101 guide to balance transfer cheques

Balance transfer cheques are rarely used these days, but we'll show you how to use them and what to watch out for when you receive one.

Updated

Have you ever received a blank cheque from a credit card company? Before you take it to the bank, learn more about what these balance transfer cheques mean and how to use them.

What are balance transfer cheques?

The first thing to understand is that balance transfer credit cards are used to consolidate all of your debt into one single place. Often, a credit card company will make you an offer on a new balance transfer credit card by sending you a blank cheque in the mail. This cheque will likely have a low APR for a specified time period, which should be stated on the offer.

Is this a good deal? It could be. By taking this cheque to the bank, you agree to transfer your current credit card debt balance to a new credit card offered by this company.

Balance transfer cards often boast APRs starting at 0% — depending on your creditworthiness. If the APR is not 0%, you may be offered a low APR of 1.99% or higher. Introductory periods for balance transfer cards typically last between 3 and 12 months.

While balance transfer cheques were relatively popular a few years ago, they are not as common now. Balance transfer credit cards, however, are as popular as ever.

How can you use a balance transfer cheque?

If you have a balance on another credit card and are paying a high monthly APR, you could possibly benefit from a balance transfer cheque. There are two ways to use a balance transfer cheque: you can use the cheque by filling it out for the balance on your high-APR credit card or you can write the cheque to yourself for a cash advance. This transfers your debt to the cheque issuer for the offer on hand.

Pro tip:

If you’re unsure whether a cheque is going to act as a cash advance with high fees, call the bank that sent it to you. It’s better to find out before you cash it.

Is using a balance transfer cheque a good deal?

Using a balance transfer cheque can be a good deal if the interest rate is lower than what you’re paying now. Here are some factors you should consider before taking your balance transfer cheque to the bank:

  • Length of the introductory period. Introductory promo periods for the APR will vary based on the credit card provider and your creditworthiness, but typically last from 3-12 months, or sometimes longer. Shop around for one that suits your financial needs. Perhaps a narrow window is all you need to pay off a smaller balance, or maybe you need a longer time period to cover a larger debt.
  • Intro APR. The APR will differ between providers and based on your creditworthiness, however you may be offered as low as 0% or as high as 8%. Typical rates generally sit from 0-3%.
  • Revert APR rate. After the introductory period ends, the provider will apply what people call a “revert rate” to your remaining balance. This interest rate will likely be a lot higher, sitting between 15% and 36%. If you know you’ll still have a large balance by the end of your promo period, it may help to look for a balance transfer card with a lower APR for a longer period of time, as opposed to a 0% APR for a shorter time.

Why am I getting this offer?

You may notice that balance transfer credit card offers always come from a different bank or provider than your current credit card provider. This is because banks don’t compete against themselves and would lose money if they offered you a lower exchange rate than they are already offering you. Balance transfer cheques are a benefit that providers use to earn your business from competitors.

Balance transfer vs convenience cheques

If you receive a cheque in the mail from your bank or credit card provider, it could be a convenience cheque. These are used to make purchases, or as cash advances instead of using a credit card. But be careful – they often don’t come with any APR benefits. Convenience cheques can accrue the same high rate as a cash advance, sometimes as high as 30%. You could also be charged a convenience fee of around 4% of the amount of the cheque.

One way to tell the difference between a balance transfer cheque and a convenience cheque is that a balance transfer cheque usually offers some sort of incentive, such as a lower APR, a long introductory period and/or no annual fees. The cheques often come from a bank or credit card company that you don’t already have a balance or account with.

Which is better really depends on your situation. If you’re working on building your credit and can’t qualify for another credit card, using a convenience cheque may be a suitable option for you. Although, you could pass on the convenience cheques and simply save on fees by using the credit card for purchases.

Balance transfer cheques are better if you want to change credit cards to get a better APR or you are seeking an extended time period to pay off your debt.

What to watch out for

  • Change from an intro APR to a higher one. Once your introductory APR window closes, you’ll revert to a higher APR. Any balance you haven’t yet paid off begins earning interest just as it would with any other credit card.
  • You’ll pay for cash advances. Balance transfer cheques that act as a cash advance carry a higher interest rate.
  • Transaction fees and finance charges may apply. You could be on the hook for transaction fees of as high as 5% of the borrowed amount.

