Balance Transfer Guide

Step 1: You apply for a credit card that has a balance transfer promotion (e.g. 0% for 12 months).

Step 2: Once approved, you request a balance transfer from your old card(s) to the new card. You provide the old account number and the amount to transfer. The new card issuer pays off that amount on the old card (or sends you a cheque in some cases) and adds it to your new card's balance.

Step 3: For the promo period, the transferred balance accrues 0% interest (or the stated low rate). You make monthly payments to the new card. Because interest isn’t piling on, more of each payment reduces the principal.

Step 4: After the promo ends, any remaining balance is charged the card’s standard purchase APR (often 19–24%). So the goal is to pay off as much as possible before that date.

Fees: Most balance transfers have a one-time fee—typically 1–3% of the amount transferred. That’s still usually much less than a year of interest at 20%.

Rates and offers change; always confirm on the issuer’s site. As of common Canadian offerings:

MBNA True Line Mastercard - Often features 0% on balance transfers for 10–12 months - Balance transfer fee (e.g. 1–3%) usually applies - No annual fee on many versions - Good for consolidating and paying down over a year

Other issuers (e.g. MBNA, TD, RBC, Scotiabank) periodically offer 0% or low-rate balance transfer promos for 6–12 months. Check their "balance transfer" or "debt consolidation" pages.

What to compare: - Length of 0% period - Balance transfer fee percentage - What happens after the promo (standard APR) - Whether new purchases on the same card get 0% (usually they don’t—and they may accrue interest first if you carry a balance)

Good fit if: - You have a chunk of existing credit card debt (e.g. $2,000–$20,000) - You can commit to a monthly payment that will pay off the balance (or most of it) before the 0% period ends - You won’t run up new debt on the old cards after transferring

Poor fit if: - You can’t resist using the new card for purchases (you’ll often pay high interest on new purchases while the transfer is at 0%) - You’re not disciplined enough to pay consistently—missing payments can end the promo and hurt your credit - The balance transfer fee plus any remaining balance after the promo would cost more than just paying down the current card aggressively

1. Making new purchases on the balance transfer card New purchases usually don’t get 0%. They often accrue interest immediately (or after the statement), and some issuers apply your payment to the 0% balance first, so the expensive purchase balance keeps growing. Use a different card for new spending.

2. Missing a payment One late payment can end the 0% promo and trigger the full standard APR on the entire balance. Set up autopay for at least the minimum.

3. Not paying off before the promo ends Plan your payments so the balance is $0 (or as low as possible) before the promotional period ends. Leftover balance will start accruing at the card’s regular rate.

4. Closing old cards and running up new debt Closing the old card can hurt your credit (utilization, age of accounts). Focus on not charging more on it; you can keep it open with a $0 balance.