If you’ve been carrying debt on your credit card that you can’t seem to pay off because of the monthly interest charges, you should consider using a balance transfer credit card to help you eliminate your debt once and for all.
A balance transfer credit card is a credit card that offers an ultra-low introductory interest rate (for example, 0%) for a set promotional period (for example, six months). When you transfer a balance onto this credit card, you’ll pay only this low interest rate for the promotional period. Balance transfer credit cards are a good way to pay off debt because you won’t have high interest charges adding to your balance every month.
After the promotional period ends, your credit card’s interest rate will rise back to normal levels, so it’s important that you pay off all of your debt before that happens. Some balance transfer credit cards also charge a fee to transfer a balance, usually in the range of 1 – 3%, but this is still lower than normal credit card interest rates.
Below, we’ve compiled our top picks for the best balance transfer credit cards in Canada for 2019.
The best balance transfer credit cards in Canada for 2019
|Credit Card||Balance Transfer Offer||Annual Fee|
|MBNA True Line® Mastercard® (VIEW)||Cardholders can get a 0% promotional annual rate||$0|
|MBNA True Line® Gold Mastercard® (VIEW)||Cardholders can get a 0% promotional annual rate||$39|
|Scotiabank Value Visa (VIEW)||0.99% for first six months||$29|
|American Express Essential Credit Card (VIEW)||1.99% for first six months||$0|
|BMO Preferred Rate MasterCard (VIEW)||3.99% for first nine months||$20|
MBNA True Line® Mastercard®
The MBNA True Line Mastercard is a no annual fee credit card offering 0% interest for ten months on balances transferred in the first 90 days for eligible new cardholders. There is a 3% balance transfer fee (minimum of $7.50) that you’ll pay when you transfer your balance. After the ten-month promotional period ends, the interest rate on the remaining balance increases to 12.99%.
Why we like it:
The MBNA True Line Mastercard is an excellent choice because of its super-low introductory interest rate of 0% – which is the best balance transfer offer in the country. The icing on the cake: the card’s balance transfer offer lasts for a lengthy ten months, as opposed to the standard six months found on most other balance transfer cards. Not to mention, the card also lacks an annual fee, so it’s free to carry. The only fee you’ll pay to transfer your balance is the 3% setup fee.
The MBNA True Line Mastercard offers 24/7 fraud protection and around-the-clock customer service. You can also take cash advances at over 1 million ATM’s internationally – although, at an interest rate of 24.99%, we can’t recommend this.
MBNA True Line® Gold Mastercard®
The True Line Gold Mastercard is very similar to the balance transfer credit card we mentioned above – except for a few key differences. The first big difference is the 0% promotional interest rate is available for six months as opposed to ten. The second big difference is it has a rock-bottom fixed interest rate of just 8.99% (this is the interest rate that’ll come into effect after the balance transfer offer ends). Lastly, this card has an annual fee of $39.
Why we like it:
Not only does the MBNA True Line Gold MasterCard have the lowest balance transfer offer in Canada at 0% for six months, it also charges the lowest fixed APR on purchases at 8.99%. So, if you transfer a balance and use the 0% interest rate for six months to pay off a large portion of your debt, but you don’t quite pay it off in full during the promotional period, your remaining balance will be subject to a rate of just 8.99%. That’s eleven percentage points lower than standard credit card interest, which will help you save big as you continue to pay off your debt.
The MBNA True Line® Gold Mastercard® offers around the clock fraud protection, 24/7 customer service and a suite of comprehensive insurance.
Scotiabank Value Visa
If you’d prefer a balance transfer credit card from a major bank, the Scotiabank Value Visa has got you covered. With an annual fee of $29, this credit card charges a flat 12.99% on new purchases, cash advances and balance transfers. As a new cardholder, you’re also entitled to a promotional balance transfer rate of 0.99% for six months.
Why we like it:
The Scotiabank Value Visa is very straightforward, offering the same low interest rate across the board. This credit card is also offered by a major bank, so if you prefer to keep your chequing accounts, savings accounts and credit cards all with one provider, you can do so with this credit card.