Consolidate and pay off debt with a large balance transfer

How to stop these offers from coming

Balance transfer cheques can be tempting to use and have the potential to get you into financial trouble. They also can lead to fraud if someone finds them and cashes them in your name. Always shred these cheques if you don’t plan to use them.

If you’re not interested in balance transfer cheques clogging up your mailbox, tell the credit card company to stop sending them. Send the credit card issuer a secure online message, mail them or call them directly. If it’s a local bank, walk into the branch and request that you no longer get their promotional mail.

Bottom line

Looking into the different types of balance transfer cards and comparing them against balance transfer cheques can make your decision much easier. While the option to convert your debt to a lower APR is tempting, consider your current financial situation to make sure the credit card or cheque you receive suits your debt and spending needs.

Compare balance transfer credit cards

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Benefits with this card Description
BMO Preferred Rate Mastercard
12.99%
12.99%
$20
$15,000
Take advantage of an introductory balance transfer offer, annual fee waiver in the first year, and low purchase and cash advance interest rates.
Get a rate of 3.99% on balance transfers for 9 months with a 1% transfer fee. Plus, get the $20 annual fee waived in the first year.
BMO Rewards Mastercard
19.99%
22.99%
$0
$15,000
Get 1 BMO Reward point for every $1 spent on eligible purchases, and get 2 BMO Rewards points for every $1 spent at participating National Car Rental and Alamo Rent A Car locations.
Earn a bonus of up to 20,000 BMO Rewards points. Plus, get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
BMO AIR MILES Mastercard
19.99%
22.99%
$0
$15,000
Get 2 AIR MILES for every $20 spent at eligible AIR MILES partners, and get 1 AIR MILE for every $20 spent elsewhere.
Earn 800 AIR MILES Bonus Miles. Plus, get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
BMO CashBack Mastercard
19.99%
22.99%
$0
$15,000
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Get up to 5% cash back on all eligible purchases in the first three months of card membership (up to a maximum spend of $2,000, and earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases thereafter). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
BMO AIR MILES Mastercard For Students
19.99%
22.99%
$0
$15,000
Earn 2 AIR MILES for every $20 spent at eligible AIR MILES partners, and earn 1 AIR MILE for every $20 spent elsewhere.
Earn 800 AIR MILES Bonus Miles. Plus, get a 1.99% introductory interest rate on balance transfers for 9 months. A 1% fee applies to balance amounts transferred.
BMO CashBack Mastercard For Students
19.99%
22.99%
$0
$15,000
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Get up to 5% cash back in the first three months (up to a maximum spend of $2,000, and earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases thereafter). Plus, get a rate of 1.99% on balance transfers for 9 months, with a 1% fee for every transferred balance.
No-Fee Scotiabank Value Visa Card
16.99%
16.99%
$0
$12,000
Save with a low interest rate, no annual fee and a balance transfer offer.
Get a 3.99% introductory interest rate on balance transfers with a 0% balance transfer fee for the first 6 months. Apply by October 31, 2020.
Scotiabank Value Visa Card
12.99%
12.99%
$29
$12,000
Save on interest for 6 months by consolidating your higher-rate balances with the balance transfer offer, and get an on-going 12.99% interest rate on purchases, cash advances and balance transfers.
Get a 0.99% introductory interest rate on balance transfers with a 0% transfer fee for the first 6 months. Apply by October 31, 2020.
Scotia Momentum Visa Card
19.99%
22.99%
$39
$12,000
Earn 2% cash back on all eligible gas station, grocery store and drug store purchases and on recurring bill payments (up to a $25,000 annual spend), and earn 1% cash back on all other eligible purchases (and on all eligible purchases once the $25,000 annual spend is reached).
Get a 2.99% introductory rate on balance transfers and a 0% balance transfer fee for the first 6 months. Apply by October 31, 2020.
Tangerine Money-Back Credit Card
19.95%
19.95%
$0
$12,000
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
Get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
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