If you are looking for help paying your credit card debt, or maybe you are trying to pay off a purchase, then a balance transfer credit card might be all you need.
Canadian credit cards have exuberant interest rates of 22% for Cash advances and 19% for purchases made. If you carry your credit card balances forward to the next billing cycle, you’ll end up paying a ton in interest fees. That’s where these Balance Transfer Credit Cards pitch in. These credit cards have low-interest rates and you’ll end up saving money by not paying interest. Instead, you can concentrate on paying off your credit card payments and making it $0.
Not only will it help you consolidate your debts, but will also help you save money while charging you the lowest possible interest rates.
As a Canadian, there are several balance transfer credit cards to choose from, so make sure you read this post till the end to pick the right one.
In this review, we’ll explore everything about the balance transfer credit cards, what it is and provide you with a list of five best options to pick. Let’s get started.
What Are Balance Transfer Credit Cards?
First of all, what is a balance transfer? Why should you do it?
If you move all your existing balance from one credit card to another its nothing but a balance transfer. While your debt still exists, it is now being paid off with another card. Your previous card will now record a zero balance while the new one will read your previous balance.
You can get balance transfer cards with interest rates as low as 0 percent. This will help you avoid incurring excessive fees on your balance as well as serve as a chance for you to save some money.
You should strive to pay off this debt balance as quickly as possible though, seeing as the low interests have a period (usually 6 to 10 months) after which they no longer apply.
Also if you are getting a balance transfer credit card, you must make the balance transfer as soon as possible, at most within the first 9 months of opening the new account. You will also have to pay a small balance transfer fee to complete the process.
Who Is The Balance Transfer Credit Cards For?
If you are a Canadian with high interests attached to your credit card debt, then you should probably get one. You must commit to paying off your debt before the card’s specific promotional period ends. This will help you avoid ending up in the same state again.
If you are unsure if you are going to be able to pay off the debt before the period elapses, then there is a simple way to figure things out.
Simply take the amount you owe, and divide it by the number of months the promotional period on the card lasts. This way, you can easily figure out how the average amount you will have to pay back each month off your debt.
The result of your calculation should be your guide and as such, it is very important. If the result is higher than your monthly take-home, then you might not be ready for a balance transfer credit card.
On the other hand, if the result is something you can easily pay off each month and you have a good credit score, then you can go ahead and get a balance transfer credit card.
The Application Process – Balance Transfer Credit Cards
To start the application process, you will visit the respective company’s site.
You can check here for links to the sites of the banks on this list. Once you have filled your application, whether online, through the mail, or maybe even in person at a bank branch, you will then be approved and allowed to perform a balance transfer.
The application submission does not guarantee approval but if you meet the terms and conditions of the new card provider, chances are you will be approved.
Once you are approved, your new card will be sent to you. You can initiate the transfer either over the phone; letting a bank representative do the entire thing for you or online on the bank’s platform, following laid out instructions to the letter.
Approval usually takes about a week or so. If after a week you do not hear from the bank, contact them to find out what is going on or what you did wrong. Most times, in cases like this, additional information is all you need to push the process again.
Once you are approved, your new provider will perform the transfer on your behalf. This transfer will depend on the credit limit of your new card and it will be minus any annual fee or transfer fees. It is best to continue your payments on the old card until the transfer has been confirmed.
To sound a note of warning again, you must do the transfer as quickly as you possibly can. This will help you avoid missing out on the promotional APR.
Benefits Of Getting A Balance Transfer Credit Card
Getting a balance transfer credit card can help you out in several ways. These are a major reason why they are so popular in Canada. If you are considering getting one, then these might just serve as the final push you need.
Balance transfer credit cards benefits:
Save you money: With the low-interest rates attached to the card, you not only cut down on how much you have to pay as interest on your card, but you also get to keep some extra money in your pockets. The amounts you could end up saving on interests can build up to amount to thousands
Clear your debts faster: if you do not have to worry about expensive interests, then paying off your debts will no longer be the almost impossible task that it might appear to be. More of your monthly payments will be focused on paying your main balance and not interests
Simplify all your finances: With a simple card receiving all your debts, you no longer have to worry about receiving numerous bills, instead, all your payments will come in one single bill
Give you rewards and Extras: Most balance transfer cards come with a chance to earn rewards on them. Rewards can be in the form of redeemable points or cashback, sometimes you can earn payments towards your gas or groceries
With these benefits, it is little wonder that many are opting for balance transfer credit cards. If you are undecided still, then the next section should probably help you out a bit
How Do Balance Transfers Credit Cards work?
