Just over half of Canadians pay off their credit card balance every month, 58 percent in 2016 to be exact.
This means 42 percent don't pay off their balance, paying high interest instead, often upwards of 20 percent!
Millennials do this most. Twenty percent pay the minimum due versus 11 percent of others.
There is a remedy to this cycle if you turn to zero balance transfer credit cards. But how do you know which cards are best? And how do you do the transfer?
We've put together tips on how to transfer balance from one credit card to another and how to find the best rate.
Keep reading to find out why this is such a great option, and then start transferring today to avoid paying that high interest. You can breathe now.
Let's just break it down straight away so you'll have no doubt as to why a low or no-interest credit card is the way to go to pay down debt.
If your credit card has an interest rate of about 20 percent and you owe about eight thousand, you'd pay about $1,600 a year. If your credit card has an interest rate of zero and you owe eight thousand and your rate deal lasts for a year, you'd pay zero in interest. '
You'd probably pay a small fee of one to two percent of the balance transferred, so $80 to $160. And that's it. No brainer.
Once you have your zero or low-interest credit card, the transfer is easy but let's walk you through it.
You can usually make the transfer online from your account on your credit card's dashboard. You can also mail in the request usually or do it by phone. That's our preferred way and for ease of explanation, let's review that because like anything, it's good to investigate and ask questions.
Just like you do when looking for health insurance options or car insurance options. Shop around. And when you get the person on the phone, ask questions.
To start, call your credit card and let them know you want to do a balance transfer and which option. Often, there will be a zero-interest option and a low-interest option.
The customer rep will then make the transfer. You will give the number of the high-interest card with the balance and indicate the amount to transfer. The charge of the transfer is added onto your balance.
Say you transfer 8K and the credit card asks 1 percent to give you the zero-interest rate, your balance will be $8080.
The rep will make the transfer and you will verbally approve it. It may take a few days, and you should be sure to cover all payments due on the other card until you are sure the transfer is done.
Be sure to always pay the amount due on the card so that you maintain the zero or low interest. Be aware of the end date of your deal. After that date, your interest will go up to a higher amount. They will tell you this when you set the deal.
There are a few options to look at when choosing the best credit card deals in Canada. Let's take a look.
First, there is the rate. Zero interest is the best deal. Most cards that offer zero interest also offer a low-interest rate too, often around two percent. This deal may cost less and go longer.
In Canada right now, there are only a few cards that offer zero-interest rates.
Second, there is the length of the offer to consider when choosing the best card. Zero-interest offers usually go for six-plus months depending on the market and the card. The longer the deal the better. The low-interest deals often go longer than the zero-interest ones.
Third, there is the cost of the offer. Zero-interest deals usually cost one to three percent of the balance you transfer. Low-interest deals cost a bit less.
The credit card will consider your credit history to determine if you are eligible for each offer but if you have multiple options, you will primarily be looking at rate, length of offer, and cost to determine which is best for you.
Some cards only offer deals to residents of certain provinces.
In addition to the basic financial savings, some credit cards offer perks such as air miles or purchase points that you can consider as well when choosing your card.
Here are a few cards to consider. Rates and deals are constantly changing based on the market so if you don't find what you need today, keep your eyes open.
This card offers a 0% balance transfer introductory rate which is why we like it. Also, there is no annual fee.
You have to have a fair to good credit score to qualify. If you live in Quebec, this offer doesn't hold. Check with them to find offers for Quebec residents.
Once you get the card, you are given a credit limit. You can transfer a balance up to this amount in the first 90 days of having the card.
The deal goes for 10 months, you during this time you pay no interest. You just pay your monthly payment.
The cost of this deal is three percent of the balance transferred. The minimum cost is $7.50.
After the 10 months, you pay 12.99% on the remainder of your balance.
This one has a great cashback rate and introductory balance transfer rate of 1.9%. This is the best cash back rate right now on a card.
You must have fair to good credit score to qualify and the offer for both cash back and balance transfers goes for 10 months.
The cost of the deal is zero if you just got the card! Yes, balance transfers and cash back is free to new cardholders. For existing cardholders, the cost is three percent.
Also, there is no annual fee on this card.
This card offers a zero-percent balance transfer rate for six months. You have to have a fair to good credit score to qualify.
The cost of the balance transfer is three percent with a minimum of $7.50.
What's great about this card and offer is that after the six months of zero-percent interest payments, they don't jack up the rate as many other cards do. The rate you pay after the six months is only 8.99% on your balance due.
This rate is good for regular credit card use as well. In other words, you can use this card even when you don't need to do a zero or low-rate balance transfer.
They do have an annual fee for the card of $39 though.
This one doesn't have a zero-interest rate but it does have a 0.99% interest rate for you if you want to do a balance transfer.
This deal is good for six months. After that, the rate you pay on your remaining balance is 12.99%.
This is a bit higher again than the Gold Mastercard but if you can get yourself to pay off the balance during the promotional period, this is still a great deal.
Actually, a good general rule of thumb should be to do your best always to pay off your balance when you get these deals.
This deal is a 1.99% balance transfer rate. The deal goes for up to six months. There is no cost for this transfer if you do it when you apply, which makes this a deal we love.
You can transfer half your credit line up to $7,500 maximum. You have to have good to excellent credit to get this card, so work on your credit if needed. You can check your score to see.
Then you can read about ways to improve your credit that you might not have thought of.
This card is also great for rewards. Look for the cashback rewards when considering it.
Also, consider that this is Canada's best deal for getting flat-rate cash back. You get 2.5% cash back in the first three months of having the card.
There's also a 0% annual fee on the card.
Now that you know how to transfer balance from one credit card to another, you can take advantage of the amazing credit cards offers out there and mentioned here. This will allow you to take time to pay off that debt.
And this means you'll have time and resources to do what you love. Like travel. We love to travel. And we also like to minimize our risk, as with credit cards.
So do your transfer, pack a suitcase, and read about how to get secure with travel insurance and travel health insurance.
Chop, chop, time is of the essence until you get your balance transferred. Then you can relax!