# Credit card promotional balance transfer



## twowheeled (Jan 15, 2011)

Hi everyone, I have a question about balance transfers on credit cards. MBNA is offering a promotional transfer for 0.99% for 1 year. 

I am struggling to understand this "too good to be true" loan. My understanding is this transfers cash directly into my chequing account and I will only pay a total of 0.99% interest per year while making the minimum payments each month. 

The DUH part of me is saying take the largest transfer I can, up to my credit limit, for example $50k. Then park this in a 1 year GIC which I am finding at 2%. At the end of the year cash out my GIC, pay out the credit balance and collect 1% return for absolutely nothing invested. 

What am I missing here?


----------



## redsgomarching (Mar 6, 2016)

i thought balance transfers with promotional rates can only be done if transferred to another credit card.

not too sure though, but the scenario you are presenting is valid. be aware of other restrictions on credit card balance transfers though and dont use it for if you have a balance already or plan to use it to make purchases, most of the time payments go first towards cash advance, interest, then purchases.


----------



## scorpion_ca (Nov 3, 2014)

Will they charge you any service fee? They usually charge minimum $7.5 or 2% of transferred amount.


----------



## mark0f0 (Oct 1, 2016)

If you read the "fine print", they technically have the right to call it. Oh and there's usually a fee associated with a balance transfer or cash advance that you have to pay as well.

And that's exactly what CIBC did when I did that earlier this year. Because I almost maxxed out the card, my credit rating dropped (its my only debt!), and voila, the CIBC computers reduced my credit limit to $500 thinking I was some sort of trailer trash foreigner maxxing everything out and skipping the country. Leaving me in a huge overdraft.

After a bit of talking to CIBC, and threatening to repay the thing in full and never do business with them again, they un-reduced my credit limit. 

But if I didn't have access to liquidity from other sources (ie: a margin account), I could've been in quite a pickle.

Its no different than the sort of bank run that Home Capital is experiencing right now.


----------



## OnlyMyOpinion (Sep 1, 2013)

I wouldn't try to game them. They will get you going if not coming. They aren't dumb enough to leave a windfall opportunity for you.
As we all know, a cc can be useful if used properly. If you use a credit card, have one that is competitive and works for your type of use, and always pay off the monthly balance.


----------



## nobleea (Oct 11, 2013)

Usually there is a transfer fee of 1% (up front) in addition to the 0.99% interest rate. Which makes a 2% GIC kind of useless.
You can request it as a cheque or transfer to your bank account - they don't care where it goes.

You have to pay a monthly amount. 1% of the balance? It goes against the balance of course.
As others have mentioned, you can't use the card for anything else otherwise you'll be paying 20% or whatever it is on those purchases until you pay the full balance transfer off.

It was very popular when MBNA had the 0% balance transfers for 15+months. There's hundreds and hundreds of posts on the red flag deals website on this topic, who to call, when to apply, what to do with it, etc etc.


----------



## marina628 (Dec 14, 2010)

My oldest did this a couple times while finishing up school ,the trick is make sure you can pay it off in full when it is up for renewal.


----------



## yupislyr (Nov 16, 2009)

twowheeled said:


> What am I missing here?


Nothing. It's legit. Others have pretty much covered all the various other caveats. There's really no tricks, just make sure you don't use it for anything else and pay off the balance before the promo ends.
The only further tip I have is that MBNA currently has a better 0% for 1 year deal. 

Either apply directly: https://apply.mbna.ca/applicationform/generateApplicationForm.htm?src=CQOR01&locale=en_CA
Or via one of these sites and get cashback: https://www.ratesupermarket.ca/credit_cards/mbna_canada/mbna_platinum_plus_mastercard
https://www.greatcanadianrebates.ca/details/MBNA-PlatinumPlus/

And then even after you've done it once, you can keep doing it over and over. I've been doing the MBNA balance transfers for going on 7 years now, without issue. Assuming the offer still exists in August, I will continue on to the next round.


