Shop Canada's Best Balance Transfer Credit Cards

Balance Transfer Credit Cards

Whenever you need to pay off credit card debt or a major purchase, using a balance transfer credit card offers the quick relief you need. Balance transfers allow you to transfer your debt from one credit card to another, helping you to save on interest payments each month. Using balance transfer cards enables you to pay off your existing card balances and build up your credit score in the process. But it's important to know the pros and cons associated with such a card before getting one.

What Is a Balance Transfer Credit Card and What Are the Benefits?

Balance transfer credit cards allow you to keep all your outstanding payments on one card, so you can keep track of and pay off your balance accordingly. It's hard maintaining outstanding balances on multiple credit card accounts as you might lose track of the number of payments you need to make and also the deadlines attached to them. With a balance transfer credit card, transferring a balance is easy, and you can do everything in one place so that you can make one payment by a certain time.

One thing that stands out about balance transfer cards is that these credit cards come with very low interest rate offers. In some cases, they come with no interest rate at all to encourage you to get the card and use it as often as possible. These introductory offers are for a limited time, ranging from 180 days to a year. Depending on how the credit card works for you, the hope with these offers is that you’re using the card long-term as a reliable debt-control mechanism.  

You can use balance transfer cards to transfer debts that aren't credit card related, too. You may be able to move debts for things such as furniture, appliances, car loans, and other things that require a monthly payment. A no-interest balance transfer credit card facilitates these options, using checks from the bank issuing the card. There are other balance transfer card types that you can get including preferred rate and money back cards. Some even come with rewards and cashback incentives, which will be sure to catch your attention. These cards help you save money and keep it in one place while you're on the go.

How Do Balance Transfer Credit Cards Work?

Like cash advances, balance transfers aren't the first thing that most people offering financial advice would recommend to you. However, if you're doing a credit card balance transfer, the process is pretty straightforward.

When a balance transfer is being consolidated, you will indicate who you want to pay, confirm account numbers, and determine how much money you wish to transfer. Once your transfer is approved, your credit card company contacts your creditors or billers on your behalf and pays the amount you've stated. This process can take up to two weeks, but if you have any payments due before those two weeks pass, make them as soon as possible to avoid late fees.

Speaking of fees, balance transfer fees are inevitable when using these credit cards. These fees are determined as a percentage of the total amount you are transferring, with three percent being the typical charge. The more you transfer, the more fees you must pay. These charges can be a real pain if the card comes with an annual fee and offsets any money you might save from the generous interest rates you're getting.

Nevertheless, using a balance transfer card ensures more of your money goes towards paying off your debt rather than paying interest. You can use it for bill payments, transfer balances off gas cards or do just about anything. Make sure you compare the interest rates on your existing credit card with one on a potential balance transfer credit card before getting one. If it doesn't save you money in the long run compared to your current card, then it's not worth getting.

How Do You Decide What Type of Balance Transfer Credit Card to Get?

Consider the benefits you will get from using such a card, even when the introductory rates are gone. If you need a card that you can use on a consistent basis to pay off a credit card balance in one go, then go for it. If you’re someone who doesn't accrue high credit card debts, you're better served looking at other credit card types.

Look at the applicable balance transfer fees, interest rates on new purchases you make with the card as well as the standard rate once the promotional period expires. While using a balance transfer credit card can boost your credit score if you pay it off at the soonest possible opportunity, it can damage your score just the same. If you have a credit card with a balance exceeding 30% above your credit limit, your score is prone to taking a sizeable hit. Also, anytime you move your credit card balance to a card that doesn't have enough available credit, your score could drop. Standard interest rates range from 19.99% and up. So, make sure you have made the necessary financial adjustments to be able to use a balance transfer card once the introductory period ends.

You should also take note that qualifying for a balance transfer card isn't a given. When you apply for a card, the card issuer will examine your credit history, income, and other factors before rendering a decision. The best terms on these credit cards are saved for those with excellent credit. These transfer cards are given to people who have a good credit score and would like to keep it that way rather than to those rebuilding their score. Also, watch for cards that require you to transfer money within a set timeframe to receive the promotional rate. It might make sense to choose a card that doesn't have that stipulation or a credit card where transferring upfront isn't required.  

Compare the best balance transfer credit cards across Canada on shoptherate.ca and choose the right one to help you say goodbye to debt.