A 0% balance transfer credit card allows you to transfer your existing credit card balance to a new card with a 0% interest rate for a limited time. This can help you save money on interest charges and pay off your debt faster. However, it’s important to understand the terms and conditions of these cards before applying for one.
Here are some key things to keep in mind:
- Introductory period: The 0% interest rate is usually only for a limited time, typically between 6 and 21 months. After that, the interest rate will increase to the regular rate, which can be quite high. Ensure you know when the introductory period ends and plan to pay off your balance.
- Balance transfer fee: Most balance transfer cards charge a fee for transferring your balance, typically around 1-3% of the amount transferred. Make sure you factor this fee into your calculations when deciding whether a balance transfer card is worth it.
- Credit score requirements: Balance transfer cards typically require a good to excellent credit score, so check your credit score before applying. Applying for too many credit cards can also negatively impact your credit score.
- New purchases: Some balance transfer cards also offer a 0% interest rate on new purchases for a limited time. However, it’s important to remember that any new purchases will likely accrue interest after the introductory period ends, so try to avoid using the card for new purchases if possible.
Overall, a 0% balance transfer credit card can be useful for paying off high-interest credit card debt. However, make sure you understand the terms and conditions of the card before applying and have a plan to pay off your balance before the introductory period ends.
Top 5 0% Balance Transfer Credit Cards In Canada For 2023
If you carry a balance on a high-interest credit card, a 0% balance transfer credit card can help you save money on interest charges. Here are the top 5 0% balance transfer credit cards in Canada for 2023:
- Tangerine Money-Back Credit Card: This no-fee card offers a 1.95% promotional balance transfer rate for six months. You can also earn unlimited cash back on your everyday purchases, with 2% cash back in up to three categories of your choice and 0.5% cash back on everything else.
- MBNA True Line Mastercard: With a regular interest rate of 12.99% and a 0% balance transfer rate for a full year, the MBNA True Line Mastercard offers a lot of runway to bring your balance down to zero. There’s no annual fee; you can also get optional balance protection insurance for added peace of mind.
- American Express Essential Credit Card: This no-fee card offers a 1.99% promotional balance transfer rate for six months and 1% cash back on all purchases. You can also get travel insurance coverage and purchase protection for added value.
- Scotiabank Value Visa: This card offers a 0.99% promotional balance transfer rate for six months and a low regular interest rate of 12.99%. There’s no annual fee; you can also get optional balance protection insurance for added peace of mind.
- BMO CashBack Mastercard: This no-fee card offers a 1.99% promotional balance transfer rate for nine months, 3% cash back on groceries, 1% on recurring bill payments, and 0.5% on everything else. You can also get purchase protection and extended warranty coverage for added value.
When choosing a 0% balance transfer credit card, it’s important to consider the length of the promotional rate, any fees associated with the transfer, and the regular interest rate once the promotional period ends. Read the fine print and choose a card that best suits your needs and budget.
Factors To Consider When Choosing A Balance Transfer Card
When choosing a balance transfer credit card, several factors can help you save money and get the most out of your card. Here are some key factors to keep in mind:
Interest Rates After Promotional Period
One of the most important factors to consider when choosing a balance transfer credit card is the interest rate that will apply after the promotional period ends. While many cards offer a 0% introductory APR for a limited time, the regular APR can vary widely and significantly impact the cost of carrying a balance. Make sure to compare the regular APRs of different cards to find one that offers a competitive rate that aligns with your needs.
Balance Transfer Fees
Another important factor to consider when choosing a balance transfer credit card is the balance transfer fee. Many cards charge a fee for transferring a balance, typically 1-5% of the total amount. While a balance transfer fee can add to the cost of transferring a balance, it may still be worth it if the card offers a long promotional period and a low regular APR. Be sure to compare balance transfer fees when choosing a card.
Credit Card Rewards
While the primary goal of a balance transfer credit card is to pay off debt, it’s also worth considering any rewards that the card may offer. Some balance transfer cards offer cashback rewards, points, or other incentives that can help offset the cost of using the card. If you plan to use the card for purchases or other expenses, be sure to consider any rewards that may be available.
Overall, when choosing a balance transfer credit card, it’s important to consider the interest rates after the promotional period, balance transfer fees, and any rewards that may be available. By comparing different cards and considering these factors, you can find a card that meets your needs and helps you save money on interest and fees.
How To Make The Most Of A 0% Balance Transfer Card
One of the most important things to remember when using a 0% balance transfer credit card is to make timely repayments. This means paying at least the minimum payment on time every month and paying off the entire balance before the promotional period ends. Missing payments or failing to pay off the balance before the promotional period ends can result in high-interest charges, quickly negating the balance transfer benefits.
Consider setting up automatic payments or reminders on your phone or calendar to ensure timely repayments. This can help you stay on top of your payments and avoid late fees and interest charges.
