Balance Transfers

Balance transfers pay off a credit card from one company to another for a lower interest rate and a small fee. A typical offer would be transferred over a balance for 0.99% interest rate for 10 months with a 2% fee. This means Timmy can take his Scotiabank credit card balance of $3,000.00. He can then bring it over to RBC (making the new balance on his Scotiabank card 0 and RBC $3,000.00). Lastly, he will pay only 0.99% on that specific balance with a small 2% fee of $60.00. (Regular interest rates apply to every purchase after this).

This can be an incredible tool. However, one thing to note is that if the balance is not paid off in full by the time the offer expires, you will pay a cash advance interest rate on the remaining balance. Also, if you do a balance transfer while you already have a balance on the card from other purchases, payment allocation applies. So, it would be best practice to only use a balance transfer if purchase balances are low or at zero.

The way the interest calculation is done is slightly different. Credit card balances are 19.99% for a full year but most balance transfers are for a maximum of 10 months. So, that 0.99% is every single day from the time the balance transfer is processed until the day the balance is paid off in full or the offer expires (can be less than 10 months if the offer is accepted late). For more information on interest calculation and how its charged refer to interest section.

The way the interest calculation is done is slightly different. Usually, credit card interest rates are 19.99% for a full year. However, most balance transfers are for a maximum of 10 months. So, that 0.99% is every single day from the time the balance transfer is processed until the day the balance is paid off (pay off debt) in full or the offer expires (can be less than 10 months if the offer is accepted late). For more information on interest calculation and how its charged refer to interest section.