Recently, we’ve been trying to learn more about balance transfers outside the U.S. This guest post comes from Janet, a Canadian credit card blogger who sheds some light on what types of offers are available up north.
If you want to pay down your credit card debt, one of the things you can do is create a plan that includes a low interest balance transfer. Since less of your money is going toward interest payments, you can pay down your principal faster. In Canada, there are a number of credit card offers that allow you to do this. However, many in the United States might be surprised to find that 0% balance transfer and introductory interest rates are practically non-existent in Canada.
Rewards Credit Card Offers
In Canada, you can expect that your balance transfer rate is most likely going to be about 1.99% for a rewards credit card. Many Canadian credit card rewards programmes have interest rates of between 17.99% and 19.99% when the introductory rate ends, usually in six to 10 months. Some rewards cards can be quite generous, but it is a good idea to pay off your balance transfer amount within the introductory period, since the regular interest rate can quickly erode the value of any rewards that you earn. There are also a number of credit cards with balance transfer interest rates of 4.90% and 5.90%.
Long Term Balance Transfer Interest Rates
Canadian credit cards also come with interesting offers related to longer-term balance transfer rates. You can find credit cards that guarantee a low rate for three years. Credit cards of this type are not common in the U.S. With these credit card offers, it’s possible to lock in a low rate of 5.90% for three years. It’s not 1.99%, but if you have a large amount of credit card debt that cannot be paid off in six months, it can be helpful to have a card that will allow you to pay down your debt at a lower rate than you would get with many bank loans. As long as you make your payments on time, and stay within the credit limit, you will see a little more breathing room as you pay down credit card debt.
Low Interest Credit Cards
For Canadians planning large purchases, or who need even more time to pay down debt, low interest credit cards can be a help. These are Canadian credit cards with relatively few perks, and are rarely rewards cards (although some of them are). Some of these cards come with a fixed interest rate of between 9.99% and 11.90%, offering the predictability that comes with knowing what you will pay each month. Other cards guarantee a rate for three years and then use a “prime plus” formula to set the rate going forward. With low interest credit cards, this is usually in the neighborhood of prime plus 3.75%. Some low interest credit cards in Canada may come with an annual fee. In many cases, you will need good credit to qualify for a low interest credit card.
Janet is a blogger and personal finance writer for CreditCardsCanada.ca, a web site specializing in helping consumers find the best Canadian credit cards.
