The best balance transfer credit cards in Canada for 2023

Balance transfer offer: 0% promotional annual interest rate for 12 months with a 3% balance transfer fee. Conditions apply. 

Ratehub.ca's take

In the Venn diagram of features most sought after by those looking to minimize their credit card debt, the MBNA True Line Mastercard has some considerable overlap. The card has no annual fee and a below-average purchase interest rate of 12.99% on purchases and balance transfers. For anyone trying to work themselves out of debt and rebuilt their credit, the 0% promotional annual interest rate for 12 months provides an excellent head start. 

Pros

• The low interest rate of 12.99% is fixed and won’t change regardless of your credit rating, income, or the bank’s prime lending rate
• No annual fee and no income requirements to qualify making it very accessible
• Promotional balance transfer of 0% is available for a full year helping pay down or eliminate credit card debt

Cons

• Does not include insurance or other benefits
• Offer not available to residents of Quebec

Balance transfer offer: 0% promotional annual interest rate for 10 months with a 1% balance transfer fee. Conditions apply. 

Ratehub.ca's take

The CIBC Select Visa also shoots right to the top of our list for best balance transfer cards. The below-average APR of 13.99% across the board on purchases, balance transfers, and even cash advances can help you save money on interest charges and make it easier to manage your credit card debt. It also offers newly-approved cardholders a great welcome bonus - Transfer your credit card balance. Get 0% interest for up to 10 months with a 1% transfer fee and a first year annual fee rebate. Conditions apply. 

With interest completely out of the equation for a limited time, you can move the balance owed on your current credit card over to the CIBC Select Visa and chip away at your debt faster and more efficiently.

The CIBC Select Visa also comes with a number of additional benefits. These include extended warranty and purchase protection, as well as access to CIBC's 24/7 customer service team.

Pros

• Below-average APR of 13.99% across the board on purchases, balance transfers, and cash advances
• Low $29 annual fee (which is rebated for the first year) and has a minimum household income requirement of just $15000, making it easily within reach of most Canadians
• Welcome offer - Transfer your credit card balance. Get 0% interest for up to 10 months with a 1% transfer fee and a first year annual fee rebate.
• Up to three free secondary cards
• One of the few low interest cards to offer additional travel coverage in the form of up to $100,000 in common carrier accident insurance
• Additional benefits include extended warranty, purchase protection, access to CIBC's 24/7 customer service team

Cons

• As a low interest credit card, the CIBC Select Visa doesn’t offer much in the form of perks
• Balance transfer offer is exclusively available to new cardholders applying online
• You can only transfer 50% of our assigned credit limit (e.g. if you’re approved for the CIBC Select Visa with a $2,000 credit limit, you can only transfer up to $1,000 from another credit card)

Balance transfer offer: 0.99% promotional annual interest rate for 9 months with a 2% balance transfer fee. Conditions apply.

Ratehub.ca's take

The BMO Preferred Rate Mastercard is another great credit card option for those looking for a balance transfer credit card with a low interest rate and additional benefits. The card has a $20 annual fee, but it offers a competitive interest rate on purchases and balance transfers (12.99%). Additionally, the card comes with extended warranty and purchase protection, which can provide peace of mind when making purchases.

One of the standout features of the BMO Preferred Rate Mastercard is its special welcome offer, which can provide additional value for new cardholders. The card also offers Zero Dollar Liability, which protects you from unauthorized purchases made with the credit card.

Overall, the BMO Preferred Rate Mastercard is a good option for those looking for a credit card with a low interest rate and additional benefits.

Pros

• Welcome offer - earn a 0.99% introductory interest rate on Balance Transfers for 9 months with a 2% transfer fee and have the $20 annual fee waived for the first year 
• Includes Zero Dollar Liability, protecting cardholders against unauthorized purchases
• Purchase interest rate of 12.99% is among the lowest in Canada and also applied to balance transfers as well
• The balance transfer promotional period is also longer than those offered by most other credit cards (nine months versus the typical six months), giving you more time to pay down any outstanding debt
• Includes free extended warranty which doubles the manufacturer’s warranty up to one year and purchase protection

Cons

• Has a higher promotional rate for balance transfers, but the offer lasts for a longer period of time

Balance transfer offer: 0.99% promotional annual interest rate for 9 months with a 2% balance transfer fee. Conditions apply

Ratehub.ca's take

For those looking to save big with cash back rewards while managing their debt, BMO’s entry-level rewards card, the BMO CashBack Mastercard, has no annual fee or income requirements. This allows cardholders to consolidate past debts and pay them off faster while earning cash back for their purchases.

