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Compare Balance Transfer Credit Cards in 2021
Save money by transferring your existing credit card debt to a lower interest rate card.
Balance transfer credit cards allow you to consolidate your credit card debt onto a single credit card with a promotional interest rate. This rate lasts for a predetermined amount of time and is designed to give you a break from interest payments so that you can pay off more of your principal debt. Find out how balance transfer credit cards work in Canada and compare your options to find the best fit for you.
Compare balance transfer credit cards
What's in this guide?
- Compare balance transfer credit cards
- What are balance transfer credit cards?
- How do balance transfer credit cards work in Canada?
- Try it yourself: Balance transfer repayment calculator
- How much can I transfer with a credit card balance transfer?
- How do interest rates work with balance transfer credit cards in Canada?
- Is a balance transfer credit card a good idea?
- How much do balance transfer credit cards in Canada cost?
- Pros and cons of balance transfer credit cards
- How to choose the right balance transfer credit card in Canada
- How to apply for a balance transfer card
- How to do a balance transfer on your credit card
What are balance transfer credit cards?
Balance transfer credit cards let you move your debt from your existing credit card over to a new card with a lower interest rate. You can also move several balances from several different cards at one time if you want to consolidate your debts all in one place. Just be aware that you’ll have to pay a balance transfer fee that’s usually worth between 1% and 3% of the amount you wish to transfer.
The promotional interest rate you can get with a balance transfer credit card typically ranges between 0% and 3.5%. This intro offer usually lasts for a period of between 6 and 10 months and doesn’t usually apply to purchases you make on your card. Once the promotional period is over, balance transfer credit cards typically revert to an interest rate of between 8.99% and 19.99% for your total balance.
How do balance transfer credit cards work in Canada?
Balance transfer credit cards work as a catch-all for all of your credit card debt. You can transfer all of your outstanding balances over to them to pay off your debt at a lower interest rate. This low interest rate will typically only apply to your transferred balance and not to any new purchases you make. Some balance transfer credit cards also allow you to earn rewards on purchases, though none offer rewards on transferred balances.
Here’s an example of how much you could save while paying off a $3,000 credit card balance over a 9-month introductory period with a balance transfer credit card versus a normal card.
|Normal credit card||Balance transfer card introductory offer|
Balance transfer fee
3% = $90
Months to pay off
Total interest and fees paid
This example shows that you could save $25 per month and $140 in total interest and fees by switching to a balance transfer credit card.
Try it yourself: Balance transfer repayment calculator
How much can I transfer with a credit card balance transfer?
The amount of money you can transfer with a credit card balance transfer depends on which provider you use. Some balance transfer credit card providers will expect you to transfer a minimum amount over to your new card (usually between $100 and $1,000).
The maximum amount you can transfer with a credit card balance transfer usually sits somewhere between 70% and 100% of your approved credit limit. So, for example, if you have a $3,000 credit limit on your new balance transfer card with a 90% transfer limit, you would be able to transfer a balance worth up to $2,700. You can find out more about minimum and maximum transfers by contacting your provider directly.
How do interest rates work with balance transfer credit cards in Canada?
There are usually three types of interest rates you need to be aware of with balance transfer credit cards in Canada:
- Promotional rate. Promotional rates often fall between 0% and 3.5% interest and typically last between 6 and 10 months. During this time, you’ll pay extremely low interest on any balance you transfer over until it comes time for your rate to revert. You usually won’t be able to extend your intro offer at this point.
- Revert rate. The revert rate is the interest you’ll pay when your promotional rate expires. The revert rate for balance transfer credit cards in Canada usually falls between 8.99% and 19.99%, depending on what type of card you have. You’ll have to pay this rate for any leftover balance you haven’t paid off.
- Purchase rate. You’ll typically be required to pay high interest rates (usually around 19.99%) for any new purchases you make on your credit card. This is why most people use balance transfer cards to pay off their transferred debt quickly rather than to make purchases.
Most credit card issuers offer balance transfer credit cards to get you to switch your business over to them. This is because many hope that when your promotional rate ends, you’ll keep your balance transfer card and use it to make purchases. At this point, you’ll also have to pay full rates on whatever balance you have left to pay off.
Despite the benefits to credit card issuers, switching to a balance transfer credit card is in your best interest since you’ll get lower interest rates than you would by sticking with your old provider. Just make sure that you don’t sign up for a card that defaults to a higher rate than what you’re currently paying when your intro period ends.
