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Got credit card debt? There is a way out. One savvy strategy is to transfer your high-interest debt to a credit card with a lower interest rate -- otherwise known as a "balance transfer credit card." Read on to learn how to transfer a credit card balance wisely.

It’s awful to be trapped in a credit card debt spiral. Paying the monthly minimum on your statement barely moves the needle, and even if you can afford to pay more, it can still take months (or years!) to completely pay off your debt. One way to eliminate your credit card debt faster is to use a balance transfer credit card, which allows you to transfer your high-interest debt to a credit card with a lower interest rate. With a balance transfer credit card, you’ll get a limited period of time with a low-interest rate, ensuring each payment you make goes toward reducing principal, not just interest. It sounds like a great way to get back in the black, but there are a few essentials to know before you transfer your debt to a balance transfer credit card.

Applying for a Balance Transfer Card in 7 Easy Steps

How do you do a balance transfer? Here are seven steps on how to transfer a credit card balance.

1. Check Your Interest Rate & Balance

Be in the know: check your interest rate and outstanding balances on all your credit cards. Start by identifying the “annual percentage rate” (APR) or “annual interest rate” (AIR) – which is the yearly interest rate applied to your credit card. Is the interest rate higher than 12%? If so, you can get a better rate with a balance transfer credit card.

Secondly, do a full audit of all your outstanding credit card debt. To take advantage of a balance transfer card, you’ll want to transfer the entire balance of your existing card. But if you’re carrying a large balance on one or more cards, you’ll need to find a balance transfer credit card with a high enough credit limit to accept all the debt you’re transferring to it.

The bottom line? Do your homework: confirm your balance – including any pending changes – and look for a card with a credit limit that can accommodate the transfer. That way, you’ll avoid leaving a balance behind. And obviously, make sure the interest rate on the balance transfer card is lower than your current credit card(s).


2. Look for the Best Intro APR Period

Look for a balance transfer card that offers the lowest interest rate for the longest promotional period – like the CIBC Select Visa* Card. For new cardholders, it offers 0% interest rate for up to 10 months on balance transfers, with a 1% transfer fee. You can transfer up to 50% of your credit limit to this card and save on interest charges. Plus, you’ll get a first-year annual fee rebate, saving you bucks in the first year. Overall, a good balance transfer card typically comes with an introductory interest rate of 0%  and has a promotional period of between 9 to 12 months.

Learn more about the CIBC Select Visa* Card.


3. Read the Fine Print

We can’t emphasize this enough: carefully read your new credit card agreement and make sure you understand all the terms and conditions. For starters, search for any hidden fees buried in the fine print, as well as loopholes that could void your introductory interest rate on balance transfers. A few things to watch out for:

  • How much time do you have to complete a balance transfer? The more time you have, the better. For instance, there are credit cards that let you transfer a balance within 90 days of opening the account. That gives you ample time to complete the transfer.
  • What’s the annual fee? Make sure you can afford the annual fee or else shop around for a no annual fee credit card.
  • Is there a balance transfer fee? Most balance transfer credit cards charge a fee to transfer the balance. For example, if the fee is 3% and you transfer $8,000, you’ll incur a fee of $240. That one-time fee is likely less than the interest charges on your current card. Plus, there are balance transfer credit cards offering low transfer fees, such as the Scotiabank Value® Visa* card: the balance transfer fee is just $3.50.
  • What happens if you pay late? Typically, a late payment will void your promotional interest rate period and also cause the regular interest rate to kick in. To avoid this penalty, always make sure to make your monthly payments on-time, if not a few days early.
  • What is the interest rate after the promo period ends? If you still have an outstanding balance after the promo period ends, the regular interest rate on balance transfers will kick-in. Settle for no less than 12.99%.

4. Apply!

Once you’ve found the balance transfer credit card that best meets your needs, the next step is applying for the card. It’s the same process as applying for any credit card offered by a bank or financial institution.

But what’s different is that you’ll need to let the card issuer know about the credit card balance you’re transferring over, including the name of the card, account number, and (most importantly) the account balance. Fill out the application online and wait to see whether you are approved.


5. Activate the Card

Assuming your application is approved, once you receive your card, you’ll need to activate it to trigger the balance transfer process. You can do this online or over the phone.

This process can take several days, but may take up to a few weeks, so while you’re activating your new card and setting up the balance transfer, make sure you don’t miss any payments on your old credit card until you see the transfer go through.