Their current welcome offer allows you to earn earn up to 5% cash back in your first 3 months. . After that, you'll still get an impressive 3% cash back on grocery purchases, making this an ideal card to use for your weekly food shopping.

Pros

• Earn 3% cash back on groceries - a very competitive earn rate for groceries for a no-fee card in Canada
• Flexible cash back redemption options including putting it towards your card statement or investing with BMO's InvestorLine
• Redeem cash back for as little as $1 and you can can set up automatic deposit for reward totals of $25 or more

Cons

• Low earn rate of 0.5% for purchases outside of bonus categories
• The insurance package included with this card is minimal; only includes extended warranty and purchase protection coverage 

Balance transfer offer: 0% promotional interest rate for 6 months with a 1% balance transfer fee. Conditions apply

Ratehub.ca's take

The Scotiabank Value Visa is a great balance transfer credit card option for students and newcomers to Canada as there is no minimum income requirement to apply for this credit card. The welcome offer - 0% introductory interest rate on balance transfers for the first 6 months. Offer ends 31 October 2023.- in conjunction with the 12.99% interest rate being one of the lowest on the market, make it suitable for consolidating your debt and paying off your outstanding balance. 

Pros

• Waived annual fee if you have a Preferred or Ultimate banking package with Scotiabank 
• Get a 25% discount on rental cars at participating Avis locations
• Pay off purchases of $100 or more with no-interest monthly installments as part of the Scotia SelectPay program

Cons

• No rewards or cash back earning potential with this credit card 
• No additional perks or features

A guide to balance transfers in Canada 

What is a balance transfer?

A balance transfer is what it sounds like: it’s the transfer of a balance from one credit card to another. This is a popular strategy for managing credit card debt, with the main objective to shift your outstanding balance from a card with a high interest rate to a new card with a far-lower interest rate. This allows you to pay off your balance more quickly and in the process pay less interest. 

How does a balance transfer work?

You can usually set up a balance transfer online through your bank’s website or app. However, depending on the bank, you may need to call your bank and talk with a customer service representative. 

When requesting a balance transfer, keep in mind: 

• the amount you transfer can be no larger than the credit limit of your new card
• depending on the card, you may also only be allowed to transfer up to a certain amount of your credit limit (i.e. 50% of your total credit limit)
• you can transfer balances between credit cards from different financial institutions, but in almost all 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).

It is important to note that moving a balance is not instant - it 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. Keep in mind that all new purchases on a balance transfer card will be subject to the standard higher interest rate, as the promotional rate only applies to the existing balance you transferred to the card and not anything added afterwards.

Balance transfer fees

As we touched on above, most balance transfer credit cards will charge a balance transfer fee. This one-time fee varies by bank (and sometimes by card) and is usually either a flat fee or equal to a percentage of the balance you’re transferring.

While nobody likes paying fees, balance transfer fees pale in comparison to a credit card’s regular interest rate. Paying a 3% balance transfer fee and 0% interest for ten months is far better than owing 19.99% in interest. Nonetheless, it’s important to consider this fee along with the promotional interest rate and the dollar amount you’re transferring when deciding which balance transfer card is right for you.

Below, we break down the balance transfer fee by some major credit cards and banks.

*Information is based on general rates, and may vary depending on the cardholder and offer terms. Check with your card issuer for fee details.

How much can I save with a balance transfer?

Transferring a large credit card balance to a card with a lower interest rate can lead to significant savings, especially if you focus on paying off the balance during the promotional period. 

For instance, imagine you have a $6,000 balance on a credit card with a 20% APR, and you get approved for a balance transfer credit card offering 0% interest for the transferred balance for the first 12 months, with a 2% transfer fee. 