----------



## twowheeled (Jan 15, 2011)

yupislyr said:


> Nothing. It's legit. Others have pretty much covered all the various other caveats. There's really no tricks, just make sure you don't use it for anything else and pay off the balance before the promo ends.
> The only further tip I have is that MBNA currently has a better 0% for 1 year deal.
> 
> Either apply directly: https://apply.mbna.ca/applicationform/generateApplicationForm.htm?src=CQOR01&locale=en_CA
> ...


looks good to me and the rate is better than my margin rates on my questrade account. So you got the 0% promotional rate and got charged 1% for initiating the balance transfer?


----------



## sags (May 15, 2010)

How does transferring balances from one credit card to another free up cash to invest in a GIC ?


----------



## nobleea (Oct 11, 2013)

sags said:


> How does transferring balances from one credit card to another free up cash to invest in a GIC ?


Balance transfer is the wrong way to think about it. What it is is a cash advance at 1%. It gets transferred to your bank account. That money is used to buy a GIC or HISA or whatever. You apply for a second card the following year when the first one is about to expire. Then transfer the balance to that new card. MBNA will often let you combine the credit limits on both cards so that the allowable amount to borrow increases each time.


----------



## yupislyr (Nov 16, 2009)

twowheeled said:


> looks good to me and the rate is better than my margin rates on my questrade account. So you got the 0% promotional rate and got charged 1% for initiating the balance transfer?


Exactly.


----------



## twowheeled (Jan 15, 2011)

bumping this thread as I'm about to try it out. 

MBNA ducked the question when I asked about the fine print. I'm trying to see if anyone who has initiated one of these balance transfers read through the contract. I'm looking for the ability of TD/MBNA to raise rates without notice.

There are a couple different banks right now offering $300 promotion for opening a new checking account that only needs to be held for 90 days. The minimum balance is $3000 to avoid fees. So through this balance transfer I transfer in the $3000 paying effectively $30 for the loan. That's a pretty good guaranteed return for half an hour of work to open an account and set up two direct payments (mine are monthly reoccurring $0.01 payments to credit cards)


----------



## Mookie (Feb 29, 2012)

twowheeled said:


> MBNA ducked the question when I asked about the fine print. I'm trying to see if anyone who has initiated one of these balance transfers read through the contract. I'm looking for the ability of TD/MBNA to raise rates without notice.


I've done the MBNA 0% cash advance several times before with no issues. The last time was a couple years ago. When I did it, they charged a 1% transfer fee up front, so it's really 1% for one year. I would strongly recommend you read the fine print of the offer before you proceed, as things may have changed, but generally, and as others have pointed out, make sure you don't use the card for anything else, make sure you make at least the minimum monthly payments during the year, and make sure you pay it off in full before the year is up, and you should be fine. I personally didn’t have any issues with the rates changing mid-way through.



twowheeled said:


> There are a couple different banks right now offering $300 promotion for opening a new checking account that only needs to be held for 90 days. The minimum balance is $3000 to avoid fees. So through this balance transfer I transfer in the $3000 paying effectively $30 for the loan. That's a pretty good guaranteed return for half an hour of work to open an account and set up two direct payments (mine are monthly reoccurring $0.01 payments to credit cards)


You can make a few bucks on both the credit card cash advances, and the new bank account cash promos, but you do have to read the fine print and follow all the rules carefully, so in the end it will take more than 30 minutes of your time for the payback. At the end of it all, you have to get your money out and close off these accounts too, which takes time. If you’re careful, detail oriented, and don’t mind a bit of administrivia, you should be fine.


----------



## awesomeame (Nov 15, 2011)

Wondering--wouldn't opening all these new accounts result in hard credit checks, resulting in a lower credit score? Might be something to look into if you're expecting to buy a home, car, rent a new place, etc.

Matt


----------