Well, the process of getting a balance transfer credit card is simple and straightforward. With the card as I earlier mentioned, you can transfer your credit card from an old card to another one with way lower interest rates. This will give you are chance to both save and maybe even earn some rewards while you are at it.
The process is as follows:
Determine the card you want and apply: there are many banks and institutions out there that offer balance transfer credit cards.
Next, you’ll have to compare them with one another and figure out the ones that fits you the best (the next section will cover all the things you need to consider before you pick a card)
Once you have chosen the balance transfer credit card, all that is left is to apply for the card of your choice
Transfer your balance: Most times, if not all the time, the card issuer will provide you with a guide on how to do this. You will also be required to pay a one-time balance transfer fee
Pay your debt: Once the transfer is done, all that’s left is to pay off the debt. You must pay off the debt before the promotional period runs out. This is how you will be able to take advantage of all the benefits that are associated with owning the card.
How To Do A Balance Transfer On A Credit Card?
To determine which credit card is suitable for you, you will have to compare many cards against one another, only then can you pick the best of the best. So by what criteria do you select your credit card?
Promotional Annual Percentage Rate (APR) length: Usually, the lower interest rate only lasts for about 6 to 10 months. Some go as high as 12 months or higher even. Regardless, you should only pick a card that gives you enough time to pay off your debt in a regular manner
Balance transfer fees: While this is only a one-time fee, you should also keep an eye on it. It is usually worth about 1% to 3% of your debt that is being processed. If the balance transfer fee is much larger than what you can afford, then you should
Annual Fees: there are credit cards that have annual fees attached, some don’t. You should know how much you will end up having to pay yearly interests. Some companies even wave payment of annual fees on their cards for the first year
Transfer limits: Some cards let you transfer a large amount of money without worry. Some cards do not. If you want to transfer to a huge amount of money, it is best if you do it in many smaller transactions
Rewards: Personally, this is a make or break criterion. The card with the best rewards system would and should receive better considerations
Revert APR: On the off chance that you do not pay off your debt during the promotional period, then you will be asked to pay with the revert interest rate. If you want to avoid any potential problems and situations then you should keep an eye on your revert APR
The Best Balance Transfer Credit Cards Right Now
This review would not be complete without mentioning a few examples of the best balance transfer credit cards available in Canada.
While there is no one perfect credit card, the wide selection ensures that there is one credit card that will suit your needs perfectly.
It is important to know that you can’t transfer balances between two cards that are made from the same issuer.
So you can’t transfer balances from one card made by BMO to another card made by BMO.
This also applies to parent companies and their subsidiaries, such as TD to MBNA, since TD owns MBNA, the cards are issued by the same company.
So which cards should you consider when shopping for Balance transfer credit cards?
1. MBNA True Line Mastercard
With a genius rating of four and a half stars out of five and user reviews earning it four out of five stars, it is little surprise that this card is the first on the list. What makes this card so good?
Well, it comes with a no-interest policy on all balance transfers for the first 10 months. This alone distinguishes it from all other cards in the industry.
The card also comes with no annual fee and has no income requirement. All that’s needed is that you must make the transfer within the first 90 days of opening the account and pay a 3% fee on the amount you are transferring (the minimum limit is $7.50).
Once the promotional period is finished, an interest rate of 12.99% applies to purchases and 24.99% on cash, if you have not yet paid off your balance.
This promotional offer is not available to Quebec residents though. If you are a resident of Quebec, then you can click here for more information.
2. Best Western Rewards Mastercard
While its interest rate is not as low as that of the previous card, the Best Western Mastercard definitely has its own perks. When it comes to earning rewards it is quite unmatched. It is the surest way to earn rewards while still paying off your credit card debt.
It has a genius rating of four out of five stars and user reviews place it at three out of five stars. Credit card genius gives it a credit estimate of “very good” and once you perform a balance transfer you can earn up to twenty thousand (20000) bonus points
The card also has the second-lowest interest rate available at 1.99% for the first 10 months. The transfer fee is lower than that of the MBNA Trueline Mastercard at 1% of the balance you are transferring.
