Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Interest-free credit cards
Save on costs and pay off your balance faster with a credit card that offers 0% interest on balance transfers.
Trying to get out of debt and looking to save on interest charges? Interest-free credit cards offer you a period of time when no interest is charged on your account balance. While some countries offer 0% purchase credit cards, these cards don’t seem to be offered on the Canadian market currently. So, this leaves us with one type of interest-free credit card: the balance transfer card. This type of credit card can offer 0% interest for a specified period of time, however, there are some things to watch out for.
While 0% purchase credit cards are not available on the Canadian market, there are occasionally a few 0% interest balance transfer credit cards to choose from. These cards usually offer introductory 0% interest on balance transfers for a specific period of time – usually 3 to 10 months.
A 0% balance transfer credit card offers an interest-free period on existing credit card debt that you move onto the new card. The 0% interest rate will typically last anywhere from 3 to 10 months, depending on the offer. This gives you the opportunity to repay your debt without collecting any additional interest, which can help you put more money towards paying off the principal balance faster. Keep in mind you will be charged interest on any new purchases you make on a balance transfer credit card.
- If you make new purchases. When you make a purchase on this type of card, the interest rate for purchases will usually apply from the time the transaction is made. This means you won’t have a “grace period” where no interest is charged.
- If you use your card for a cash advance or cash equivalent transaction. With these types of transactions, interest charges and fees will apply from the time they are made. Be aware that cash advance charges tend to be steep.
- If you don’t pay off your balance transfer debt by the end of the introductory period. If the balance transfer interest-free period ends and you have an outstanding balance to pay, you’ll start collecting interest on it. The interest rate that kicks in once the intro period is up is known as the revert rate.
Also known as the “grace period”, credit card providers in Canada must offer a minimum of 21 days where they charge you no interest on the balance owing. As long as you pay your balance back in full by the time it is due, you will avoid facing interest charges.
While the grace period can seem like a gift from the banks, it is in fact a risky time if you don’t pay off your credit card balance in full. Even if you pay back a portion of what you owe before the due date, banks and credit card providers can charge you interest on the entire sum of owed money, dating it all the way back to the purchase date.
Let’s say you bought a new camera for $1,200 on 21 July. If the billing cycle for your card ends on 15 August and your payment is due on 5 September, you will need to pay the entire $1,200 balance by this date in order to avoid interest charges.
If you decide to pay only $1,000 by 5 September and pay the remaining $200 on 10 September, you will incur interest charges on the entire $1,200 balance dating back to the purchase date of 21 July. This means you’ll be charged interest on $1,200 for 31 days plus an additional 5 days of interest charged on the late $200 balance.
If you want to get a credit card with an interest-free period, consider the following features:
- Introductory period. If the card offers a promotional 0% interest rate for balance transfers, check how long the introductory period is available for. Consider your budget and calculate whether or not you can repay the balance you put on the card while the introductory offer is in place. If not, you might want to look for a card with a longer promotional interest-free period. Balance transfer intro periods generally last from 3 to 10 months, sometimes longer.
- Standard interest rates. The standard variable purchase and balance transfer rates for credit cards usually sit around 19.99%, however they can be as high as 36% APR. Make sure you check what the promotional rate reverts to when comparing options so that you can budget for any interest charges that may apply if you’re still carrying a balance at that time.
- Grace period requirements. Credit cards that offer interest-free days – more commonly known as a grace period – for each statement cycle usually have specific conditions around eligible purchases and repayments. For example, cash advances are not eligible for interest-free days and you must pay your balance in full by the due date on each statement.
- Rewards programs. Some cards earn rewards or travel rewards points for every $1 spent on the card. These programs can provide extra value, but be careful you don’t overspend in order to get more rewards, otherwise you may end up with unnecessary debt since you’ll be charged a revert rate on any new purchases.
- Complimentary extras. Many cards offer complimentary extras such as international travel insurance, purchase protection, extended warranty coverage and concierge services. These perks may add value to your card – but only if you actually use them.
- Annual fees. Card costs can range from $0 to over $700 each year. Make sure that the cost of the annual fee doesn’t offset the interest savings you’ll make from the interest-free offer. You may want to consider a credit card with no annual fee to help save on your costs.
- Balance transfer fees. Some cards have a one-off processing fee of 1% to 5% of your total balance when you apply for a balance transfer. If you choose an interest-free card for your existing debt, make sure you look for this fee when comparing options so you can find one that’s affordable.
More guides on Finder
How to buy goeasy stock in Canada
Find out how to buy GSY stock in Canada and compare Canadian stock trading platforms.
310-LOAN payday loan review
Borrow up to $1,500 from 310-LOAN with no credit check.
How to lower your tax bill using tax deductions and tax credits
You can reduce your total tax bill using tax benefits like tax deductions and tax credits.
Tax-free savings account (TFSA) taxes
A guide to everything you need to know about TFSA taxes, including the maximum TFSA contribution, so that you know what to do with your TFSA on your tax return.
E-transfer payday loans
Find out which licensed lenders can e-transfer payday loans.
National Bank Direct Brokerage Review
Trade commission-free with this large Canadian bank. Plus, it’s good for beginners and pros alike.
Binance NFT Marketplace Review and Guide
The Binance NFT Marketplace offers one of the safest NFT marketplaces for creating, buying and selling NFTs.
How to send money home for the holidays from Canada
SPONSORED: How you can save when sending money abroad for festive occasions with Simplii Financial.
Easy payday loans
Payday loans are considered easy to get, but they’re also expensive. Before you apply, here’s what you need to know.
How to buy Ethereum (ETH) with Credit Card
Credit cards are a popular way for buying Ethereum (ETH). Learn how you can do the same by reading this guide