Can I transfer my balance to a new card when my promotional offer expires?
You can typically make a second balance transfer to another card as long as it’s not with the same card issuer. This is referred to as “balance transfer kiting” and is a common practice (though it comes with some risks).
- Risk #1: Balance transfer kiting can lead you to accumulate higher debts if you don’t pay your balance off during the promotional period.
- Risk #2: Transferring your debt over to another credit card can hurt your credit score since it requires a hard pull on your credit for every new card you apply for.
- Risk #3: You may not get approved to transfer your entire balance, which can require you to make multiple payments across several credit cards.
- Risk #4: You’ll have to pay a balance transfer fee every time you transfer money, which can eat into any money you save with lower interest rates.
You may want to look into this option if you’re close to paying down your debt, you have a good credit score and you can afford to pay a second balance transfer fee.
Is a balance transfer credit card a good idea?
Ask these questions to find out if a balance transfer is a good idea.
- Is your interest rate making it difficult to pay down your balance?
You could benefit from a balance transfer card if you’re paying a standard 19.99% interest rate on your outstanding balance.
- Can you repay a significant amount of your debt in the promotional period? It could make sense to get a balance transfer card if you think you can repay a significant amount of your debt in your first 6 to 10 months of card ownership.
- Will you be able to transfer all of your debt? You may want to pursue a balance transfer if your institution will allow you to transfer all of your debts over at one time. If your credit limit is small on your new card, you may only be able to transfer a portion of your debt – which can make repayment more difficult to manage.
How much will you actually save with a balance transfer? Balance transfers can come with fees, usually from 1% to 3% of the amount being transferred. The fee, intro rates, long-term APRs, introductory period and your budget should be considered when you’re calculating potential savings.
Do you have a good enough credit score to qualify? You may need to have a credit score of 650 or higher to qualify for a balance transfer card. You should check with the institution you want to apply with to make sure you’ll meet their eligibility requirements.
How much do balance transfer credit cards in Canada cost?
There are three main fees to keep in mind when considering a balance transfer credit card:
- Interest rate. Your interest rate will typically fall between 0% and 3.5% with a balance transfer card. This rate will usually only last for up to 10 months, after which it will typically revert to a regular interest rate (around 19.99%).
- Balance transfer fee. This is the money you’ll pay to initiate the balance transfer. Your balance transfer fee can run anywhere between 1% and 3% of the total amount you want to transfer. On a transfer of $5,000, this would amount to a fee between $50 and $150.
- Annual fee. You could be required to pay an annual fee for your credit card, which can range as high as $150 per year depending on the card. Make sure you factor this fee in when calculating your total costs to initiate a credit card balance transfer.
Pros and cons of balance transfer credit cards
- Faster debt repayment. You will pay minimal or no interest on your debt during your introductory period, so you can pay your principal balance back faster.
- No annual fee. Most credit cards with 0% promotional interest rates have no annual fee, which can save you money upfront.
- Extra rewards. Some cards let you earn rewards for purchases as well as a promotional interest rate (such as the Tangerine Money-Back Credit Card).
- Consolidate debt. You may be able to put all of your credit card debt in one place to get a lower interest rate and make your repayments easier to manage.
- Balance transfer fees. Fees range between 1% and 3% of your transfer amount, though there are a handful of credit cards with no balance transfer fee.
- Balance transfer amount limits. Card issuers may limit your balance transfer amount based on the size of your debt or your credit limit.
- No same-bank transfers. You usually can’t make balance transfers between accounts within the same bank or its affiliated financial institutions.
- Revert interest rates may apply after missed payments. You may end up paying the revert interest rate (up to 19.99%) if you miss any payments.
How to choose the right balance transfer credit card in Canada
Compare the following features to find the best balance transfer credit card for your needs.
- Length of promo offer. Most promo interest rates are available for 6-10 months. Find the card with the lowest promotional rate for the longest term.
- Balance transfer fees. Balance transfer fees typically range between 1% and 3% of the total amount of debt you’re transferring. Look for a fee that suits your budget and doesn’t drastically cut into the amount you’ll save on interest by switching.
- Annual fees. Some credit cards have annual fees ranging from $0 to $150. Look for a card that comes with no annual fee or promises to waive the fee for the first year.
