Blog

How to Come Out Ahead on Credit Card Balance Transfers

By Debt.ca on June 9, 2014 No Comments

Credit card debt is one of the most profitable forms of debt for the big banks, so it should come as no surprise that banks are fighting for your business. If you have a large outstanding balance on your credit card and you’re already up to your ears in debt, a credit card balance transfer can seem like a lifeline. However, before you sign on the dotted line, it’s important to understand if this will help or hinder your financial situation.

What is a Credit Card Balance Transfer?

As the name suggests, a credit card balance transfer is when you transfer your outstanding balance from one credit card to another. If you’re carrying a balance on your credit card, why would you go through the trouble of transferring your debt to another lender? It’s because lenders typically offer low introductory interest rates on balance transfers as a marketing tactic to lure you in. Lenders hope that once you sign up for a credit card with them, you’ll take out other financial products like mortgages and lines of credit.

If you’re paying interest on your existing credit card at a typical rate of 19 per cent, you’ll quickly rack up credit card debt. That’s because credit card companies calculate your interest based on your daily outstanding balance – it can take you years and cost you thousand in interest if you only pay the minimum. Credit card companies offer balance transfer for as little as 0 per cent – that’s right, you could transfer your outstanding credit card debt and receive a break from paying sky high interest.

Why Should I Take Advantage?

If you’re running into temporary financial difficulties from job loss or illness, a balance transfer can offer a reprieve from racking up a lot of interest. While most insurance companies offer balance protection insurance, a balance transfer is usually a lot less costly since you avoid paying the monthly premiums of insurance.

Why Balance Transfer Might Not Be So Great

As the saying goes, there’s no such thing as a free lunch. Although credit card companies offer low introductory interest rates, there’s a catch. More often than not, there is a fee required to transfer your balance – most companies charge between one per cent and five per cent, based on how much you’ll be transferring. For example, if you’re transferring $10,000, you’ll typically pay between $100 (one per cent) and $500 (five per cent).

How Do I Come Out Ahead?

The best way to come out ahead with a credit card balance transfer is pay off your outstanding balance before the promotional period ends (typically six months). You can accomplish this by creating an aggressive repayment plan. If your cash flow is tight and you’re making extra payments on your mortgage, you should halt those payments immediately and instead use them towards paying down credit card debt. As long as you remain committed to repaying debt, balance transfers can be a great way to manage your debt.

Debt.ca

Admin


Tackle holiday debt now

By Rubina Ahmed-Haq on January 13, 2017

The holidays are expensive. We know that. According to a recent survey from savings destination RetailMeNot.ca, the average Canadian spent almost $1000 this past holiday season on food, drink, travel and gifts. Another survey by PC Financial finds 77 per cent agree the holiday season tends to be more expensive than planned. If you went over…

4 Money Moves You Can Do To Start The Year Off Right

By Andrew Daniels on January 2, 2017

With 2016 in the review mirror, it’s time to turn our attention to the amazing year ahead, and see what 2017 has to offer. With all of the possibilities and opportunities it’s hard to know where to begin. To make the most of your money this year, make sure to get these money items off your checklist…

How to Set New Year’s Financial Goals and Actually Stick to Them

By Jordann Brown on December 27, 2016

As the New Year approaches many Canadians will begin planning their resolutions, and many of those resolutions will be financial in nature. Money-based resolutions are the third most popular type, yet only 19% of Canadians keep their resolutions for the entire year. That’s because setting a goal is one thing, but sticking to it is…

Things You Should Always Buy at a Dollar Store

By Amanda Reaume on December 15, 2016

Dollar stores are great places for thrifty shoppers, but anyone who has ever used a dollar store cotton swab knows that there are just some things that you shouldn’t buy there. So, what should you be buying at a dollar store? As someone who has saved hundreds, if not thousands of dollars by shopping at dollar stores over…

No Comments Leave a Comment  

Leave a Comment

Free Savings Estimate

How much do you owe?

$100,000

$5,000
$100,000
Live Chat
Welcome to our Live Chat
Agents are not available at this time. Please leave a message. Thank you.
First Name
Last Name
Phone
Email
Postal Code
Debt Amount
 
PHP Live! powered