Making your first purchase will gain you a welcome bonus of twenty thousand points, and then you earn a point for every dollar you spend on the card.
Keep in mind that for any payment that you make on the credit card, the interest rate is usually applied to the portion of the balance that comes with the lowest interest rate.
Any new purchase that you make will be applied at the standard interest rate of 19.99%. This interest rate might stick around longer than you would like, so it’s preferable to pay off the debt right after receiving the welcome bonus; you’ll avoid unnecessary interest pile up.
3. BMO CashBack Mastercard
If you would like to earn cashback rewards after paying off your credit card debt, then this card is for you. It has a genius rating of four out of five stars and user reviews give it a three out of five.
The card comes with an interest rate of 1.99% for the first 9 months and it has an accompanying 1% fee for the amount you have transferred.
In terms of cashback reward, there are not many credit cards that can compete with this credit card. With it, you can
Earn 3% cashback on all your groceries. This reward is capped at $500 each month.
Earn 1% cashback on all your recurring bills.
Earn 0.5% cashback on any other buys that you make with this credit card.
4. MBNA True Line Gold Mastercard
When it comes to a permanently low-interest-rate there is none quite like this card.
The MBNA True Line Gold Mastercard credit card has a rating of four out five stars from credit card genius and users give it three and half stars out of five.
Alongside the permanent interest rate on this card, it also has a relatively low annual fee.
The card comes with a 0% interest rate for the first six months after the balance transfer and you only have to pay a transfer fee worth only 3% of the amount you transferred. This might not be the best transfer fee available, but it has great interest rates on both purchases and balance transfers.
After the promotion period has been exhausted, you are placed on a low-interest rate of 8.99%. This rate is what is applied to any amount that you have not paid off before the period ends. Purchases that you make with this credit card will also be calculated with this interest rate.
This permanent low-interest-rate ensures that you will need not worry about making new purchases, as everything will still be charged at an 8.99% interest rate. This makes this card much better than other cards who charge 19.99% interest rates after the promotional period is over.
If you are looking for a constantly low-interest rate card, then this is the card for you.
5. Scotiabank Value Visa Card
This list has featured multiple Mastercard’s, it is only fair that at least one visa card makes the list.
The Scotiabank Value Visa Card is the best of the best when it comes to visa balance transfer credit cards. It has a genius rating of four out of five stars and user reviews give it the same rating of four out of five stars.
The card comes with a promotional offer of 0.99% for the first six months. After the promotional period expires, the interest rate rises to 12.99% on all purchases, balance transfers, and cash advances. The annual fee for this card is just $29.
If you are a fan of visa cards over Mastercard, then this card is the best visa card you can get anywhere.
How To Pick The Right Balance Transfer Credit Card For Your Needs?
With this list, it is obvious that there are multiple options for you to choose from, but how do you know which balance transfer card is the right one for you. As I earlier mentioned, there are specific things that you will have to consider before you pick a card.
These things include
The Promotional APR
The Balance Transfer Fee
The Revert APR
Rewards attached to the card
While it might be difficult to find a card that has no balance transfer fees while still offering great promotional APR, it is not impossible. The point is to get a card for the lowest possible rate all the while maximizing your benefits.
If you have decided on a card, then all that’s left to do, is to gather any and all information about the card and submit your application. It is going to be necessary that you provide the bank details of the card you are transferring your debt from. You will also have to provide the amount you are looking to transfer if all or not.
Old Cards: What To Do With Them After Balance Transfer?
You can decide if you want to keep your old card or not once the transfer is done. If you have no need for the old card and you are being charged membership fees, it would be best to close the account.
If not, there is no urgency about closing the card, seeing as having open lines of credit that are not pilling up charges in one way or the other, will boost your credit rating no matter how small.
The bottom line remains that balance transfer credit cards are a good way to consolidate debt.
If you don’t end up paying off all your debt, you will at least make a sizeable dent in it. In the end, the only thing you will have to do is confirm if switching cards will save you money or not.
If it will, then you can go ahead and make the switch to the most comfortable card for you.
Hope you found this article useful. Let me know if you have any questions in the comment section below.
Do share this article and help spread the word. Thanks for reading!
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.