Carrying debt on a high-interest credit card? One way to tackle this problem is to do a balance transfer – whereby you move debt from one high-interest credit card to a new one with a much lower (or no) interest rate.
This smooth move could save you hundreds of dollars in interest, allowing you to pay down your debt faster. A balance transfer credit card is a card with very low or no monthly interest on balance transfers.
Basically, you’re using one card to pay off another, while also taking advantage of a rock bottom interest rate that’ll make your payments more manageable.
Here are our top picks for the best balance transfer credit cards in Canada:
Overview of Best Balance Transfer Credit Cards in Canada 2020
|Credit Card||Best For||More Info|
|CIBC Select Visa* Card||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||Read On|
|Tangerine Money-Back Credit Card||Cash back rewards + low introductory balance transfer rate||Read On|
|Best Western Mastercard® credit card||Very low introductory balance transfer rate + rewards||Read On|
How to Choose a Balance Transfer Credit Card
When choosing a balance transfer credit card, here are five things to be on the lookout for:
- Introductory interest rate on transferred balances: The lower the interest rate, the better. Paying 0% is the best-case scenario!
- Length of promotional grace period: The amount of time the promotional rate is in effect varies card to card. The longer, the better – especially if it’s a lengthy 0% timeline.
- Balance transfer fee: Typically expressed as a percentage of the balance you’re moving, this fee is tacked onto your total.
- Annual fee: Some balance transfer cards have an annual fee, so work that into your calculations. A card with no annual fee is best for transfers.
- Regular rate: What is the interest rate after the grace period? Although your plan should be to pay down your debt before the low-interest promotion expires, you don’t want to be caught out paying a higher-than-average rate should you need to take more time.
- Rewards: Sweetening the pot, some balance transfer cards also allow you to collect rewards. Carriers of the Best Western Mastercard® credit card will receive 20,000 points—enough for a free night’s stay—on their first purchase plus additional points thereafter.
One thing to note: the low-interest rate for balance transfers is typically offered on an introductory basis for a finite period.
After the promo expires, the balance is charged at a much higher rate. So your goal should be to pay down your balance before the promotion period ends.
Best Balance Transfer Credit Cards in Canada
CIBC Select Visa* Card
If you’re seeking a 0% balance transfer credit card with a long promo period, take a look at the CIBC Select Visa* Card.
As a welcome offer, it offers a 0% interest rate for up to 10 months on balance transfers, with a 1% transfer fee.† Plus, you’ll get a first-year annual fee rebate, so signing up is a no-brainer.†
After the promo period expires, you’ll get a low-interest rate of 13.99% on purchases and cash advances.† It’s ideal for consolidating your debt onto one card and reducing your interest payments.
- Annual Fee: $29 (first-year annual fee rebate)†
- Annual Interest on Purchases: 13.99%† | Annual Interest on Cash Advances: 13.99%†
- Minimum Income Requirement: $15,000 household
- Credit Score Required: Good
- Welcome Offer: 0% interest rate for up to 10 months on balance transfers with a 1% transfer fee†
- Other Perks: Low interest rate on purchases and cash advances
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.
Tangerine Money-Back Credit Card
The Tangerine Money-Back Credit Card is offering a sweet balance transfer deal to new customers: make a transfer within 30 days of opening your account and pay only 1.95% for 6 months, after which time you will pay the standard interest rate of 19.95%. This is an attractive offer, especially combined with no annual fee and Tangerine’s cash-back benefits of 2% on eligible money-back categories.
- Annual Fee: $0
- Minimum Income Eligibility: $12,000
- Credit Score Required: Good to Excellent
- Welcome Offer: 1.95% introductory interest rate for 6 months when you transfer a balance within 30 days of opening your account.
- Balance Transfer Fee: 3% of a minimum of $5.00
- Other Perks: Automatic, monthly reimbursement to your credit card balance or savings account
- Other Card Info: Purchase APR: 19.95% | Cash Advance APR: 19.95%
Best Western Mastercard® credit card
In addition to a generous 10-month grace period, the Best Western Mastercard® credit card is a natural contender because of its rewards program.
