Transfer Credit Card Balances
Are you feeling overwhelmed by high-interest credit card debt? You’re not alone. Many people find themselves paying more in interest than on the principal amount of their debts, making it a challenge to get ahead financially. One tool that could help is to Transfer Credit Card Balances.
A balance transfer lets you move your existing high-interest balances to a new card with a lower interest rate or even a zero percent promotional period. This simple action can save you money and simplify your payments into one manageable account.
In this blog post, we’ll guide you through understanding how balance transfers work, choosing the right card for your needs, and avoiding common pitfalls. Get ready to take control of your credit card debt.
Key Takeaways
- You can save money by moving your debt to a card with lower interest rates. Remember, many cards offer a period where they charge you zero percent interest.
- Always look at fees when choosing the right balance transfer card. Cards like MBNA True Line® Mastercard® and CIBC Select Visa* Card have different fees that can affect your savings.
- Pay off your transferred balance before the promotional period ends. This way, you avoid paying higher interest later on.
- Your credit score matters for balance transfer deals. A high score may get you better offers with longer zero-interest periods.
- Be careful not to spend more after transferring a balance. Focus on paying down your debt to really benefit from the move.
Understanding Balance Transfers
A balance transfer means moving what you owe on one credit card to another card. This can save you money on interest and help manage your debt better.
What is a balance transfer?
A balance transfer moves your debt from one credit card to another, usually a new one with lower interest rates. This method can save money, especially if the new card has a promotional period with no interest.
Many cards charge a fee for this service, so it’s wise to check the conditions first.
People often use balance transfers to handle high-interest credit card debts. The goal is to pay off the amount moved during the low or zero interest period. By doing this, you avoid the higher charges on your original account.
Always read the terms carefully, as both transfer fees and promotional offers may change how much you actually save.
How do balance transfers work?
To start a balance transfer, you need to give the new credit card company your old account details and how much money you want to move. This step is simple but very important. The new issuer might let you do this online or over the phone.
Sometimes, they send checks that you can use to pay off other debts with the transferred amount. This way, your high-interest debt moves to a card with lower interest rates.
Making payments on time is key, even if your new card has a 0% interest rate for starters. According to the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, any payments must first cover balances charging higher interest.
This rule helps you save money by lowering what you pay in interest overall. Always aim to meet at least the minimum payment due on time every month to avoid extra fees and keep your credit score healthy.
Evaluating Balance Transfer Cards
When looking at balance transfer cards, finding ones with low fees and long no-interest periods is key. Compare the interest rates and read about any charges to make sure you’re getting a good deal.
Key features to look for
Look for cards with low or no annual fees to save money. For example, the MBNA True Line® Mastercard® does not charge an annual fee. This can keep costs down over time. Choosing a card that offers a zero percent promotional interest rate can lead to big savings.
Both the CIBC Select Visa* Card and BMO® Preferred Rate MasterCard® offer attractive introductory rates.
Consider the length of the promotional period too. Cards like the MBNA True Line® Mastercard®, with its 12-months zero percent offer, give more time to pay off your debt without interest adding up.
Also, pay attention to balance transfer fees as they impact your total cost. The lower these fees, like CIBC’s 1% transfer fee compared to others, the better it is for you.
Comparing interest rates
Comparing interest rates is a crucial step in choosing a balance transfer card. This table breaks down key interest rates of notable cards:
| Credit Card | Interest Rate on Purchases | Balance Transfer Promotional Offer |
|---|---|---|
| MBNA True Line® Mastercard® | Award-Winning Low Rate | Best Balance Transfer Option |
| BMO® Preferred Rate MasterCard® | 13.99% | Varies Based on Credit Score |
Each card offers different rates. The MBNA True Line® Mastercard® stands out for low-interest rates. The BMO® Preferred Rate MasterCard® has a 13.99% rate on buys. Promotional terms change based on your credit score. Always check the regular rates after promotional periods end. Choose wisely to save on interest and manage debt better.
Understanding fees and charges
After comparing interest rates, it’s crucial to consider fees and charges on balance transfer credit cards. These fees can quickly add up, affecting the total cost of transferring a balance.
Most credit card companies charge a fee for each balance transfer. This fee usually ranges from 3% to 5% of the amount you’re moving over. For example, if you transfer $3,000 from one card to another with a 3% fee, you’ll pay $90 just for the transaction.
These charges also reduce your available credit limit on the new card. If your new card has a limit of $10,000 and you move over $3,000 plus pay a $90 fee, you’re left with only $6,910 in available credit.
It’s essential to account for these costs when planning a balance transfer and ensure they don’t eat into your savings too much. Always read the fine print related to any fees or additional charges that could apply before making a decision.
