Zero balance on credit card

A credit card balance is the amount of money owed to the credit card company. A new credit card balance may take up to 24 hours to update, once a payment has been processed depending on the credit card company and method of payment employed. The balance can be positive, negative or zero depending on if money is owed, if a payment greater than the balance was made or the balance was paid in full.

BREAKING DOWN 'Credit Card Balance'

A zero credit card balance is the best approach to manage credit effectively in order to avoid the high interest rates associated with a positive balance. If there is a positive balance, paying more than the minimum monthly payment pays it down quicker, resulting in less interest owed to the credit card company.

A credit card balance is the amount of charges owed to a credit card company based on purchases made that have not been paid yet. The balance includes recent purchases, any unpaid balance, interest charges, annual fee and any other fees associated with the credit card such as a late fee or inactivity fee. Every new purchase is added to the balance, and each payment made reduces the balance.

Paying off the balance saves money on credit card interest, which reduces the money paid to the credit card company and increases monthly cash flow and liquidity. However, carrying a balance month to month lowers a credit score because it increases the credit utilization on the card. An ideal credit utilization is 20% or less. For example, if you have a credit limit of $5,000 and a $4,000 balance on your credit card, your credit utilization is 80%, which is extremely high. This type of behavior shows creditors and lenders that a cardholder is not responsible with credit and is a high risk of defaulting on a future loan or credit card payment.

Maintaining a high credit card balance can lead to disaster. If an unexpected emergency arises, possessing a high balance reduces the flexibility to use a credit card and increases the chance of going further into debt, using risky financial products or paying late fees. Credit utilization is one of the factors used to calculate a credit score. It counts for 30% of a credit score. A low credit utilization proves to creditors and lenders that a cardholder is able to manage credit responsibly.

Using a credit card is essentially using the credit card company’s money to make a purchase. In addition, a cardholder makes a purchase but pays for it with money earned in the future. The key to paying down a credit card balance is to determine the report date; the date an account is reported to the credit reporting agency and pay the bill prior to the report date or statement closing date, which increases a credit score.

Benefits of a Zero Percent Balance Transfer Card

Pay off debt faster with a balance transfer.

What is a zero percent balance transfer offer?

Credit card companies that offer credit cards with an introductory zero percent balance transfer for a limited time can help give new card members a way to help relieve debt. By taking advantage of these introductory rates, you can have your existing balance on other credit cards paid off by transferring it to a new card and will not accrue interest on that transferred balance for the duration of the introductory 0% annual percentage rate (APR) offer.

The introductory zero percent balance transfer rate is temporary. The duration of the introductory 0% balance transfer offer varies based on individual offers. After this introductory period, the remaining transferred balance is subject to the standard balance transfer rate for the card. You should pay attention to the duration of the introductory offer because, once it is over, there will be an increase in your interest rate.

It is always important to familiarize yourself with the terms and conditions for any credit card. For example, in some cases, new purchases on cards with an active 0% balance transfer offer will incur interest at the standard purchase APR, unless the 0% offer applies to new purchases as well. The amount transferred through such 0% balance transfer offers is often subject to a one-time balance transfer fee. This fee, typically 3% – 5%, is added to the new balance.

Why Apply For A Zero Percent Balance Transfer?

A zero percent balance transfer can be an effective way of consolidating or reducing debt. 0% balance transfers can help you to save on interest payments you are making on your existing credit card.

For example, consider you owe $3,000 on a card with an APR of 15%. If you continue to pay interest while reducing the balance by $215 each month, you will still have accrued $525 of interest over the 14 months it took you to pay off the balance, assuming you make no additional purchases.

Pay Off Debt Faster with a Balance Transfer.

But, let’s say that you accepted a 0% balance transfer offer of 14 months with a 3% balance transfer fee. You would pay off your old balance of $3,000 and would incur a new balance of $3,000 plus $90 in balance transfer fees on your new 0% balance transfer credit card. Because of the 0% balance transfer offer, you could pay off your new balance in 14 months and save over $400 in interest assuming that you make no additional purchases and make monthly payments of $221.

It is important to remember that, no matter how much you are struggling with your debt, you should continue to make all of your payments on time because only applicants with excellent credit will qualify for introductory credit card offers like zero percent balance transfer. And, for those looking into taking advantage of a 0% balance transfer, consider making a comprehensive plan for eliminating credit card debt that focuses on maximizing income, minimizing expenses, and paying down the entire credit card before the introductory rate expires.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

Best 0% Balance Transfer Credit Cards

This posts lists a bunch of the 0% balance transfer credit cards on the market today, and having the list in the first place was motivated by a reader who managed to pay off her debt with these 0% balance transfer offers. Below is her story along with the different choices out there on the market today, including a couple options with no balance transfer fees.