Activating the card is not the same as opening the account. You open the account when you first apply and are approved for the credit card. In the case of a balance transfer card, the clock is now ticking. Remember, you may have a limited amount of time to transfer a balance and take advantage of a promotional offer. Activate your card right away to get the process moving!


6. Check Your Old Credit Card Account

Once the balance transfer is complete, check your old credit card account to ensure the entire balance was transferred over and you didn’t miss any additional charges.

Check every few days to see if your old card has received the funds from the transfer. It’ll be reflected on your account just like a regular credit card payment.

It’s important to stay on top of the situation and make sure everything goes through in a timely manner. Otherwise you might end up paying a late fee, plus interest on the card from which you transferred the balance.


7. Pay Off Your Debt

Once everything has been completed, the clock starts ticking on your promotional interest rate period. Make a plan to pay off your debt in full (or as much as possible) during this time to take full advantage of the low rate. If your balance is $5,000 and the promotional period is 0% for 12 months, then you can pay off your entire balance by making 12 monthly payments of $416.66.

Calculate your Balance Transfer Savings

Balance Transfer FAQ

Yes, if you have unpaid debt on a high-interest credit card. Getting a balance transfer credit card can ease your interest charges and help you pay off your credit card debt faster. When moving debt from a high-interest credit card onto a low-interest balance transfer credit card, you can either greatly reduce or even stop the accumulation of interest – buying you more time to pay down your principal.
While there’s nothing stopping you from applying for another balance transfer credit card to continue on with the low-interest promotional period, it’s not good. For starters, you’ll run out of options eventually and have to pay back the balance in full at some point. Plus, each new application will negatively impact your credit score. If you have multiple high-interest debts, and/or are prone to dipping into credit to pay for your living expenses, look for a consolidation loan through a personal line of credit.
Yes. Applying for too many credit cards can hurt your credit score because each application produces a “hard check,” which lowers your score by around 10 points each time. However, you can easily bounce back: your score will improve when you demonstrate that you pay your bills on time.
Not long. Once you’re approved for a balance transfer credit card, it may take up to 5-7 business days to receive your card. After activating the card, it can take up to 2 weeks for the balance from your existing card to be transferred to the new card.
Ideally, you should use the length of the promotional period to pay off your debt in full. To do that, divide your total debt by the number of months in the promotional interest period. That will give you the optimal payment to make each month. For example, let’s say you get a card with 0% interest for 12 months and you transfer a balance of $8,000. To pay it off in a year, you’d need to pay $666.67 per month. Just remember that after the promotional interest rate period expires, your rate will go back up to the “regular” interest rate. So you can carry over the debt, but you'll likely be paying a higher interest rate.

Final Thoughts: How to Pick the Best Balance Transfer Credit Card?

Paying a lot of credit card interest won’t put much of a dent in the actual amount of money you owe. This is especially true if you only pay the minimum monthly balance on your statement. If you pay $100 a month, but $50 goes toward interest, half your payment does nothing to reduce your debt. One reason why people get discouraged with their debt situation is because they fail to see progress. A balance transfer credit card, with 0% interest for 9-12 months, can help you make real progress and pay down your debt faster.

In terms of picking the best balance transfer credit card, there’s no “right” card. If you’ve got a large amount of credit card debt, you’ll likely benefit from a card with a low introductory interest rate on balance transfers and a long promo period. It may come with an annual fee or a balance transfer fee, but in reality, these fees might be minuscule compared to what you’re currently racking up in interest on your current credit card. If your debt is smaller and more manageable, you can afford to be a bit pickier. Shop around for a balance transfer credit with a low (or no!) annual fee and a rock bottom interest rate. Just make sure to put a plan in place to pay off the debt pronto. Ultimately, the point is to find a card that works for your unique financial situation.

If you’re still unsure, take a look at the best balance transfer credit cards in Canada. Whatever you decide, just know that you’re making the first step towards getting your finances back on track.

If you enjoyed this article, you may also like: The Best Canadian Credit Cards in Canada.

Conditions apply

Insurance coverage(s) included with CIBC credit cards are underwritten by Royal & Sun Alliance Insurance Company of Canada. You may contact the insurer at 1 866 363-3338 in Canada and the U.S or collect from elsewhere at 905 403-3338 or visit cibccentre.rsagroup.ca. Some insurance coverage(s) require purchase(s), common carrier fares, accommodations and other trip costs to be charged to the card to activate coverage. Other conditions may apply. For important information regarding coverage, eligibility requirements, benefits, pre-existing health/medical conditions, limitations and exclusions, see cibc.com/ca/credit-card/agreements-insurance.html and the insurance certificate(s) in your card package.

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