Benefits of Balance Transfers
Balance transfers can help you save money on interest payments. They also make it easier to manage all your debts by combining them into one.
Potential savings on interest
Transferring a credit card balance can lead to big savings. For example, moving a $6,000 balance with a 20% annual percentage rate (APR) to a new card offering 0% APR saves you $1,080 if you pay it off during the promotional period.
This process includes paying a 2% transfer fee, which adds up to $120. It means more money stays in your pocket instead of going towards interest.
Moving forward, let’s talk about how consolidating debts into one payment can simplify your financial life and possibly save even more money.
Consolidation of debts
Saving money on interest can lead to an easier way to handle your debts. By using a credit card balance transfer, you can pull all your high-interest debt under one lower-interest card.
This method makes it simpler because you only have one payment to manage instead of many. Banks like BMO and MBNA offer cards designed for these transfers, making it more straightforward to get control over your finances.
Consolidating also helps in keeping an eye on how much you owe in total. It avoids the confusion that comes with juggling multiple lines of credit from different providers. With just one statement and one due date, staying on top of repayments becomes less complicated.
Entities such as Scotiabank and TD Bank have products that cater specifically to those looking at consolidating their debts, offering features like promotional annual interest rates (AIR) that reduce the cost even further over a set period.
Short-term financial relief
Transferring your credit card balance can give you a break from high interest rates. For six to 18 months, you might not have to pay any interest at all. This means more of your money goes towards paying down what you owe instead of just covering the cost of borrowing.
It’s like hitting pause on your debt’s growth.
By moving your debt to a card with an introductory offer, such as the MBNA True Line Mastercard or the BMO Preferred Rate MasterCard, you get a chance to catch up. You can use this time to pay off your debt faster because every payment reduces what you owe, not just the interest.
This offers some breathing room for your budget and makes it easier to manage your finances without adding pressure from new loans or cash advances.
Common Pitfalls of Balance Transfers
While balance transfers can help, they might hurt your credit score, lead you to more debt, and the low interest rates don’t last forever. Keep reading to learn how to avoid these traps.
Impact on credit scores
Balance transfers can affect your credit scores. A hard credit inquiry happens when you apply for a new card. This may lower your score for a short time. Your credit utilization ratio also changes after you move debt to the new card.
If this ratio goes up, it could hurt your score. Make sure you check these impacts on your credit report.
It’s key to keep making minimum payments on time after a balance transfer. Missing payments can lead to losing the introductory APR and grace period, further damaging your score. Next, we will discuss the risks of accruing more debt through balance transfers.
Risks of accruing more debt
Taking on a new credit card for a balance transfer might seem like a good step towards managing debt. Yet, it can lead to more debt if not handled wisely. If someone transfers their debt to a card with a promotional annual interest rate (AIR) and fails to clear the balance before this period ends, they face high-interest rates after.
This situation makes it harder to pay down the debt.
People often use their new available credit as an opportunity to spend more, ignoring their repayment plan. Without strict budgeting and discipline, expenses can grow, and so does the debt.
It’s crucial to avoid using the transferred amount as an excuse to increase spending. Focusing on paying off the existing amount without adding more purchases is key to truly benefitting from a balance transfer.
Limited time promotional rates
Many credit card providers offer special deals with low interest rates for a short period. These promotional rates can help you save money when you transfer your credit card balance.
But these offers don’t last forever. After the promo period ends, any remaining balance will face the regular interest rate, which is usually higher.
Credit scores play a big role in what kind of deal you get. Not everyone will qualify for the best offers. If your credit score is high, you might get longer promo periods and lower fees.
It’s important to read all the details before making a transfer to avoid surprises later on.
How to Execute a Balance Transfer
To start a balance transfer, you first need to get ready. You should check your credit score and find out how much debt you can move over. Next, choose whether to do it online or by phone, or use a balance-transfer paper slip from the bank.
This step makes moving money from one card to another easy and fast.
Preparing for a balance transfer
Getting ready for a balance transfer is a smart move to manage your credit card debt. It helps you save on interest rates and combine your debts into one payment. Here’s how to prepare:
- Check your current credit card balances and interest rates. Knowing what you owe and the rate of interest you’re paying is the first step.
- Look at your credit score through a credit check. A good score usually means you qualify for the best balance transfer offers.
- Research cards that offer 0% interest rates for balance transfers. Not all offers are the same, so find one that suits your needs.
- Read the fine print to see if the 0% rate requires a credit check or if it’s automatic upon approval.
- Calculate the transfer fee, which is often 3% to 5% of the amount you want to move over. This cost will affect your savings.
