Benefits of Balance Transfer Credit Card
The idea of adding another credit card to your collection might not appeal to most people, but this is a good solution to reduce the credit burden. There are several distinct advantages of this program that can make getting a new credit card worth your while. Here are some of them:
- Your debt will be easier to manage. Instead of keeping track of several credit card bills at once, you can focus on just one.
- You can reduce the number of credit cards you have by clearing all debt and canceling a few. For example, if you have 5 credit cards and you can make do with two or three, you can clear the bills from a couple and then cancel them. This will help you limit your expenses as well.
- You could potentially save hundreds of dollars on interest rates if you pay off all your debt during the promotional period. For example, if you’re in a stable financial situation, you can transfer the debt to the balance transfer credit card and pay it off in a year.
- You won’t have to look at alternative solutions to reduce your debt. For example, you won’t have to apply for debt assistance programs like a consumer proposal in order to pay off your debt. Such programs can have an impact on your credit score and limit your ability to borrow money in the future.
As you might have guessed, these credit cards are only suitable for people who are responsible with their money and know how to use a credit card wisely. If you intend to pay all the monthly bills on time and keep your expenses in check, the balance transfer credit card is a great option for you.
Most Popular 0% Balance Transfer Credit Cards Canada 2017
Compare Balance Transfer Credit Cards Canada
A Balance Transfer Credit Card isn’t for everyone so it’s important to assess your financial situation and your requirements carefully. Here are some things you should consider before you before you apply:
- Financial Considerations – A balance transfer isn’t free of cost and you don’t get a low-interest credit card for all your purchases. You will have to pay balance transfer fees and regular interest rates on new purchases with the new card. You should also consider the standard interest rates applicable when the promotional period ends.
- Balance Transfer Fees – These fees are typically 1% to 5% of the debt amount you transfer over to the new credit card. This varies from company to company so if you have a debt of $10,000 and the transfer fees are 5%, you will need to pay $500 for the transfer. Sometimes the combination of transfer fees and the interest rates can make this option unsuitable for some people.
- Regular Purchases – If you use the balance transfer credit cards for new purchases, you will have to pay the standard interest rates. When you make your monthly payments, the money will go to pay off your low-interest debt rather than your high-interest debt so you will accumulate interest on your new purchases until your balance is completely paid off. That can prove to be expensive.
When you apply for a balance transfer credit card, look at the low-interest rates as well as the standard interest rates. Also compare the promotional period and the annual fees of different cards. You should also compare the rewards programs to gain added benefit. These factors will help you choose the best card for your requirements.