During the 0% balance transfer credit cards craze of recent years, many of my friends were calling me ignorant for not taking advantage of these balance transfer offers. The idea was simple in that all you needed to do was apply for a few credit cards offering 0% balance transfers, send the money to a high yield savings account and pocket the difference in interest.

The 0% balance transfer tactic worked well, with each card earning a couple hundred dollars before taxes with minimal effort. I never bothered, though. The tactic seemed weird. It just wasn’t me and subsequently, I never talked about it here.

Now that the credit card companies are offering these 0% balance transfer offers in full force again, a reader took the plunge and wrote me an email that really changed my perception of these 0% balance transfer cards.

David, you have to write about these 0% balance transfer credit cards. I used one and it helped pay off my debt a year ahead of schedule!

Whoa. That got my interest.

Apparently, reader Shelby (fake name as she requested to stay anonymous), used these cards to transfer all her credit card debt onto 2 cards with 0% interest. Then she made every effort to pay off the balance. It was a great strategy because based on her calculation, the lack of interests helped her reach her credit card debt free goal 394 days ahead of time.

She said more people should take advantage of these offers to get out of debt and I totally agree. All you need to do is apply for 0% balance transfer credit cards and watch your debt shrink much more rapidly.

An insightful and exciting way to decrease the burden of credit card debt, while at the same time not having to pay exorbitant interest fees, is to take advantage of a 0% balance transfer credit card offer. Sure, this may seem like a foolish exercise in futility at first glance – taking out a new credit card account to get rid of credit card debt – but nevertheless, the fact remains that this can be a remarkably effective tool in your arsenal when you want to save money and diminish credit card debt.

A 0% balance transfer is a marketing tool used by credit card companies to increase the number of customers holding accounts with them, and also increase the amount of debt held within those accounts. While these balance transfers are effective for the credit card companies, they also can be a powerful aid to customers who wish to save money and pay off credit card debt. This is how the process works:

First, a customer opens a new credit card account that offers a 0% interest balance transfer program. These are not usually difficult to find, although there are variables about which customers should be aware. Some balance transfer offers are considerably longer than others, and in this case, longer is definitely better. In addition, customers would be well advised to pay close attention to the interest rate after the period of zero interest expires. It will, of course, be increased. However, some companies will charge incredibly high rates after the end of the initial period with no interest. Because of the importance of these types of details, it is absolutely vital that a customer read the fine print very carefully before deciding which credit card offer to accept.

Once the new account has been opened, customers will usually find the telephone operators with their new credit card company more than willing to assist them in transferring the balances to their new account. This is to be expected, of course, because they want as much of that money transferred into that account as possible – right up to the limit. How that account is managed after the transfer is what will make the difference in how much money is saved over the course of the zero interest period.

Once the new account has high-interest funds transferred in, this is the best time to pay down that balance as aggressively as possible. By doing this, customers may be able to completely pay off much of the credit card debt without incurring any interest fees at all, saving significant amounts of money. It is, however, vital to remain aware of when the zero interest promotion ends. In the event that there is still a balance remaining on the transferred balance as this time period comes to a close, it may be possible to open a 0% balance transfer credit card with another company, and continue the cycle further. Again, looking out for the longest period with a 0% balance will help you to diminish debt and save money.

How to Calculate When Using a 0% Balance Transfer Makes Sense

When deciding what to do about your debt, one common question is how to calculate when using a 0% balance transfer makes sense. 0% balance transfer credit cards are promotional offer that creditors extent to attract customers. The offer permits you to transfer balances from other credit cards onto the new card at an amount up to your credit limit. You will pay 0% interest on the money transferred for a set period of time, usually between six months and one year. After this period of time, any remaining balance will default to the normal interest rate, under the terms of most cards. Most 0% balance transfer credit cards charge you a fee to transfer the balance. The industry standard is a 3% fee. This fee used to be capped, which meant that there was an upper limit maximum that would be charged.

Calculating Whether 0% Balance Transfer Credit Cards Makes Sense

Your first consideration when calculating whether the 0% balance transfer credit cards make sense should be determining whether you will save enough in interest to make the 3% fee worthwhile. This will depend on the amount of money you owe and the interest rate you are currently paying.

Interest rates on credit cards can vary widely from around 5% to upwards of 25% depending on your credit score and a number of other factors. This will make a vast difference in determining whether a balance transfer makes sense in your situation or not.