- Ensure the transfer amount won’t exceed your new card’s credit line. Your available line of credit limits how much debt you can shift.
- Consider cards with rewards programs, like cash-back or discounts, which can add value beyond just a balance transfer.
- Look for additional perks such as purchase protection, fraud protection, and zero dollar liability that some cards offer.
- Decide how you’ll do the transfer: online, over phone, or using balance-transfer checks from the issuing bank.
- Plan how you’ll pay down the transferred balance before any promotional periods end to avoid facing high-interest rates afterward.
By following these steps, you set yourself up for success with a balance transfer, making it easier to handle your credit card debt wisely.
Online or phone transfer processes
After you’re ready for a balance transfer, the next step is choosing how to do it. You can either go online or call the credit card company. Here’s how each process works:
- Go to the credit card’s website.
You need a computer or a smartphone. Find the section for balance transfers. You will enter details about your old debts. - Type in account information.
Include the credit card or loan accounts you want to move money from. This tells your new company where to get the debt. - Enter how much money you want to transfer.
Decide on the amount. Make sure it does not exceed your limit on the new card. - Submit your request online.
After checking all details, click submit. Doing this sends your information securely to the credit card provider. - Or, call customer service.
Find the phone number on your credit card statement or website. Prepare to give them your details over the phone. - Provide personal and account information.
Talk about which debts you’re moving over. Make sure to have account numbers and amounts ready. - Confirm transfer details with a representative.
They will ask questions to confirm what you want to do and help complete the process. - Wait for confirmation.
Either method ends with waiting for an email or letter saying your request got approved.
This simple guide helps move debt from one place to another without hassle, potentially saving on interest rates and consolidating payments into one manageable amount every month.
Handling balance-transfer checks
After discussing how to transfer balances online or by phone, let’s focus on using balance-transfer checks. These checks allow you to move your credit card debt under more favorable terms.
- Receive your checks from the new issuer after your balance transfer request gets approved.
- Make sure these checks are linked to an account with a low interest-rate promotion.
- Write a check to pay off the credit card balance you’re transferring from.
- Confirm that the amount you write doesn’t exceed your balance transfer limit.
- Deposit this check directly into your bank account if paying off a loan not linked to a credit card.
- Keep an eye on the expiration date of the promotional rate; use your checks before this date.
- Understand that any amount transferred will be subject to the promotional rate until paid off, as long as you meet the terms.
- Monitor your accounts closely to ensure the transferred balance shows up on your new account and decreases from the old one.
- Contact customer service if there are any issues or delays in processing your balance-transfer check.
- Read all terms related to balance transfers, including fees and charges, which might apply when using these checks.
Using these steps can simplify managing your credit card debt through balance-transfer checks, making it easier to benefit from lower interest rates and consolidate debts efficiently.
Choosing the Right Card for a Balance Transfer
Picking the right card for moving your debt involves looking at fees and how long the no-interest period lasts. Cards like BMO CashBack Mastercard, Scotiabank Value Visa, and others may offer low transfer charges or extended times without interest, helping you save money while you pay down what you owe.
Best cards for low fees
Finding the best cards for low fees is crucial for anyone looking to transfer their credit card balances. The goal is to save money, and choosing a card with minimal fees is key to achieving that. Below is a comparison of two cards that stand out for their low transfer fees.
| Credit Card | Introductory Rate | Transfer Fee | Annual Fee |
|---|---|---|---|
| MBNA True Line® Mastercard® | 0.00% for 12 months | 3% | No annual fee |
| CIBC Select Visa* Card | 0.00% for 10 months | 1% | $29 |
The MBNA True Line® Mastercard® offers a 0.00% rate for the first 12 months, with a 3% fee for transferring a balance. It does not charge an annual fee. This makes it an excellent choice for those looking to reduce their costs while paying down their debt.
On the other hand, the CIBC Select Visa* Card also provides a 0.00% introductory rate but for 10 months. Its transfer fee is lower at 1%. Despite having a $29 annual fee, it remains a competitive option due to its low transfer fee.
Both cards offer a way to save on interest payments and reduce the overall cost of debt. Choosing between them depends on one’s preference for a longer zero-interest period or a lower balance transfer fee.
Best cards for long promotional periods
Transitioning from discussing cards with minimal fees, let’s examine those known for offering extensive promotional periods. These options allow users more time to manage their debt without the burden of high interest.
| Card Name | Promotional Period | Balance Transfer Fee |
|---|---|---|
| MBNA True Line® Mastercard® | 0.00% for 12 months | 3% |
| BMO® Preferred Rate MasterCard® | 0.99% for 9 months | 2% |
These cards stand out for giving users a lengthy timeframe to pay off their balances. The MBNA True Line® Mastercard® leads with a zero percent rate over 12 months, imposing a 3% transfer fee. Following closely, the BMO® Preferred Rate MasterCard® provides a slightly higher rate of 0.99% for nine months with a 2% fee. Both cards offer a substantial window to reduce debt without accruing significant interest, making them top choices for those aiming to consolidate and eliminate their debts efficiently.