- Balance transfer limit. Check your balance transfer limit and make sure the amount you want to transfer is below this number. Otherwise, you’ll end up with a large balance spread across multiple credit cards.
- Revert interest rates. Find out how much interest you’ll have to pay when your promo offer runs out. Search for a card that reverts to a low interest rate (between 8% and 14%) if you want to keep saving money when your promo rates expire.
- Penalties. Some credit cards may enforce harsh penalties if you miss a payment, including eliminating your promotional rates altogether. Make sure you read the fine print before you sign up for a card.
- Rewards and benefits. Most balance transfer credit cards are designed specifically to help you pay off your debt, though some may offer rewards. Find out what rewards and benefits come with your new card before you make the switch.
Purchase interest rate
Tangerine Money-Back Credit Card
Apply today and earn 2% cash back in up to three spending categories of your choice.
- Purchase interest rate: 19.95%
- Cash advance rate: 19.95%
- Balance transfer rate: 1.95% for the first 6 months, 19.95% thereafter
- Annual fee: $0
- Credit score: 680
How to apply for a balance transfer card
Most balance transfer card providers offer cards to applicants who are at least 18 years old and reside in Canada. While the exact information you’ll need to complete your application can vary by provider, you’ll likely need to submit the following:
- Your personal contact information.
- Your Social Insurance Number (SIN) and date of birth.
- Your residential status.
- Financial details, such as your annual salary and other income.
Some balance transfer credit cards in Canada allow you to request your balance transfers on the application itself. You will need to supply the following information if you want to do this:
- Account details for the debt you want to transfer.
- The amount you expect to transfer to your new card.
- Compare a range of balance transfer credit cards. Compare several different cards to find the best fit for your personal situation. You should also make sure you meet the eligibility requirements of any card you intend to apply for before you submit an application.
- Check your credit score. Apply for your credit score from one of Canada’s major credit bureaus (Equifax or TransUnion). See where you sit as you could have difficulty getting approved with a score below 650. If your credit score is low, talk to your card issuer to find out what their minimum requirements are and what you need to do to qualify.
- Ensure you have a low debt-to-income ratio. Your debt to income ratio shows the total amount you owe on all of your debts vs the total amount you make. Just divide your monthly debt payments by your income each month to find out what your debt-to-income ratio is. Be aware that you could struggle to get approved if your ratio sits above 15%.
- Speak to an agent in person. Book an appointment to speak to someone about your current financial situation and credit card needs in person. With some providers, you could use details such as your income or current debt load to help make a case for why you should be approved.
How to do a balance transfer on your credit card
While the exact procedure to initiate a balance transfer may vary based on your credit card provider, you can usually follow the steps below to get started:
- Initiate a balance transfer request. Ask your new provider to initiate a credit card balance transfer for all of the cards you would like to transfer over.
- Provide account information for your old cards. Provide your new credit card issuer with account information for your old cards and specify how much of your balance you want to transfer from each card.
- Wait for the transfer to process. Wait several days or weeks for your credit card issuer to process your balance transfer and liaise with your old credit card providers.
- Continue to make payments on your old cards. Continue to make payments on your old cards until you get a confirmation that the transfer has gone through.
What should I do with my old cards after I initiate a balance transfer?
You may want to keep your old cards open once you initiate a balance transfer, even if you’re not using them anymore. This is because closing old cards can negatively impact your credit score for the following reasons:
- Causes your credit utilization ratio to go down. Your credit utilization ratio assesses the overall credit limit you have across multiple credit cards vs how much of that credit you’re using. If you knock out a couple of credit cards, your overall credit limit will go down even though your credit use will stay the same.
- Lowers the average age of your credit cards. The age of your credit cards also matters to the credit bureaus. They will give you a higher score for having older forms of credit (such as long-term loans, mortgages or credit cards). This is why it makes sense to keep your credit card open even if you’re done using it.
When should I close my old credit cards?
You may want to close your old cards if they are fairly new (less than a year old) or you don’t think you can avoid spending money on them if you keep them open. You may also want to close them if they come with annual fees that you don’t want to pay.
You can save a significant amount in interest if you sign up for a balance transfer credit card. Just keep in mind that you’ll typically only save money on the balance you transfer over and not on new purchases you make on your card. Learn more about how credit card balance transfers work and compare balance transfer credit cards in Canada to find the best fit for you.
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