A balance transfer moves debt from one credit card (or loan) to a new card offering a low or 0% promotional interest rate. Done correctly, it can save hundreds to thousands of dollars in interest and accelerate debt repayment.
How a Balance Transfer Works
- Apply for a new card with a promotional balance transfer offer (e.g., 0% for 10 months)
- Request the transfer — provide the account number and amount to transfer from your existing card
- The new card issuer pays your old balance directly (you don’t receive cash)
- Your old card balance drops to $0 (or is reduced by the transferred amount)
- You repay the new card at the promotional rate during the offer window
The goal: Pay down the principal aggressively during the 0% window, eliminating or significantly reducing the balance before the promotional rate expires.
Typical Balance Transfer Terms in Canada
| Feature | Typical Range |
|---|---|
| Promotional rate | 0% to 3.99% |
| Promotional period | 6 to 12 months |
| Transfer fee | 1%–3% of the transferred amount |
| Rate after promo ends | 19.99% (standard purchase rate) |
| Credit required | Good to excellent (650+ recommended) |
| Transfer limit | Usually up to 50%–90% of your new credit limit |
The Transfer Fee: Is It Worth It?
Most Canadian balance transfer offers include a one-time transfer fee of 1%–3%:
| Balance Transferred | 2% Transfer Fee | Interest Saved (vs 19.99% for 10 months) | Net Saving |
|---|---|---|---|
| $3,000 | $60 | ~$500 | ~$440 |
| $5,000 | $100 | ~$833 | ~$733 |
| $10,000 | $200 | ~$1,666 | ~$1,466 |
Even with a 2% fee, a 0% balance transfer almost always saves significantly more than the fee costs — as long as you pay down the principal during the promo period.
The Critical Rules
1. Don’t use the new card for new purchases during the promo period. Payments are typically applied to the lowest-rate balance first. If you make new purchases at 19.99%, those accrue interest while your payments go toward the 0% transferred balance.
2. Pay more than the minimum every month. The goal is to pay off as much principal as possible in the 0% window. Divide the transferred balance by the number of promo months — that’s your target monthly payment.
Example: $6,000 transferred at 0% for 10 months → pay $600/month to clear it entirely.
3. Set a calendar reminder 30 days before the promo ends. If you haven’t paid it off, evaluate whether to: (a) make a large lump payment, (b) apply for another balance transfer, or (c) accept the 19.99% rate on the remaining balance.
4. Don’t close your old card immediately. Closing it reduces your total available credit and may hurt your utilisation ratio. Keep it open with no balance (or a small recurring charge on autopay).
Best Balance Transfer Cards in Canada
See Best Balance Transfer Credit Cards in Canada for the current list of cards offering promotional rates.
Cards to check include:
- Scotiabank Value Visa — often has promotional balance transfer offers
- MBNA True Line Mastercard — low ongoing rate after promo
- BMO Preferred Rate Mastercard — competitive transfer offers
Balance Transfer vs. Low-Interest Card
| Scenario | Best Option |
|---|---|
| Large lump of debt you can pay off in 6–12 months | Balance transfer — 0% rate maximises paydown speed |
| Ongoing balance you’ll carry indefinitely | Low-interest card — 8.99%–12.99% with no promotional clock |
| Debt you need to consolidate long-term | Consider a personal loan or line of credit |
Impact on Your Credit Score
Applying for a new card for a balance transfer creates a hard inquiry — a minor temporary score impact (5–10 points). The score usually recovers within 3–6 months, and the reduced utilisation from paying down the transferred balance often improves the score over time.
Related Articles
- Best Balance Transfer Credit Cards in Canada
- Best Low-Interest Credit Cards in Canada
- Minimum Payments Explained
- How Credit Card Interest Works in Canada
- Credit Card Basics — Canada Guide
Balance transfer promotional offers are limited and subject to credit approval. Always read the full terms and conditions. Promotional rates apply only to the transferred balance. See our Advertiser Disclosure.