Dealing with debt on a typical credit card is only dragging you down, all while keeping your interest rates up.
Balance transfer credit cards were literally designed to help cardholders tackle debt strategically with more affordable or 0% introductory APR periods and lower interest rates overall.
Not only do these low-interest and interest-free introductory periods allow you to catch up on repayments, they also help you target your debt rather than your interest rates (which is the real root of the problem). The result? You get to climb out of debt faster, leaving unnecessary and expensive surcharges in the dust.
Still, you might be wondering which balance transfer credit card eradicates debt best. To help you find the right contender for your case, we built the above Credit Card Balance Transfer Interest Savings Calculator. This calculator is programmed to compare how much you could be saving on your current credit/loan balance(s) if you transfer your lingering credit card balance to a Canadian balance transfer credit card.
How do Balance Transfer Credit Cards Work?
Before we dive in, let’s cover the basics.
Balance transfer credit cards limit or defer the amount of interest cardholders receive on their carried balance. They’re essentially a valuable vehicle for getting out of credit card debt.
Usually, good balance transfer credit cards will have the best balance transfer and interest rates during a promotional period, which can last up to a year. After this promotional period, these rates may rise, that’s why it’s best to apply for a balance transfer credit card with a promotional period that gives you enough time to pay off your debt – so plan ahead!
To transfer your current credit card balance, apply for a balance transfer credit card that you're eligible for. To check your eligibility and to ensure the card will cater to your needs, make sure you browse top offers with low balance transfer fees, low APRs, low interest promotional periods, and suitable credit limits to support your existing balance.
Our Best Balance Transfer Credit Cards blog post will help you navigate the best balance transfer credit cards on the Canadian market.
Once you successfully apply for a balance transfer credit card, you can initiate a balance transfer with your new credit card issuer, this is typically done online or by phone.
How Does a Balance Transfer Credit Card Compare to a Personal Loan?
The difference between a personal loan and a credit card balance transfer is that a personal loan can be used to cover multiple different types of debt, while credit card balance transfers are best suited to relieving credit card debt specifically.
Most of the time, personal loan interest rates are lower than credit card balance transfer rates after their promotional periods. During their promotional periods, balance transfer credit cards supply some of the best low interest or interest-free rates on credit card debt.
All in all, if you can pay off your credit card debt within your balance transfer credit card's promotional period, a credit card balance transfer is the superior option. However, if you're looking for a long-term loan that surpasses a year and maybe carries more than just credit card debt, a personal loan is best.
To learn more about these two debt consolidation methods, check out our Personal Loan Vs Credit Card Balance Transfer blog.
How to Understand Our Balance Transfer Calculator Results
Now for the fun part: playing around with our Credit Card Balance Transfer Interest Savings Calculator.
Basically, our balance transfer calculator estimates your potential interest savings when you swap your current credit/loan product(s) for a balance transfer credit card instead.
Here’s how to initiate a calculation:
- Start by inputting your current credit card or loan balance(s) into the first filter, indicating the value of your balance(s) and the associated interest rate(s) – you can add multiple products if needed.
- In the following filter, plug in the length of your interest term to help us accurately calculate costs and your potential savings within that time period.
- The final filter allows you to sift through various balance transfer credit cards and select multiple options for comparison. To make things easier, we’ve pre-selected some of the best balance transfer credit cards on the Canadian market.
As you interact with the filters, the interest graph will change according to your input, demonstrating how much you’ll ultimately be paying in your indicated loan term for each credit or loan product (including your current card/product).
Based on the height of each bar in the graph, you’ll be able to conclude which debt consolidation method (in this case, which balance transfer credit card) offers the lowest interest rates and fees during your specified time frame compared to your current product.
If a balance transfer credit card has a 0% introductory period that complements your loan term or even extends beyond it, it’s likely that this card will suit you best and save you the most money.
To keep things transparent, your best overall balance transfer credit card will be highlighted at the bottom of this page with a clear balance transfer breakdown and summary.
The Cost of Your Debt Without a Balance Transfer Credit Card
So, what happens if you don’t opt for a balance transfer credit card? In short, it’s going to cost you. How much? Just take a look at the savings table below the interest graph.
The amount you see represented in the “Interest Savings” column in this table is the amount you could be saving if you choose to swap your current interest product for one of the listed balance transfer credit cards.
Chances are, your current product doesn’t have an interest-free promotional period, that’s why you’re here. So, if you choose to stick with your current situation, not only are you repaying your carried balance in monthly instalments, but you’re also paying hefty interest fees on top of that. Simply put, your current product is asking you for extra handouts instead of actually lending you a hand.
What to Look for in a Balance Transfer Credit Card
To pinpoint the best balance transfer credit card, there are a couple of qualities you’ll want to look for:
- Different Credit Card Issuers: Typically, you cannot transfer carried balances between credit cards with the same credit card issuer. So, if you have credit card debt on a regular Scotiabank credit card, you generally cannot transfer that balance to, say, the Scotiabank Value Visa Card. In this case, you’ll want to look for another leading balance transfer credit card from a different credit card issuer, like the MBNA True Line Mastercard.
- Low Balance Transfer Fees: Unfortunately, balance transfers aren’t free. Instead, cardholders are subject to transfer fees which can range from 1% to 3% of the transfer amount, sometimes even higher. With this in mind, it’s best to scout out a balance transfer credit card with a low transfer fee or to compare the transfer fee to the grand scheme of how much you’ll be saving overall, which might help offset the expense.
- Long Promotional Periods: The longer you have to catch up on your repayments and spread out your total debt, the better. That’s why you’ll want to look for balance transfer credit cards with low or (ideally) 0% introductory periods that are extensive or complimentary to your repayment plan.
- Some Perks: It’s no secret that most balance transfer credit cards lack reward programs and added benefits, but there are a few cards that feature some insurance and perks to bulk up the appeal. The best non-promotional balance transfer credit card with benefits is the Scotiabank Platinum American Express Card, which includes a rewards program, extensive insurance coverage, and tons of travel-oriented benefits (including lounge access). The catch? An above average annual fee and no interest-free promotional period.