Avoiding New Debt
Another important consideration when using a 0% balance transfer credit card is to avoid accumulating new debt on the card. This can be tempting, especially if you have a large credit limit and the card offers rewards or cash back on purchases. However, adding new debt to the card can make paying off the balance transfer harder before the promotional period ends, resulting in high-interest charges.
To avoid new debt, consider using the card only for the balance transfer and not for new purchases. If you need to make new purchases, pay them off in full each month to avoid interest charges.
By making timely repayments and avoiding new debt, you can make the most of a 0% balance transfer credit card and save money on interest charges. However, it’s important to read the terms and conditions of the card carefully and to choose a card with a promotional period that is long enough to pay off your balance.
Impact of Balance Transfer Cards on Credit Score
Balance transfer credit cards can be an excellent tool for consolidating high-interest debt and paying it off faster. However, before applying for a balance transfer credit card, it is essential to understand how it can impact your credit score.
How Balance Transfer Cards Affect Credit Score
When you apply for a balance transfer credit card, the issuer will inquire hard about your credit report. This inquiry can cause a temporary dip in your credit score. However, the impact is usually minor and will fade within a few months.
Once approved for a balance transfer credit card, the available credit on the new card will increase your overall credit limit. If you transfer a balance from a high-interest credit card to a balance transfer card with a 0% APR, you can significantly reduce your credit utilization rate. A lower credit utilization rate can positively impact your credit score.
Things to Keep in Mind
While balance transfer credit cards can help improve your credit score, it is essential to keep a few things in mind:
- Pay your bills on time: Late payments can significantly negatively impact your credit score, so make sure to pay your bills on time, every time.
- Keep your old accounts open: Closing old credit accounts can hurt your credit score, so it is best to keep them open, even if you are not using them.
- Avoid applying for too many credit cards: Applying for too many in a short period can hurt your credit score, so only apply for the necessary cards.
In conclusion, balance transfer credit cards can be a great way to consolidate high-interest debt and improve your credit score. However, it is essential to understand how they can impact your credit score and take steps to use them responsibly.
Steps To Apply For A Balance Transfer Credit Card
When you’re struggling to pay off high-interest credit card debt, a balance transfer credit card can be a useful tool to help you get back on track. Here are the steps to apply for a balance transfer credit card in Canada.
Assess Your Debt
Before applying for a balance transfer credit card, assessing your debt and determining how much you need to transfer is important. List all your credit card debts, including the balances and interest rates. This will help you decide how much credit you need on your new balance transfer card.
Choose The Right Card
Once you know how much credit you need, it’s time to choose the right card. Look for a card with a low or 0% introductory interest rate on balance transfers. Consider the length of the promotional period and any fees associated with the transfer.
You should also check the card’s regular interest rate and any other fees or charges. Ensure the card offers benefits that align with your needs, such as rewards or cashback.
Also Read: Best credit cards for teens in Canada
Once you’ve chosen the right card, it’s time to apply. You can typically apply online or in person at a bank or credit union. You must provide personal information, including your name, address, and social insurance number.
You’ll also need to provide information about your income, employment status, and current credit card debt. The credit card issuer will run a credit check to determine whether you qualify for the card.
If approved, the credit card issuer will transfer the balance from your existing credit card(s) to your new balance transfer credit card. Make sure to continue making payments on your old credit cards until the transfer is complete.
In conclusion, applying for a balance transfer credit card can be straightforward if you follow these steps. Assess your debt, choose the right card, and complete the application process. With some research and planning, you can take control of your credit card debt and start working towards a debt-free future.
Frequently Asked Questions
What are the best balance transfer credit cards in Canada for 2023?
Several low (0%) balance transfer credit cards are available in Canada for 2023. Some of the best options include the Tangerine Money-Back Credit Card, the MBNA True Line Mastercard, and the Scotiabank Value Visa.
Which credit card companies offer 0% balance transfer promotions?
Many credit card companies in Canada offer 0% balance transfer promotions, including Tangerine, MBNA, and Scotiabank. It’s important to note that these promotions are often temporary and may have certain terms and conditions attached.
What is the current MBNA balance transfer promotion?
As of July 2023, the MBNA True Line Mastercard offers a 0% promotional interest rate for 12 months on balance transfers within 90 days of account opening. This card also has no annual fee and a low standard interest rate of 12.99%.
Are there any balance transfer line of credit options available?
Yes, some Canadian banks offer balance transfer line of credit options. These may include the TD Home Equity FlexLine, the RBC Homeline Plan, and the BMO Homeowner ReadiLine. It’s important to note that these options may require collateral and have different terms and conditions than traditional credit cards.
Which Canadian banks are currently offering 0% balance transfers?
Several Canadian banks offer 0% balance transfers, including TD Bank, RBC, BMO, and Scotiabank. It’s important to compare the terms and conditions of each offer to determine which is the best fit for your needs.
Do balance transfers hurt credit scores?
Balance transfers themselves do not hurt credit scores. However, opening a new credit account or closing an old one can temporarily lower your credit score. Additionally, carrying a high balance on a credit card can negatively impact your credit utilization ratio, which is a factor in determining your credit score.