credit card, ideally with a lower rate.
Once you transfer the loan, you will make payments from the new card. Ideally, you won’t be charged any fees with your new balance transfer card so you can focus on paying the balance down.
Since most (but not all) credit cards come with a balance transfer fee, it usually makes sense if the new card has a lower interest rate than your existing loan or the new card has fewer promotional offers.
How to Apply for a Balance Transfer Credit Card
The process for applying for a balance transfer credit card is similar to applying for any other type of credit card. First, decide which card might best suit your goals. You can then usually apply online or in person at the issuing bank where applicable. Y
ou must enter your name, a U.S. Address and your Social Security or ITIN number. You may be asked to provide your income and living expenses. This information, along with a hard credit pull, will be a factor in how much credit limit you will be given on a new card.
What is a balance transfer fee?
A balance transfer fee is the amount charged for transferring your loan from one A card to another. Usually it is 3% or 5% of the transferred amount. It is important that you pay any fees before applying for a balance transfer card as this will add to your existing debt. Do the math to make sure you’ll actually save money by transferring a balance.
Best balance transfer credit cards in Canada
- Wells Fargo Reflect® Card
- Bank of America® Customized Cash Rewards credit card for Students
- Bank of America® Unlimited Cash Rewards credit card
- Citi Rewards+® Card
- Discover it® Balance Transfer
- Bank of America® Travel Rewards credit card for Students
- Bank of America® Customized Cash Rewards credit card
- Citi Simplicity® Card
- Citi® Diamond Preferred® Card
- Citi® Double Cash Card
In some cases, a balance transfer can positively impact your credit score and help you pay less interest on your debt in the long run. However, frequently opening new credit cards and transferring balances to them can hurt your credit score in the long run.
A balance transfer allows you to use one credit card to pay off debt on another credit card. It can save you money if you transfer the balance to a card with a very low interest rate. Card issuers often have balance transfer offers, sometimes at rates as low as 0%.
Disadvantages of Balance Transfer Cards: When you transfer your balance to a new card, the card issuer will usually charge you a balance transfer fee. Balance transfer fees are typically 3% to 5% of the total balance transferred and can add to your debt.
But in general, balance transfers are the most valuable option if you need a few months to pay off high-interest debt and have enough credit to qualify for a card with a 0% introductory APR on balance transfers. This type of card can save you a lot on interest, giving you an edge when paying down your balance.
Is the bottom line
A balance transfer credit card can be a useful tool if you’re looking for a way to consolidate and pay off high-interest debt. With the right 0% introductory APR offer, you’ll be on your way to debt-free while saving a significant amount of money on interest.
However, you must weigh the pros and cons, as balance transfers are not right for everyone. If you have bad credit or mounting debt, you may decide it’s worth considering other options.
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