If you have racked up a bit of credit card debt, balance transfer credit cards are like manna from heaven. A balance transfer credit card offers promotional low-interest offers to entice borrowers to open an account and transfer debt. For those paying the industry standard ~20% APR on their credit card debt, these low-interest offers translate into IMMEDIATE relief.
|1||No Annual Fee||Apply NowReview|
|2||Get 1.25% Cashback on Everything||Apply NowReview|
|3||25% Discount Anywhere in North America||Apply NowReview|
The standard length of these low-APR promotional periods ranges from 6-10 months generally, and it is a pretty common practice to bounce from one card to the next in order to extend the low interest window if needed. While this method offers important relief -and is arguably the best way to manage credit card debt in the short to medium term – bouncing from card to card is not the ideal long-term solution to your credit card debt. Not only can bouncing from card-to-card affect your credit score, for the debt-addicted it might encourage unhealthy behavior. Balance transfer cards should be seen as providing a low-interest period during which the underlying debt can be paid down, almost always the most important thing you can do to improve your personal finance scenario.
Beware These Balance Transfer Traps
The more often you bounce around between cards, the more likely you are to lose track or discipline. Keep an eye on the fine print, because there are a number of pitfalls that can kick your interest payments into high gear.
Pay Off Your Monthly Minimums!
New debt placed on balance transfer cards almost always accrue interest at a higher, standard rate. And in the nightmare scenario, failure to pay the minimum monthly payment on new debt can trigger a higher “default” interest rate on the entire amount, which is usually a great deal higher than even the standard rate.
Mind the Expiration!
If you have a six month balance transfer offer, that will generally mean six statements from the transaction date. If you are consolidating credit card debt, there might be different transaction dates; keep a record of the expiration for each particular balance transfer.
If you are getting close to the end of your expiration and you still have an unpaid balance, apply for a new balance transfer card. Generally speaking, new balance transfer cards allow a few months grace period to transfer your balance, and that first transfer kicks off your low interest rate clock. Get prepared ahead of time with a new balance transfer card to avoid paying higher interest.
Beware the Hybrid Cards
A few of the cards on this page have some pretty nice reward offers on top of their balance transfer promotions. You should be extremely wary of using your balance transfer card for any day to day spending, because if you miss your minimum payments, the balance on the entire card shoots up to default rate, which can get into the mid 20% range. While it might be tempting to take advantage of various point bonuses and earnings, do so with caution! Remember, the value of the points earned pale in comparison to your savings on interest payments. In most cases, it is probably better to simply designate a different card for your day to day spending.
The credit card offers standard rates of 12.99% on purchases and balance transfers post 10 months, which is actually quite a good standard APR.
With no annual fees, this is the current go-to balance transfer card in Canada, hands down.
Simply Cash is a decent cash back card, which is how it is usually positioned. You get 2.5% back on all purchases for the first 3 months (capped at $150) after which the earn rate drops to a respectable 1.25%. There are a few nice additional perks, like travel accident insurance and buyers protection, considerate throw ins considering there is no annual fee.
But the Best Western is also a GREAT rewards card. Your first purchase (make sure you pay it off immediately!) triggers your welcome bonus of 20,000 BWR points, which they say is enough for a one-night stay. We actually think this understates the value – Beachfront hotels January in Miami were going for 10,000 points a night when we checked.
The Best Western Card is a platinum, which comes with excellent insurance and travel benefits – and all this with no annual fee and no minimum income requirements.
If you miss out on two minimum payments in a row, the interest jumps by 100%, to an eye-watering 25.99%. Moral of the story – don’t miss two payments in a row.
As suggested from its name, this BMO card is branded as an Air Miles reward card. New customers are eligible for up to 800 bonus miles, the first 400 credited after your first purchase with the card, the second 400 after spending $1,000 within three months. Spending accrues 1 Mile for every $20, a ho hum rate, but adequate considering there is no annual fee.
Comparison of the Top Canadian Balance Transfer Cards
Balance Transfer Rate Duration Transfer Fee Annual Fee True Line Mastercard 0.00% 10 Months 1% $0 Best Western Rewards 1.99% 10 Months 1% $0 AMEX Simply Cash 1.99% 6 Months 0% $0 Scotiabank Value Visa 0.99% 6 Months 1% $29 PC Mastercard 0.97% 6 Months 1% $0 BMO Airmiles 1.99% 9 Months 1% $0
|Balance Transfer Rate||Duration||Transfer Fee||Annual Fee|
|True Line Mastercard||0.00%||10 Months||1%||$0|
|Best Western Rewards||1.99%||10 Months||1%||$0|
|AMEX Simply Cash||1.99%||6 Months||0%||$0|
|Scotiabank Value Visa||0.99%||6 Months||1%||$29|
|PC Mastercard||0.97%||6 Months||1%||$0|
|BMO Airmiles||1.99%||9 Months||1%||$0|
Important Note: Do not miss one of the minimum payments on your balance rate credit card. The bank could very well flag you as a “higher risk” profile, and increase your interest to the standard rate.
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