Assume, for a moment, that you have a 5% interest rate. If you have a $1000 balance, that means that you are paying 5% annually on a $1000.00 balance. Although there is some variation on how creditors charge interest – some charge interest on a double month cycle- you will pay approximately $23.37 in interest over a 6 month period. This number was calculating assuming you are making minimum payments of 3% per month of the balance remaining. If you are making larger payments, you will pay less in interest. Over a one year period of time using the same calculations and assuming the same payment rate, you will pay $42.79 in interest over the course of the year. This means that if the balance transfer offer is good for six months, a balance transfer may not be right for you, since you will pay a $30.00 fee (3% of $1000) to save $23.37 in interest. However, if the balance transfer offer is good for one year, then a balance transfer will safe you about $12.00. While this is a savings, only you can decide whether that amount of money is worth the hassle of transferring a balance.

If your interest rate jumps to 15% on your credit card, the numbers look a bit different. Again assuming a $1000 balance and payments at 3% per month, you are now looking at $71.66 in interest over six months and $134.94 in interest over the course of a year. Assuming a 3% balance transfer fee of $30.00, the offer begins to look a bit more attractive.

If your credit card interest rate is 20%, with all other factors the same, you will pay $96.59 in interest over 6 months and $184.48 over one year. In this situation, a balance transfer begins to look as though it might make sense.

Therefore, it seems clear that the higher the interest rate, the wiser it is to do a 0% balance transfer. The same rule applies for high balances. If you had an $8000 balance on that same 20% card, over the course of a year you would pay $1475.89 in interest. This is quite a bit more then the $240 balance transfer fee you would pay.

Other Things to Consider about 0% Balance Transfer Credit Cards

One other major factor to consider when making the calculation of whether a 0% balance transfer credit cards make sense is whether you can actually pay the balance back within the promotional period. If you have, for example, an $8000 balance, you would need to make credit card payments of over $1330.00 per month in order to have that balance paid off within a six month promotional period. If you do not have that kind of cash lying around, you need to consider what happens when the promotional rate ends.

Typically, when a promotional rate ends, you will just have to begin paying at the regular interest rate on the remaining balance. Thus, you would need to look at what that standard interest rate was in order to determine how much you should expect to pay in interest on the remainder of the transferred balance after your promotion ends. You can do this by figuring out how much you can pay per month and subtracting that amount form the total owed. So, if you were able to pay $200 a month on your $8000 balance, at the end of six months you would still have $6800 remaining on your card. Find out what rate will be charged on that remaining balance. If the rate is higher then the rate you have now, it might not be advantageous for you to take the balance transfer offer unless you are absolutely confident that you can pay off the balance within the promotional period.

Be diligent about ensuring that you really can pay off the money within the promotional period. Do not be late on your payments or otherwise default on any agreement with the credit card company or you may find yourself spending much more money when your rate defaults to a penalty rate under the terms of the contract. Finally, do not count on simply being able to transfer the balance again at the end of your promotional rate. After the economic crisis of 2009, the days of easy credit and endless balance transfer offers are no more and there is no guarantee that at the end of your promotional term, another balance transfer offer will come along.

The Best 0% Balance Transfer Credit Cards

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Those who live under a mountain of credit card debt quickly realize that their suffering has two components. First there is the principal, the actual amount of goods and services that was charged to their credit card. Secondly, there are the financing charges imposed each month on their balance. With each statement cycle, their average daily balance is multiplied by one twelfth of the card's Annual Percentage Rate (APR). Therefore, if you owe $10,000 on a card with an APR of 12%, you are incurring $100 in interest each month. Due to the effect of compounding interest, the finance charges incurred each month add to your balance, resulting in more interest being accrued with each passing month. (See also: What You Must Know Before Transferring Credit Card Balances)

To help relieve the burden of debt and acquire new customers, banks have long offered credit cards with a 0% promotional APR, for a limited time, on balance transfers. Applicants who qualify for a new card with these promotional rates can have their existing balance paid off by their new card. During the time that the 0% promotional rate applies, interest is not being accrued on the balance transferred; however, the amount transferred is almost always subject to a one-time balance transfer fee. This fee, typically 3%-5%, is added to the new balance. Also, cardholders are still responsible for making minimum payments on their account. New transactions may incur interest at the standard rate, although in some instances, the 0% promotional rate also applies to new purchases as well. Finally, no matter how much you are struggling with your debt, it is critical that you continue to make all of your payments on time, as only applicants with the excellent credit will qualify for most of these promotional credit card offers.