By moving your balance to the new card and diligently paying it off during the promotional period, your only expense will be the $120 transfer fee (2% x $6,000). In comparison, if you continued to pay off the same balance on your old card over those same 12 months, you would have spend $1,200 in interest ($20% x $6,000). This results in overall savings of $1,080 ($1,200 - $120). 

Actual savings may vary depending on factors such as your current monthly payment amounts, planned payment amounts on the new balance transfer card, timing, and card terms.

Do balance transfers 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 allows you to repay your outstanding credit card debts much faster, which in turn, will reduce your credit utilization ratio. Credit utilization, a major factor in determining your credit score, refers to the amount you owe on your credit card relative to your total credit limit. Generally, a lower ratio and smaller outstanding balances can lead to a better credit score.

However, in the process of undergoing a balance transfer, you may face a few temporary effects on your credit score. For example, when you apply for a new balance transfer credit card offering a lower interest rate, you’ll receive an inquiry on your credit report, similar to the process for applying for any new credit card. That said, applying for a new balance transfer card won’t have a lasting impact on your credit report. With consistent on-time payments, your credit score can fully recoup in a few months.

Balance transfer example

Now that we’ve covered how a balance transfer works, let’s walk through a scenario that demonstrates the savings achievable with a balance transfer. Let’s say you:

• Currently hold a balance of $3,000 on a rewards credit card with a 19.99% annual interest rate
• Every month, you diligently pay $300 towards your balance

Here’s a side-by-side comparison of what would happen if you choose to either: 1. Continue with your existing rewards credit card or 2. Transfer your debt to a balance transfer credit card with a 0% promotional interest rate for 10 months and a 2% transfer fee.

Based on this simplified example, you’d save $249 in fees ($309 – $60) and pay off your balance a full two months faster by transferring your debt to the 0% balance transfer credit card. That’s a substantial amount of money.

Pros and cons of balance transfer credit cards:

Benefits of balance transfer credit cards

1. Better interest rates. The major advantage of balance transfer credit cards is that their significantly lower interest rates compared to standard credit card. This is especially true when you consider their promotional offers. Unlike the average interest rate of most credit cards (19-20%), certain balance transfer credit cards provide a period of zero interest.
2. Easier to pay off debt. Thanks to the remarkably low interest rates offered by balance transfer credit cards, you'll be able to focus entirely on paying off your existing debt without the added stress of accumulating more interest on the principal. However, it is critical to establish a reliable repayment plan to ensure that you don't collect interest once the promotional period ends.

Drawbacks of balance transfer credit cards

1. Not made for new purchases. While you can certainly use your balance transfer credit card to make new purchases, it's not recommended. The primary allure of the card - its ultra-low interest rate - only applies to transferred debt, not any new purchases/transactions. New purchases will be subject to the regular interest rate, not the promotional one. So until you've squared away your debt, you probably don't want to add to your existing balance.
2. Limited rewards. Unlike rewards cards designed to incentivize spending, balance transfer cards prioritize debt repayment. Because of this, you're unlikely to see many rewards or extra perks with these cards. Once you've paid off your outstanding balance and built up your credit, you might want to switch over to a rewards or cash back credit card to begin earning points or cash back.
3. Promotional interest rates are time sensitive. Although the ultra-low interest rate may seem like a dream come true to someone struggling to pay off credit card debt, it's important to remember that it is only valid for a specific duration. That means its imperative to ensure that you can clear your debt within that timeframe; otherwise, you could end up accumulating interest again.

Alternatives to a balance transfer credit card

If you prefer not to get a balance transfer credit card, one alternative is to seek out a line of credit and use it to pay off your credit card balance. 

Lines of credit typically charge lower interest rates than credit cards, though still higher than what would be offered on a balance transfer credit card. An important thing to note with line of credits, is that rates can change depending on the banks prime lending rate.

Also read:

• The best credit cards in Canada
• Best low interest credit cards in Canada
• How to pay off your credit card and reduce interest charges
• The best credit cards in Canada for people with bad credit