Credit card issuers offer balance transfers, but are they really a good solution for those who want to get their credit card balances to zero?
Marie-Eve Leclerc, director of web content at Milesopedia, explained to Journal de Montréal that balance transfer offers can actually help credit card holders catch their breath.
According to Marie-Eve Leclerc, by using a balance transfer, it is possible to put an end to a debt spiral: “It’s an excellent way to give yourself some oxygen, especially with a high-rate card. […] When you benefit from a zero rate, the debt does not increase, because the interest stops accumulating. We control the hemorrhage by focusing on reimbursement.”
Balance transfer offers are generally accompanied by deadlines that vary between 9 and 12 months, but in addition, those who take advantage of them must pay fees representing 1% to 3% of the amount transferred.
In return, when a credit card holder accepts a balance transfer offer, they are generally entitled to reduced rates, which are between 1% and 5%, in addition to a holiday on the annual card fees, lasting from 6 to 12 months.
When the offer ends, any outstanding balance will attract the card’s normal rate, but some cards also charge interest retroactively from the date of transfer.
According to Milesopedia in its list of the best credit cards with balance transfer, the CIBC Visa Select card, with a welcome rate of 0% over 10 months, no annual fees for the first two years, is an excellent choice.
We also find among the cards that stand out the Scotia Minima Visa, with a rate of less than 1% for nine months, with no annual fee for the first year.
It is important to know that if you are unable to meet the promotional deadline, it is advisable to use your line of credit or negotiate debt consolidation with your financial institution.
Your priority in such a situation would be to benefit from a more lenient rate and a longer term maturity.
For those who are worried that their credit score will be affected by a balance transfer, remember that reducing your debt will be to your advantage.
Finally, note that the Consumer Protection Office (OPC) revealed that it would take 13 years and 4 months to repay $20,000 by making the minimum payment, with credit costs of $9,870.71.