How to Save Money With a Balance Transfer

First, it is crucial that those seeking a balance transfer do so as part of a comprehensive plan to eliminate their credit card debt. Such a plan should focus on maximizing their income, minimizing their expenses, and regularly paying down their entire credit card balance before the promotional rate expires.

As part of an overall plan to eliminate debt, the benefits of a balance transfer are clear. For example, if a cardholder has an existing credit balance of $10,000 on a card with a 15% APR, that cardholder is currently accruing $125 in interest each month. If the cardholder continues to pay interest while reducing the balance by $500 each month, that person will still have accrued $1,250 of interest over the 20 months it took him to pay off the balance (15% interest applied to an average daily balance of $5,000 over 12 months). Alternatively, that person could accept a balance transfer offer of 21 months at 0% interest with a 3% balance transfer fee. In this case, that person's old balance of $10,000 will be paid off, while they will incur a new balance of $10,000 plus $300 in balance transfer fees. If all goes according to plan, at the end of the 21 months, the new balance will be paid off and the cardholder will have saved nearly $1,000 in interest.

A 0% balance transfer is not an instant solution to the problem of credit card debt. You should think of these offers as a significant push up a big mountain, but you will still have to do most of the work yourself.

Top 0% Balance Transfer Cards on the Market

Like every aspect of the credit card industry, we are fortunate to enjoy an extremely competitive market for 0% balance transfer credit cards. None of these cards have annual fees. Here are the top offers currently available.

The BankAmericard® Credit Card offers 0% intro APR on balance transfers for 15 billing cycles, one of the longest introductory periods currently offered by credit cards. This introductory rate applies to balance transfers made in the first 60 days of opening your account. After that, a standard APR for both purchases and balance transfers is 13.24%-23.24% variable. There is also $0 Intro balance transfer fee during first 60 days of account opening. After that, the fee for future balance transfers is 3% (min. $10). There is no annual fee.

The Chase Slate® card is catered specifically for balance transfers. You get 0% Intro APR for 15 months on balance transfers and new purchases. After that, a variable APR of 16.24%-24.99% applies. What makes this card uniquely suited for balance transfers is the zero intro balance transfer fee when you transfer a balance during the first 60 days of account opening. After that, the fee for future transactions is 5% of the amount transferred, with a minimum of $5. This is a great deal if all you need is a card to transfer a balance to and get a 15 month relief from interest. There is no annual fee.

Bank of America® Cash Rewards Credit Card

The Bank of America® Cash Rewards Credit Card offers a 0% Introductory APR for 12 billing cycles for purchases and for any balance transfers made in the first 60 days, then, 14.24% - 24.24% Variable APR. There is a 3% fee (min $10) which applies to balance transfers. The 3% cash back for gas is among the highest available, and you earn 2% at grocery stores and wholesale clubs (for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter). There is no annual fee.

Low Interest Credit Cards for Long Term Debt

Another option to save money if you have a large credit card debt is to transfer the balance(s) to a low interest credit card. This option is especially attractive if you won't be able to pay off the entire balance within the 0% intro APR period of the cards above. Click here for good low interest credit card choices.

Best 0% Balance Transfer Credit Card Offers For Canadians

Posted by Stephen Weyman | Aug 29, 2017 Aug 29, 2017

If you have credit card debt, then chances are you’re paying a soul-crushing interest rate on that debt of at least 19.99%. It can go as high as 30% if you have a charge card or you’ve missed payments in the past.

If you have a $10,000 average monthly balance on your credit card over the period of one year, that debt is costing you between $2,000 and $3,000 each and every year . And that’s just the interest, not the principle.

Paying interest rates that high on debt is something you should work hard to avoid by staying out of credit card debt .

But, when you’re stuck with it…what then?

Let me be cliché and say: when life gives you lemons it’s time to make some lemonade…

…and find ways to cut that interest rate to the bone while paying down your balance ASAP.

One of the best ways to do that is to transfer your high interest credit card balance to a new credit card with a 0% interest rate (yes they exist!) for up to a full year. There’s also others that have very low rates like 1.99%.

Just make sure you have a plan to:

Pay off that balance in full BEFORE the promotion is up.

Otherwise high interest rates will kick in again and you’ll be right back where you started.

Top 5 Low Interest Balance Transfer Credit Card Offers

1) MBNA Platinum Plus MasterCard

MBNA offers the only true 0% interest balance credit card in Canada with the longest low rate term of 12 months .

Better, there’s no annual fee to pay to qualify for this amazing rate.

