On milesopedia, we encourage our readers to be good managers of their personal finances before getting started with points. For example, to have an excellent credit report, it’s important to master different concepts:
Credit card balance transfer can help those who find themselves temporarily stuck with high credit card interest rates, provided it is done correctly. Read our article to find out if a balance transfer is right for you.
Most credit card issuers occasionally offer balance transfer deals with low interest rates. The goal is to attract your business by offering rates of 0% to 5%, which are well below the common rates of 19% and above.
This lower interest rate can temporarily save you if you’re currently paying interest on your credit card balance. However, you need to pay close attention to all the terms and conditions imposed as part of the balance transfer.
Different terms and conditions govern a credit card balance transfer, and failing to comply with them can have negative consequences!
Credit card balance transfer offers often come with fees (around 1% to 3% of the transferred amount). These fees will depend on each credit card issuer, but also your province of residence.
The CIBC Select Visa* Card for example, offers a 0% interest rate for 10 months on balance transfers:
The Scotiabank Value® Visa* Card offers you an interest rate of 0.99% on balance transfers for the first 9 months.
Generally, you will be able to make a credit card balance transfer within a limited period of 90 days from the account opening date.
It’s a way, for example, of consolidating different credit card balances onto a single card. So plan your move well so that you don’t miss the promotional period.
The promotional balance transfer interest rate is subject to a term of 6 to 12 months, as a general rule.
This means that your transferred balance will be subject to the promotional interest rate for this period only. After this period, standard rates will apply.
Here too, make sure you plan your balance transfer carefully, with a repayment schedule for the duration of the new term.
Make sure you don’t miss ANY payments on your new card.
Indeed, terms and conditions often come with “default rates”: if you miss several consecutive payments, the promotional interest rate will cease to apply and rates will rise back up to standard rates.
As with any new credit card application, please take a few minutes to read all the terms and conditions before applying for it!
Transferring a credit card balance can be a good backup solution. However, you will need to be particularly vigilant in managing this debt. Here are 3 other tips to keep in mind.
Create a debt repayment game plan by scheduling regular payments over the duration of the promotional rate (6-9-12 months).
Have you transferred $6,000 and are benefiting from a promotional rate of 0% for 12 months? Schedule payments of $500 per month for the next 12 months to completely erase your debt.
A credit card balance transfer should not be an opportunity to continue down the path of accumulating debt. Take a break from credit while you pay off your current debt.
To keep your finances clear, don’t make any new purchases with your new card. Just pay back the transferred balance gradually according to the established schedule.
Don’t wait until you’re in trouble to schedule an appointment with a personal finance specialist. It could start with your bank advisor, who might be able to offer you financing solutions that are much less expensive than credit cards, for example!
For more tips, discover our guides to help you pay off your credit card debts and manage your debts to improve your financial situation.
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