Cardholders who rent a vehicle at AVIS car rentals will receive a 25% discount – perfect for those holiday road trips.
American Express Essential Credit Card
The American Express Essentials Credit Card has no annual fee and a flat interest rate of 8.99% on purchases, cash advances and balance transfers. If you have a balance to transfer when you apply for this credit card, you’ll qualify for an introductory 1.99% balance transfer rate for the first six months. The minimum income required for this credit card is $15,000 per year.
Why we like it:
The balance transfer rate offered by this credit card isn’t the lowest on this list, but if there is a chance you won’t pay off the entire transferred balance during the promotional period, the American Express Essentials Credit Card is a good option. Once the promotional period expires, the remaining balance will be subject to 8.99%, which is the lowest fixed interest rate in Canada. Not having to pay any annual fees is another big advantage.
The American Express Essentials Credit Card has quite a few perks and benefits beyond the low interest rate. When you book trips with this credit card, you’ll be covered by travel accident insurance ($100,000), and when you purchase electronics and other items with this credit card, you’ll be covered by an extended warranty which doubles the manufacturer’s warranty up to one year. You’ll also have exclusive access to American Express Invites which grants you access to a variety of special offers and events.
BMO Preferred Rate MasterCard
The BMO Preferred Rate Mastercard has the lowest fixed interest rate on purchases of any BMO credit card at 12.99% and offers cardholders with a strong 3.99% promotional offer on balance transfers for the first nine months. In order to qualify for this card, you’ll need an annual income of $15,000 and a credit score of 660 or more.
Why we like it:
While the 3.99% promotional rate on balance transfers isn’t objectively the lowest, the promotional rate lasts for a lengthy nine months (which is three months longer than what most of the other cards on this list offer). This can prove beneficial if you think that you’ll require more time to pay off your credit card debt. Plus, even after the nine-month promotional period ends, the balance transfer rate will increase to a competitive fixed rate of just 12.99%.
In exchange for a nominal $20 annual fee, this card provides a number of built-in benefits, including free extended warranty coverage and protection against unauthorized use in instances your card is stolen and used for purchases you didn’t authorize – which means you can enjoy some added peace of mind as you consolidate your debt.
Best balance transfer credit cards – honourable mentions
Below, we’ve listed rewards credit cards that offer great balance transfer promotions.
We’ve categorized them as honourable mentions because they aren’t full-fledged low interest cards – which means their rates will increase sharply in the case you don’t pay off your transferred balance in full before their balance transfer offer period ends.
PC Financial Mastercard World Elite
The PC Financial Mastercard World Elite has no annual fee and a balance transfer offer of 0.97% for the first six months with no additional transfer fees – that’s objectively one of the best balance transfer offers on the market.
On top of being an excellent balance transfer credit card, the PC Financial Mastercard World Elite is also a rewards credit card that’s a great fit for anyone who spends big at stores where President’s Choice products are sold. With this card, you’ll earn PC Optimum points at a rate of 45 points per dollar spent at Shoppers Drug Mart, 30 points per dollar on groceries at Loblaws, No Frills or Superstores, and 10 points per dollar on everything else. For reference, 10,000 PC Optimum points equal to $10.
There is a minimum income requirement of $80,000 per year for individuals or $150,000 per year for families. On a final note, it’s important to highlight that once the balance transfer offer ends, this card’s interest rate increases to 22.97%.
Tangerine Money-Back Credit Card
The Tangerine Money-Back Card is one of the best cash back credit cards in Canada that also happens to offer a competitive balance transfer offer. New cardholders can pay 1.95% on transferred balances for the first six months (after which the rate will increase to 19.95%).
While you won’t earn any rewards on your balance transfer, you’ll get cash back on your regular purchases at a rate of 2% in up to three bonus spending categories and 0.5% on everything else. You can choose your own bonus categories from a total of ten options (which includes gas, groceries, restaurants, hotels and more). This card has an income requirement of $12,000 and charges no annual fee.
