Your guide to balance transfers on credit cards

If you’re having trouble paying off the amount due on your credit card, a balance transfer could help you get back on track.

A balance transfer lets you use a credit card to pay the balance from another credit card. This could save you money if you’re moving the balance to a card with a much lower interest rate such as the CIBC Select Visa* Card or the CIBC bizline® Visa* Card. Card issuers often have promotional balance transfer offers, sometimes with rates as low as 0% with minimum transfer amounts.

How balance transfers work

When you transfer a balance to a credit card, the new issuer pays off the balance on your old card. That balance is then moved to the new card. You’re responsible for making payments on the new card.

How to do a balance transfer with a credit card

1. Apply for a card with a low interest rate offer on balance transfers. Alternatively, you can use a card you already have. To qualify, your account has to be in good standing.
2. Request a balance transfer. You need to be sure of the amount of debt you're moving, your account information and the name of the card issuer. Submit a balance transfer request through your new card issuer’s online portal or by contacting their customer service team.
3. Continue making payments on your old card. You’re still responsible for any charges and interest until the balance transfer is approved. This could take anywhere from a few days to a few weeks.
   
4. Avoid new purchases to prevent raising your balance while you’re paying off your balance transfer.
   
5. Pay off your balance. If you have a remaining balance after the promotional period, you’ll be charged the regular balance transfer interest rate.

How much does a balance transfer cost?

Most issuers charge a balance transfer fee of around 1% to 5% of the amount you transferred. The fee is usually added to your balance. For example, if the fee is 3% and you transfer $2,000, you’ll be charged $60, bringing your total balance to $2,060. Occasionally, issuers may waive the fee or offer a lower fee as part of a promotional deal.

How much can you save with a balance transfer on a credit card?

Transferring a significant credit card balance to a card with a promotional balance transfer can lead to substantial savings.

Example of how a balance transfer on a credit card can help you save money

Refer to the table below for an example of how much you could save with a balance transfer on a $5,000 balance. This example is for illustrative purposes only.^†

Based on this example, you could save over $600^† by opting for a balance transfer rather than paying off the balance on your current credit card.

Benefits and drawbacks of balance transfers on credit cards

Benefits of a balance transfer

Pay off your balance with minimal interest

The purpose of a balance transfer is to help you pay off your amount owed. This means paying as little interest as possible. For example, if a card has an introductory balance transfer interest rate of 0%, you have a chance to pay off your balance without accumulating more interest.

Consolidate and manage payments

Balance transfers can also help you manage your payments. If you have balances on multiple credit cards, consolidating your balances onto one card means fewer payments to keep track of.

Pay off your balance over time

The promotional period of a 0% balance transfer interest offer allows you to carry a balance without accumulating additional interest. This gives you flexibility since you only need to pay off the balance by the end of the promotional period to avoid incurring interest costs.

Drawbacks of a balance transfer

Balance transfer fees

Most balance transfer cards, including those offered by CIBC, typically charge a fee, usually around 1% to 5% of the transferred amount. This fee can add to your overall balance if not factored into your repayment plan.

Promotional period limitations

While balance transfer cards often offer a promotional period with low or 0% interest rates, these periods are usually temporary, such as 6 to 18 months. Also, some issuers may require a minimum transfer amount to take advantage of a promotional balance transfer offer. If you don't pay off your transferred balance within this period, the interest rate can revert to a higher standard rate, potentially increasing your balance costs.

Factors to consider when you’re deciding to make a balance transfer

• Promotional interest rates: The lower the interest rate, the better.
• Promotional period: Check if the offer is long enough for you to pay off your balance. When the promotion ends, the interest rate goes back up. If you’re still carrying a balance, you’ll have to pay a higher interest rate.
• Minimum amount: Check if the amount of the transfer meets the minimum requirement to receive the promotional interest rate. If it does not meet the minimum, you may not qualify for the promotional interest rate offer and may be charged the regular balance transfer interest rate.
• Credit limit: The amount you can transfer depends on the card you’re moving your balance to. For some cards, the maximum amount is the card’s credit limit. For other cards, it’s 50% of the credit limit.
• No interest-free grace period: Unless you’re using a 0% interest rate offer, you’re charged interest as soon as the balance transfer is posted to your account.
• New purchases: The promotional balance transfer interest rate only applies to the balance you transferred. That means for new purchases, the higher regular purchase rate applies.

Balance transfer promotions

A balance transfer promotion is a special offer from credit card issuers that allows you to transfer existing balances from one credit card to another at a lower or 0% interest rate for a specified period. Some offers may require a minimum transfer amount to be eligible. The primary goal is to help you consolidate amounts owed and save money on interest charges temporarily.

A good balance transfer promotion offer is 0% interest rate. This means for the length of the offer, you’re not paying any interest on the balance you moved. For example, if a card has a promotional interest rate of 0% for 10 months, you won’t be charged interest on the balance you transferred during that time. This means you can pay off your amount due faster than if you were charged the regular interest rate for purchases.

Worried you can’t pay off your balance before the offer period ends? Look for a card with a great balance transfer offer and low standard interest rates. This may be a good option if you carry a balance from month to month or plan on making new purchases while paying off your balance transfer.

Frequently asked questions