How Does a Credit Card Balance Transfer Work?

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Alexandrine Bertrand
Alexandrine Bertrand Alexandrine Bertrand
An avid solo traveller, Alexandrine is an expert on loyalty programmes such as Aeroplan, Avios, AIR MILES, Flying Blue and Marriott Bonvoy. With a budget-conscious approach, she helps travellers make the most of their points and miles to experience affordable, off-the-beaten-path getaways. She also shares a love of gastronomy and enjoys exploring local flavours and culinary traditions.
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Une personne tient une carte bancaire devant un ordinateur portable
To the point Credit card balance transfer is a tool that should be used wisely. Here are our tips if you ever need to use it.

Balance Transfer

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:

  • Being punctual when time comes to pay our balance
  • Having a reasonable “available credit” ratio
  • Credit history
  • The types of credit held
  • New credit inquiries

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.

Lower Interest Rates

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.

Terms and Conditions

Different terms and conditions govern a credit card balance transfer, and failing to comply with them can have negative consequences!

Balance Transfer Fees

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.

Balance Transfer Period

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 Duration of the Promotional Interest Rate

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.

Clauses on Missed Payments

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!

Additional Advice

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.

Plan Your Repayments

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.

Temporarily Stop Using Credit

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.

No Purchases on the New Card

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.

Schedule an Appointment with a Specialist

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!

Balance Transfer Offers

Come to discuss that topic in our Facebook Group!
Jean-Maximilien Voisine
Jean-Maximilien Voisine
Jean-Maximilien, President and Founder of Milesopedia, is a recognized expert in rewards programs, credit cards, and travel in Canada and France. Approaching forty and a father of two, he has travelled to over 100 countries, half of them with his children and his wife, Audrey. Specializing in top loyalty programs like Aeroplan, American Express Membership Rewards, and Marriott Bonvoy, he guides travellers to maximize their benefits across North America and Europe.
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