You aren’t forced to only transfer a balance from an existing credit card either, you can actually transfer money directly to your bank account at the same 0% rate and use it to pay off any debt you may have.

And you can use the money for ANY purpose , just make sure you don’t blow it and get stuck with that big interest rate after your 12 months is up.

Also, there is a 1% fee that applies to any transfer you make at the promotional 0% rate. You’ll still be saving at least 19% over the full year.

After the promotion expires, that fee goes up to 3% and the annual interest rate goes up to 21.99%.

2) Canadian Western Bank Rewards MasterCard

It isn’t 0%, but this card does offer a great rate of 1.99% for a lengthy 10 month period and no annual fee .

The card is also backed by MBNA, who are known for their top balance transfer offers. The same 1% fee applies when you make a transfer.

The advantage to this card?

After the promotional period is over and you’ve hopefully paid your balance in full, you’re left with a great no annual fee rewards card.

It gives you 1% of your spending back as cash or any type of travel you can imagine. Or, you can choose from a wide range of merchandise and gift cards.

It’s actually has the most flexible credit card rewards program in Canada that allows you to redeem your rewards ANY time you want ANY way you want. For cash, you can choose from cheque, direct deposit, statement credit, or charity donation. For travel, just charge the purchase to your card and then pay it off with points by either calling them or using online banking.

Keep in mind though, that you should never use a credit card for both a balance transfer promotion and purchases at the same time.

It’s because you can’t fully pay off your purchases until your large balance transfer is also fully paid off.

That means you’re stuck with the 19.99% interest rate on those purchases for the entire duration of your balance transfer promotion. Not good!

Always use a different credit card, debit, or cash for purchases. Simple as that.

With this card you’ll also get 1.99% interest for 10 months on balance transfers with no annual fee .

Again you will be charged a 1% fee on transfers because this is another MBNA card (told you they had the best promotions).

If you like to travel, this card is nice to have for earning Best Western Rewards after your balance transfer promotion is over. You’ll earn 1 point for every dollar you spend on the card, and 5 points on eligible purchases at Best Western.

Better, on your very first purchase you get 20,000 points all at once. That’s worth up to 2 free nights at their lowest category hotels (which are a bit rare), but you should be able to get at least 1 free at some of their better hotels.

Just make sure you only buy a pack of gum to qualify for the 20K bonus, and nothing else , until your promo interest rate expires.

4) American Express Essential Card

Ok, we’re finally out of the MBNA cards (actually there’s even more in our full list of balance transfer credit cards ).

The American Express Essential is a true low interest card that also comes with 1.99% interest on balance transfers for 6 months .

They’ll only let you use up to half your total credit limit as a balance transfer, which is good for keeping a healthy credit score actually.

The good news though, is that if you can’t pay off your full balance in 6 months, then the regular interest rate is only 8.99% on transfers, purchases, and cash advances. There’s a lot less pressure and panic there for sure.

More good news, the usual 3% balance transfer fee is completely waived for the introductory 1.99% offer so there won’t be any surprises with this card.

It’s a really strong low interest package that is hard to ignore because you’ll get all of that with no annual fee .

It’s nice to see a big bank in the top 5!

The Scotiabank Value Visa Card gives you the same 1.99% rate for 6 months that the Essential card above does, and it also has a low 11.99% ongoing interest rate after the initial promo expires.

I’d probably pick one of the other offers before this one…

But if you really want a Visa or something from a bigger bank, then this is your ticket.

You’re Getting The Lowest Interest Rate Possible

There’s no short or long term loan in Canada that offers a better interest rate than a 0% interest credit card balance transfer offer. Try if you want, you won’t find it.

You won’t be able to beat a 1.99% rate with another loan either if you’ve already used the MBNA 0% offer.

While it can be difficult to pay off a credit card from one bank with another credit card from the same bank…

…It’s easy to apply for a 2nd balance transfer card when your first promo rate is about to expire – and use that to pay off the 1st. That’s one way to extend your low interest rate for a much longer period until you get that debt paid off.

Just keep an eye on your credit score , because running high balance and applying for credit cards too often can start to drag it down. 1 or 2 cards per year if you have healthy score is not a problem, but I’d avoid doing any more than that.

Final Tip: You often can get the 0% card from MBNA multiple times, even if you’ve had it and cancelled it before. Sometimes they’ll even let you have 2 of the same card at once.

creditcardGenius is the only tool that compares 50+ features of Canadian credit cards using math-based ratings and rankings that respond to your needs, instantly. Discover which of Canada's cards is for you.

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