Apr 15, 2026
While we adhere to strict editorial guidelines, partners on this page may provide us earnings.
A balance transfer sounds like a clean start. You move a high-interest credit card balance onto a new card charging 0% for a promotional period — sometimes up to 12 months — and eliminate the interest portion of your payment. No interest means more money to pay down the debt.
But there is a catch, and it catches a lot of people. The moment you use that card for everyday spending, the 0% advantage starts working against you.
How does a balance transfer card work in Canada?
A balance transfer card lets you move an outstanding balance from one or more existing cards onto a new card at a low introductory rate — sometimes as low as 0% — for a defined promotional period of time. In Canada, promotional periods typically run six to 12 months. A one-time transfer fee applies, usually 1% to 3% of the amount moved.
Advertisement
The math can be compelling. On a $5,000 balance at 19.99%, you would pay roughly $1,000 in interest over a year making only minimum payments. Move it to a 0% card with a 1% transfer fee, and that $50 fee is the only cost — provided you clear the balance before the promotional window closes.
Once that window closes, any remaining balance reverts to the card's standard rate, which typically sits between 13.99% and 22.99%.
Stop letting high interest stall your progress. Compare Canada’s top balance transfer cards and find the 0% introductory offer that fits your budget.
Must Read
- Stop the leak: 5 costs Canadians (still) overpay for every single month. How many are sabotaging your 2026 budget?
- What's your worth? Here are the 3 net worth milestones that change everything for Canadians (and what they say about you)
- Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich — and that ‘anyone’ can do it
Why new spending on a balance transfer card backfires
The promotional rate applies only to the transferred balance — not to new purchases. Any new spending begins accruing interest immediately, which typically ranges from 12.99% to 22.99%.
For people trying to pay down debt, this poses a problem.
But there is a second problem: payment allocation. Under most cardholder agreements, if you pay more than the minimum, issuers apply the excess proportionately across all balance categories. So, a $400 payment on a card carrying $3,000 in transferred balance and $500 in new purchases does not simply eliminate the high-rate purchase balance first. A portion goes to each, leaving interest-accruing purchases on the card longer than expected.
Advertisement
The result? A card designed to cost nothing in interest starts quietly generating charges on the side. By the time the promotional period ends, the transferred balance may not be paid off — and the standard rate applies to everything.
What's the right way to use a balance transfer card?
Treat it as a single-purpose debt-repayment instrument — not a card you carry in your wallet for daily use.
- Transfer the balance, then put the card in a drawer. Use your existing card or debit for everyday spending
- Calculate your required monthly payment before you transfer. Divide the full balance by the number of promotional months — on a $6,000 balance with a 10-month window, that's $600 a month
- Set up automatic payments for at least the monthly target — missing one payment can trigger the loss of your promotional rate immediately under some cardholder agreements
- Don't transfer more than you can realistically pay off. Clearing $4,000 entirely beats moving $8,000 and leaving $3,000 reverting to a 20%+ rate in month 13
- Keep your old card open but unused if it's long-standing — closing it can push up your credit utilization ratio
Ready to become debt-free? Use the Money.ca comparison tool to see how much you could save by moving your high-interest balance to a low-rate card today.
Read more: The ultra-rich are bailing on volatile stocks right now — these 4 shockproof assets are their new safe havens
Who is a balance transfer card best suited for?
A balance transfer card works best for someone with a specific, manageable balance they can pay off within the promotional window — generally someone with a credit score of approximately 660 or higher who can commit to not using the card for purchases during the repayment period.
For Canadians carrying serious or multiple types of debt, a non-profit credit counselling agency can help determine whether a balance transfer is the right tool or whether a broader debt management plan makes more sense. Credit Counselling Canada member agencies offer free confidential consultations.
A balance transfer card is one of the lowest-cost ways to buy time on high-interest debt — but only if it's used as a one-purpose tool. The clock starts the moment you transfer. Every month you don't spend on it and do pay it down is a month you keep money that would have gone to interest. That is the point. Don't give it back.
Lower your total borrowing costs. Roll high-interest credit card debt into a more affordable loan. Find out how much you can save — get a personalized debt consolidation quote from Loans Canada in under 60 seconds.
You May Also Like
- Here’s how to retire in 10 short years no matter where you live in Canada — even if you’re starting with $0 savings
- If you’re still feeling the pinch this month — don’t panic. Here are 5 easy ways to fix your finances without a total overhaul
- How Warren Buffett’s simple buy-and-hold real estate approach offers a lesson for Canadian homeowners and long-term investors
- Approaching retirement with no savings? Don’t panic, you're not alone. Here are easy ways you can catch up (and fast)
Romana King is the Senior Editor at Money.ca. She writes for various publications, and her book -- House Poor No More: 9 Steps That Grow the Value of Your Home and Net Worth -- continues to be an Amazon bestseller. Since its publication in November 2021, this book has won five awards, including the New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award in 2022.