8 things you to need to know about credit card balance transfers
1. What is a balance transfer (and what are its advantages)?
A balance transfer is what it sounds like: it’s the transfer of a balance from one credit card to another. The goal is usually to move your outstanding debt from a card that charges a high-interest rate to a new card with a far-lower interest rate, and in the process, pay off your balance faster by having more of your money go towards the principal of your debt while losing less to interest.
Simply put, it’s like you’re using a new card to pay off an older one faster.
A balance transfer is a popular strategy for addressing credit card debt, and when involving the right balance transfer credit card, can help you save hundreds (or in some cases, thousands) of dollars in interest over the long term.
If you owe money on multiple credit cards, a balance transfer can also help you stay on top of your debts by consolidating all your balances onto just one card. So, instead of having to juggle several card statements every month (each with their own billing cycles, due dates, and dollar amounts), you’ll have just one balance to keep track of and pay.
2. The importance of balance transfer offers
To take full advantage of this strategy, you’ll want to transfer your high-interest credit card debt to a balance transfer credit card. These cards come with special promotions that let you pay an ultra-low interest rate (sometimes as low as 0%) for a limited period of time, usually around six to ten months.
Balance transfer cards provide an excellent opportunity to make a real dent in your debt because more of your payments will be going towards the principal. A balance transfer credit card with a super-low rate of 0%, like the MBNA True Line Mastercard, gives you the opportunity to pay down your debt faster versus a high-interest credit card charging 19.99%.
To put into perspective how much you could save with a balance transfer, here’s an example using the MBNA True Line Mastercard: If you were to transfer $4,000 onto this card, you would pay a $120 transfer fee and that’s it for ten months. In contrast, if you kept this balance on a card charging 19.99% interest, you would owe around three times more in interest charges if you paid off the balance within the same ten-month period.
3. Remember, balance transfer offers are only available for a limited time
It’s important to reiterate that balance transfer offers aren’t permanent and are only offered for a limited period, after which the card’s regular interest rate will come into effect. For example, the MBNA True Line Mastercard, currently Canada’s top balance transfer card, offers a 0% balance transfer promotion for a limited period of ten months. After this ten-month period ends, the promotional interest rate of 0% expires and any remaining balance will be subject to the credit card’s regular interest rate, which in the case of the MBNA True Line is 12.99%.
The promotional nature of balance transfer offers means it’s important to keep an eye on when your transferred balance will be subject to the regular interest rate and to try to pay it off before the promotional period ends. It’s also important to pick a balance transfer card with a low regular interest rate, so if you do need more time to clear off your debt, you can still be in a position to save in the long run. For example, the MBNA True Line’s regular interest rate is 12.99%, which while much higher than its 0% offer, is still considerably lower than the typical interest rate of 19.99% found on most other credit cards.
4. Transferring a balance is not the same as paying off a balance
Remember, simply transferring a balance onto a balance transfer credit card won’t get rid of your debt. Instead, you’re moving your debt from a high-interest credit card to a low interest credit card. That means, while it is easier to pay off your debt because the interest rate is significantly lower, it still needs to be paid off.
You should make a concerted effort to take advantage of the low interest promotional period to make progress in paying off your transferred balance before the interest rate rises.
5. New purchases on a balance transfer card will be subject to a higher rate
While balance transfer credit cards are a great way to reduce the interest you pay on past purchases, that’s not the case with new purchases. When you charge new purchases to your balance transfer card, they won’t be subject to the special promotional interest rate; they’ll be subject to the credit card’s regular interest rate instead.
For example, using the MBNA True Line Mastercard, if you make a new purchase on this credit card, that purchase will be subject to the card’s regular interest rate of 12.99%, not the promotional rate of 0%. For this reason, it’s a good idea to avoid charging new purchases to your credit card while you’re paying off your transferred balance.
Further to this point, any payments you make towards your credit card bill will go towards paying off your transferred balance first and not new purchases. That means you’ll have to completely pay off your old transferred balance before you can chip away at a new balance you’ve racked up from recently-made purchases.