Upon sign-up, you can get a balance transfer at 1.99% for 10 months* with a 1% transfer fee (minimum $7.50 fee) – one of the top promotions in Canada.
After that, the interest rate on transferred balances will be 22.99%. Customers earn Best Western Rewards® points on all spends that can be redeemed towards hotel stays, dining, gift cards, and more, and you will receive 20,000 Best Western Rewards® points after your first eligible purchase—that’s enough for a free one-night stay!
With no annual, this card offers great perks to frequent travellers.
- Annual Fee: $0
- Minimum Income Requirement: N/A
- Credit Score Required: Fair to Good
- Welcome Offer: 20,000 Best Western Rewards® (after first eligible purchase)
- Other Perks: Redeem rewards for hotels, dining, gift certificates, and more
- Interest on Purchases: 19.99% | Interest on Cash Advances: 22.99% | Interest on Balance Transfers & Access Cheques: 22.99%
*This offer is not available for residents of Quebec. For residents of Quebec, please click here.
Comparison of Best Balance Transfer Credit Cards in 2020
Credit Card Annual fee Balance Transfer Intro Rate CIBC Select Visa* Card
$29 (first year annual fee rebate) 0% for 10 months, 1% Transfer Fee* Visit Site
Tangerine Money-Back Credit Card $0 1.95% for 6 months Visit Site
Best Western Mastercard® credit card $0 1.99% for 10 months Visit Site
Best Western Mastercard® credit card: *This offer is not available for residents of Quebec. For residents of Quebec, please click here.
Why Get a Balance Transfer Credit Card?
Transferring a balance can be an excellent strategy for consolidating debt and getting you back in the black.
When moving outstanding debt from a high-interest credit card onto a balance transfer credit card, you can either stop or greatly reduce the accumulation of interest while buying time to pay down your principal.
For example, imagine you have $2,500 in debt sitting on a credit card with the typical interest rate of 19.99%.
The interest on that debt totals around $500 over a year—that’s no small change! Instead of chipping away at the debt while interest accumulates, you could send that debt over to a balance transfer credit card at a lower interest rate and pay down the principal with little or no interest accumulating. In the long-run, this savvy strategy could save you some serious coin.
In general, balance transfer cards are a very good idea for small or medium amounts of debt. Since you can transfer debt from multiple cards, they work like a charm if you’re trying to consolidate what you owe.
Just make sure to read the fine print, as interest rates and grace periods vary for each credit card.
Balance Transfer Card Best Practices
Get the most from your balance transfer credit card by following these savvy strategies:
- Don’t make new purchases on your balance transfer card: Your balance transfer is charged at a low or 0% rate of interest, but there is a different interest rate for new purchases. If you make purchases on the same card, your payments will be equally split between your balance transfer and the purchase amount. The idea in using a balance transfer card is to pay down debt fast, and this simple mistake will stretch out your repayment time—and trigger interest on the purchase amount. It’s a good idea to have a separate card for new purchases, so consider leaving one of your existing accounts open—or look into getting a low-interest credit card.
- Don’t exceed your credit limit: Some companies allow overspending – and if that happens, there’s a chance of losing your introductory low-interest rate.
- Pay your minimum monthly payments: If you miss a payment deadline, you could lose your low introductory interest rate.
- Keep track of the time: Like all good things, the promotional period must come to an end. When it does, you’ll be charged at a much higher interest rate. Aim to pay off your debt in full, but failing that, give yourself time to transfer your remaining debt to another balance transfer card.
Still got questions? Read more about how to transfer a credit card balance like a boss.
The Final Word
If you’re one of the many Canadians holding a modest amount of debt, you should definitely consider getting a balance transfer credit card to lighten the load.
With typical credit card interest rates running at around 20%, a small money misstep can turn into an onerous obligation—and fast. Luckily, the smart and strategic use of balance transfer credit cards can help minimize the financial blow.
Just remember to shop around for the right one: look carefully at the introductory interest rate, regular interest rate, annual fee, and balance transfer fee to see which credit card best matches your needs.
With a little strategy and determination, you can eliminate your debt in no time at all.
The Best Credit Cards by Category:
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This post was not sponsored. The views and opinions expressed in this review are purely my own.