Evaluating card perks and rewards
After looking into the best cards for low fees and long promotional periods, it’s time to turn our attention to rewards and perks. Cards often offer more than just a way to transfer your balance.
For example, the BMO CashBack Mastercard gives you 5% cash back in the first three months. This means extra money back in your pocket just for using the card. It also has no yearly fee and a low interest rate of 0.99% for nine months on transferred amounts.
On top of savings from lower interest rates, some cards like the CIBC Select Visa* Card add even more value with extra benefits. These include extended warranties on purchases, protection if something you buy gets stolen or damaged soon after buying it, and coverage while traveling.
Choosing a card with these types of perks can make managing your debt not only easier but also more rewarding in both short-term savings and valuable bonuses over time.
FAQs on Balance Transfers
Find answers to common questions about moving your card debt, like who can do it and how it affects your credit report. Check out more details to understand how different offers compare.
Eligibility for balance transfers
To get approved for a credit card balance transfer, you need to meet some requirements. Your income and how good your credit scores are play a big part. If you have higher credit scores, you’re more likely to get the okay for the transfer.
Credit card companies look at these things because they want to make sure you can pay back what you owe.
You cannot move your debt from one card to another if both cards are from the same lender. This means if you already have a Visa card with The Toronto-Dominion Bank, you can’t transfer that balance to another Visa offered by them.
You’ll need to pick a different company for the balance transfer.
Effects on credit history
After checking if you meet the eligibility criteria for a balance transfer, it’s key to understand its effects on your credit history. Balance transfers can lead to hard credit inquiries as lenders check your creditworthiness.
This might lower your scores temporarily. If you manage the new credit card wisely, you can improve your utilization ratios which is good for your scores.
Balance transfers offer a chance to streamline debt repayment under better terms. By moving high-interest credits onto a single card with lower interest rates or promotional offers, you handle fewer payments monthly.
Paying off this consolidated debt punctually boosts your repayment history, positively impacting your credit profile over time.
Comparing balance transfer offers
Comparing balance transfer offers is key to finding the best deal for your financial situation. Here’s a look at how to compare these offers effectively:
| Feature | Importance | Example |
|---|---|---|
| Interest Rate | High | 0.00% for 12 months with MBNA True Line® Mastercard® |
| Transfer Fee | High | 3% with MBNA True Line® Mastercard® |
| Promotional Period | High | 12 months of no interest with MBNA True Line® Mastercard® |
| Annual Fee | Medium | No annual fee with MBNA True Line® Mastercard® |
| Savings Potential | High | $1,080 saved by paying off a $6,000 balance during promotional period |
| Eligibility Requirements | High | Varies by card issuer |
To compare balance transfer offers, focus on the interest rate during and after the promotional period. Look at the transfer fee, as it can impact your savings. The promotional period length matters, longer is usually better. Check if there’s an annual fee. Estimate potential savings, like saving $1,080 by paying off a $6,000 balance at 20% APR during a promotional period. Finally, consider eligibility requirements, which vary by issuer. This approach lets you find an offer that fits your needs and maximizes savings.
Conclusion
Transferring your credit card balance can be a smart move. It lets you pay less interest and manage your debt better. Be careful to choose the right offer and watch out for fees. Make sure you know when the low-interest period ends so you don’t get surprised by high rates.
Smart planning and attention to details will help you save money and reduce what you owe faster.
FAQs
1. What does it mean to transfer credit card balances?
Transferring credit card balances means moving the amount you owe from one card to another, often to a card with lower interest rates like those offered by Citi or Visa.
2. Can I use balance transfers to pay off personal loans?
Yes, you can use balance transfers for paying off personal loans if your credit card company allows it and you might save on interest costs.
3. Are there fees involved in transferring a credit card balance?
Most times, yes. Companies usually charge a flat fee or a percentage of the transferred amount when you move your debt, so check the terms first.
4. How do rewards cards work with balance transfers?
Rewards cards like World MasterCard may offer points or cash back on purchases but be sure to read if these benefits apply to balance transfers as well.
5. What should I consider before doing a credit card balance transfer?
Before transferring, look at the lending rate of the new card, any fees involved, and if using services like Apple Pay affects your ability to get rebates or extended warranties on purchases.