Remember, the goal of a balance transfer is to help you pay off older debts. So, until you’ve wiped out your old debts, you’ll want to tread carefully and avoid using credit to make new purchases.
6. How do balance transfers work with credit cards?
You can often request for a balance transfer online through your bank’s website or app, but depending on the bank, you may need to dial the phone number on the back of your card and speak with a customer service representative in person to get it done.
When requesting a balance transfer, you must provide the account information of the card you’ll be moving the balance to as well as the amount you want to transfer. The amount you can transfer can be no larger than the credit limit of your new card. For example, if you want to transfer a $3,000 balance to a card with a credit limit of $2,000, you won’t be able to transfer the full amount.
You can transfer balances between credit cards from different financial institutions, but in most cases, you can’t move balances between cards from the same bank. You’ll usually have to pay a balance transfer fee as well (though, it’s typically a nominal 2% or 3% of your transferred amount). Lastly, moving a balance isn’t instant and may take upwards of seven to ten business days for the proper approvals to go through and the transferred balance to appear on your new card.
7. Is a balance transfer worth it?
If you have a credit card balance that you’re struggling to pay off, a balance transfer can be an excellent way to temporarily reduce your interest rate and pay off your debt quicker. You could easily save hundreds of dollars in interest charges by taking advantage of a balance transfer.
Balance transfers are always worth it if you’re transferring a balance that you’re confident you can pay off during the promotional period, and at the same time, you’re sure that you won’t charge new purchases to the card.
That said, there are some scenarios when a balance transfer may not be worth it. If you have a low credit score, for example, you may not be approved for a balance transfer credit card in the first place. Second, while some rewards credit cards come with balance transfer offers, their interest rates will increase sharply to 19.99% after the promotional period. So, if your transferred balance is larger than you can pay off during the promotional period, you should avoid rewards cards with balance transfer offers and instead consider a low interest card (like the MBNA True Line) that has a low regular interest rate even after its balance transfer offer ends.
8. Do balance transfer affect your credit score?
A balance transfer can generally help to improve your credit score over the long term. That’s because a balance transfer can help you pay back your outstanding credit card debts much faster, which in turn, can reduce your credit utilization ratio. One of the biggest determinants of your credit score, credit utilization refers to the amount you owe on your credit card relative to your total credit limit, and typically the lower this ratio, the better your score.
In the process of undergoing a balance transfer, however, you may face a few negative (albeit, temporary) dings to your credit score. For example, when applying for a new balance transfer credit card with a low interest rate, you’ll receive an inquiry on your credit report.
Overall though, applying for a new balance transfer card won’t have a lasting impact on your credit report and your score can fully recoup in a few months provided you make payments on time. Not to mention, by reducing your utilization ratio with a balance transfer, you’ll be on track to save money and improve your overall creditworthiness in the long run.
Summary: what to watch out for when using a balance transfer credit card
Balance transfers are a good option to pay down your debt faster, but it’s important to read the fine print and be aware of the limitations of these credit cards. Here are several considerations to keep in mind:
- Promotional rates don’t last forever: Balance transfer promotional interest rates are usually available for a set period of between 6 and 12 months. After the promotional period ends, the remaining balance will be subject to the regular interest rate, which may be higher than your current credit card.
- Additional fees: Most balance transfer credit cards will charge a balance transfer fee equal to a percentage of the transferred balance. Sometimes that fee can be as high as 3%, so it’s important to consider this fee along with the promotional interest rate when deciding whether a balance transfer is worth it.
- No rewards: Most credit cards, even those that offer rewards on everyday purchases, will not offer rewards for transferred balances. Since your goal when transferring a balance is to achieve a lower interest rate, not earn rewards, this isn’t a deal breaker.
- Credit scores: Some balance transfer credit cards require very high credit scores, which may exclude your application.
If you’re carrying a balance on your credit card that you’ve been meaning to pay off, transferring your balance could be an excellent way to jump-start your debt repayment and save you several hundreds of dollars in interest charges. Just keep in mind that a balance transfer credit card’s low interest rate is only available for a promotional period and that some credit cards charge additional fees to transfer a balance.
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