I am pleased to present this guest post from Jeff at SmartBalanceTransfers.com. This is part of a post exchange on balance transfers. Credit Card Canada's post appeared at SmartBalanceTransfers.com on November 12.
When it comes to balance transfers, U.S. credit card companies are significantly more generous than those in Canada. However, much of this difference is superficial, as a number of Canadian credit cards offer significantly better long term options than their American counterparts.
0% Balance Transfers in the U.S.
Most balance transfer offers in the U.S. come with 0% interest rates that last a legal minimum of 6 months to as long as 21 months at times. These offers provide a good opportunity to save money on interest. However, because the 0% rate period is limited, consumers who can’t pay off their credit card debt before the 0% rate expires either have to do multiple balance transfers or pay off whatever debt is left at the end of the 0% period at a higher interest rate, often between twelve and nineteen percent.
Another feature of U.S. balance transfer credit cards is transaction fees. In the past, no balance transfer fee offers were common. Since the credit crunch, these offers have all but disappeared. Today, typical balance transfer transaction fees range from three to five percent. This essentially turns 0% APR balance transfers into three to five percent APR balance transfers.
Long Term Balance Transfers
While a few credit card companies offer 0% balance transfers that last more than one year, most do not. In Canada, it is possible to get low rates that last three years and come with no balance transfer fees. These offers are ideal for people who need more than a year to pay off credit card debt, which is often the case for many who turn to balance transfers.
Ultimately, whether you live in Canada or the US, using balance transfer credit cards can be an extremely effective way of reducing credit card interest expenses and getting out of credit card debt faster. In the U.S., the best balance transfer offers come with long 0% introductory rates, but moderate to high fees. In Canada, you can find offers with no fees that may not have 0% rates, but instead give you more time to pay off your debt.
In some ways, it is hard to tell whether offers are better in the U.S. or Canada. But regardless of where you live in North America, doing a balance transfer can help you save money on interest.
Jeff writes about credit cards and ways to use them effectively at www.smartbalancetransfers.com/blog
Image source: Jonathan Thorne via Wikimedia Commons
This post was included in the 12th edition of the Canadian Finance Carnival.
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