If you have debt across one or more credit cards, you could consolidate it to a single balance transfer credit card – and pay it off with 0% or low interest for a predetermined number of months. While you can save hundreds – or sometimes thousands – of dollars in interest payments, you’ll need to watch out for the one-time balance transfer fee.
Scotiabank Value Visa Card
Scotiabank Value Visa Card
Purchase interest rate
Eligibility criteria, terms and conditions, fees and charges apply
Scotiabank Value Visa Card
Apply today and enjoy a 0.99% introductory interest rate on balance transfers for the first 6 months when your new credit card account is opened by 1 March 2020.
Purchase interest rate: 12.99%
Cash advance rate: 12.99%
Intro balance transfer rate: 0.99% for the first 6 months
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A balance transfer is the result of moving all – or part – of your existing debt to a new credit card provider, typically to save money on the overall interest you’d pay on that debt. Balance transfer cards offer new customers the opportunity to transfer most types of debt to a new credit card with a low or 0% intro APR for a set period of time (usually up to 10 months). This provides some often much needed breathing room to help cardholders get their debt under control, and start paying
Let’s break down how balance transfers work.
A balance transfer credit card allows you to move your existing debt to a new credit card with a lower interest rate, usually between 0% and 3.99%, for a set time period (typically between six to 10 months). A lower APR can result in significant savings.
Here’s the steps to complete a balance transfer:
Find a balance transfer credit card that meets your needs.
Confirm how much you’re eligible to transfer.
Submit your application and transfer amount.
Wait five to seven days for application approval.
Confirm your transfer — and start saving.
What will it cost me?
There are three main fees to keep in mind when it comes to a balance transfer: APR, balance transfer fees and annual fees.
Your purchase APR affects how much interest your balance accrues each month. If you have an APR of 19% and a balance of $4,000, you can expect to rack up an additional $63.60 a month in interest charges, assuming you make no payments. When you’re offered a 0% or low APR, you can put these savings towards paying down the actual debt.
Balance transfer fee
A balance transfer fee is a one-time fee that’s charged to transfer your debt to the new credit card. This fee is usually between 1% and 3% of the total amount transferred, though some balance transfer cards charge no fee as part of their welcome offer. Watch out for this fee – the cost can take away from savings you might get with a low or 0% APR.
You’ll need to take the annual fees of the credit card into consideration, as a high annual fee can add to the debt you already have. Some balance transfer cards come with no annual fees, while others might have annual fees into the hundreds of dollars.
When is a balance transfer worth it?
A balance transfer is worth it when the money saved on interest outweighs any balance transfer and annual fees.
Let’s say you owe $4,000 with an interest rate of 19% and you intend to pay $300 each month. Here are four common options for tackling this kind of debt:
Options for repaying credit card debt
Specs of original card Credit card balance: $4,000 Original card interest rate: 19% Annual fee: $0 Monthly payment: $500 Cost in interest: $329.45
Credit card: 0% apr, 3% transfer fee
Credit card: 1% apr, 1% transfer fee
Loan: 5% apr
Minimum payment of 3%
Time to pay off debt
In this case, a balance transfer card with an APR of 1% and a lower balance transfer fee of 1% is the best option. Although the APR is higher than the 0% APR, the balance transfer fee savings make the card a slightly cheaper choice.
How do I compare balance transfer cards?
In addition to the APR and balance transfer fee, here are a few more factors to weigh when choosing a balance transfer card:
If you can’t pay your debt in full by the end of the intro period, any unpaid balance will begin to accrue interest at the revert rate. Depending on the card, you could face interest of 19.99% or higher – so budget wisely.
Some credit cards may enforce harsh penalties if you miss a payment, including eliminating your intro APR period altogether.
Most balance transfer cards are designed specifically to help you pay off your debt, though some may offer rewards, making them a decent ongoing choice after you’ve paid off your balance.
Some balance transfer cards come with annual fees. These can reduce your overall savings and prove a needless burden after you’ve paid your balance.
Five common questions
There can be a lot of fine print when it comes to balance transfers. Here are 5 common questions answered:
How much can I transfer? The minimum and maximum amount you can transfer during a balance transfer is typically determined by your card’s credit limit. Some providers will allow you to transfer up to 100% of your credit limit, while others will allow up to 70% or a specified dollar amount (such as $7,500).
What kinds of debt can I transfer? Aside from credit card debt, you can transfer nearly any type of monthly payment owed, such as personal loans and lines of credit.
What mistakes should I avoid in my application? Applying for a balance transfer card with your existing credit card provider is one of the biggest mistakes you can make. This is because providers (or their affiliates) don’t typically allow existing customers to qualify for a balance transfer promotion, after all, they’re not going to compete for their own business.
What happens if I can’t pay off my balance in time? If you can’t pay your full balance before the promotion ends, the revert APR will kick in and you’ll need to start paying that interest on future payments.
Balance transfers can be a good way to make a dent in your debt when high interest charges are eating away at your payments. Before you apply, make sure the switch will save you time and money by taking a look at the APR, balance transfer fee and annual fee.
Yes. To avoid losing your 0% intro rate, you’ll need to repay the minimum amount due on your card monthly.
Applying for a balance transfer card is much the same as applying for any other credit card. The only difference is that you’ll complete a separate section of your application dedicated to the balance transfer. Here, you’ll provide your creditors’ information, account details and how much of your old debt you’re looking to move to the new card. If your application is approved, your debt is automatically transferred to your new card. But you’ll need to contact your old bank to close your existing accounts once your transfers are complete.
You can apply at the time of application. Some lenders also allow balance transfers within 30 days of applying for a card. Check with the lender in question.
While a few providers offer transfers completed in just a few days, it can take anywhere from one to three weeks. To avoid late fees and other penalties, make sure your old debt is fully paid before you stop payments to that card.
No, you can’t usually do a balance transfer from one account to another under the same bank or credit card provider – or any of their affiliate partners for that matter. If you’re unsure, contact your provider.
All of your potential fees and rates should be available in the disclosure documents for your card. Keep an eye out for balance transfer fees, the revert APR you’re charged at the end of your promo period and any annual fees you’ll pay to use the card. Make sure these fees aren’t more than your potential savings before applying. You’ll also want to watch out for penalties such as late fees.
Emma Balmforth is a Producer at Finder. She is passionate about cryptocurrency, credit cards and loans, and enjoys helping people understand the often confusing world of finance. Emma has a degree in business and psychology from the University of Waterloo. She wants to help people make financial decisions that will benefit them now and in the future.
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