The risks and opportunities of using a balance transfer credit card


Paying rent on your credit card is a fantastic way to earn rewards or cash back, but you must be careful about how much debt you put on your credit card. If you spend too much, you may find yourself overextended and carrying a credit card balance that is subject to a high interest rate.

If this has already happened and you have credit card debt that you’re paying the standard 19.99% interest rate on, a balance transfer card is an effective strategy to save money on interest payments. But beware – while balance transfer credit cards present an excellent opportunity to pay down your debt quickly, they aren’t without their risks. Keep reading to find out about the risks and opportunities of using a balance transfer credit and decide for yourself whether the reward is worth it.


The big incentive for using a balance transfer credit card is the low promotional rate offered by these credit cards. The promotional rate can be as low as 0% and lasts for a specific period, usually six to 12 months. If you’re carrying credit card debt that you’re confident you can pay down within the promotional period, transferring that balance can be a great way to jump-start your debt repayment and avoid the high interest rates that most credit cards charge.

Once the promotional rate expires, your balance transfer credit card’s interest rate will jump back to its normal rate. Some balance transfer credit cards offer regular interest rates as low as 8.99%, so if you’re not sure whether you can pay off your debt within the promotional period, you should choose a balance transfer credit card with a low regular interest rate.


Balance transfer credit cards aren’t without their downsides. The biggest downside is that once the promotional period ends, the credit card’s interest rate jumps back to normal levels. These interest rates can range from as low as 8.99% to a whopping 21.99%. If you haven’t paid off your debt within the promotional period, the remaining balance will be subject to these higher interest rates (as will any purchases you make with this credit card). That’s why it’s so important only to transfer a balance that you are confident you can pay off during the promotional period.

Balance transfer credit cards also come with fees. Of particular importance is the balance transfer fee. The balance transfer fee is applied when you move a balance onto your balance transfer credit card. The balance transfer fee is usually around 1% of your balance. For example, if you transferred a $5,000 balance onto your balance transfer credit card, you’ll be charged a fee of $50 to do so. It’s important to take these fees into account when determining if a balance transfer credit card is the right choice or if you’d be better off taking money from other sources to pay off your debt such as your savings.

The bottom line

Balance transfer credit cards can be an effective way to pay down a portion of your credit card debt in a short timeframe. If you have a few thousand dollars lingering on a credit card that is accumulating interest, transferring it to a 0% interest credit card might be a safe way to pay it down quickly. But if you have a large amount of debt that will take longer than the promotional period to pay off, you risk being hit with hefty interest charges. empowers Canadians to search smarter and save money by comparing mortgage rates, credit cards, high-interest savings accounts, chequing accounts, and insurance.

Use our Rewards Maximizer to see what credit card is best for you when paying your rent.

Tags : Credit CardCredit Card PaymentsPersonal Finance
Allan Chau

The author Allan Chau

Allan is the Digital Marketing Manager at RentMoola. He loves to eat & travel and is also an avid fan of Lego.

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