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Credit card debt can feel overwhelming, but Cambrian can help, with solutions like balance transfers.
Christine Young, Personal Banking Advisor for Cambrian Credit Union, can explain balance transfers and how they can help. Here goes:
A balance transfer is when you move an outstanding balance from one credit card to another. Many credit card issuers periodically offer promotional balance transfer rates, which may be lower than the interest rate on your current card for a limited time, sometimes as low as 0 per cent.
If you carry a balance that you are not paying in full each month, a lower rate can help reduce interest costs and allow more of your payment to go toward paying down the transferred balance.
“Members don’t always realize that paying the minimum payment each month is not actually lowering the balance,” says Christine.
While part of the payment typically reduces the balance, a significant portion may go toward interest charges, especially when carrying a balance on a high-interest card. As a result, paying off the debt can take much longer and cost much more in interest. Additionally, carrying high balances relative to your available credit can have a negative impact on your credit score.
When you carry a balance from month to month, interest is charged at the rate outlined in your credit card agreement. Interest rates vary by card and issuer, depending on the card features, promotional offers, or pricing associated with your account.
“I always ask, ‘Do you carry your balance month to month, or do you pay in full?’” says Christine. “If they say, ‘I carry a balance,’ I ask the total they’re carrying forward. I usually run a quick calculation for them to show them the interest cost between their current card and the interest cost savings through our balance transfer offer, because people just look at the minimum payment. After the one-time 3 per cent initial balance transfer fee, any payment you make during the nine months offer goes straight onto the principal payment.1 You can actually see the balance going down.”
Example: Let’s say you have a balance of $10,000, and every month you only make the minimum payment. That means you have to pay the interest; $10,000 at 21 per cent (typical interest rate) is $2,100 per year.2 That means every year you’re paying at least $2,100 just on interest, not the principal.
There’s good news! If you transfer your balance over to Collabria with Cambrian, we have a special offer: nine months at 0 per cent when you transfer over the balance, with a one-time balance transfer fee of 3 per cent upfront.1
Following on from the example above: if you take the $10,000 owing and do a balance transfer to us on an approved Collabria Mastercard, you get nine months to pay it off at 0 per cent. The 3 per cent balance transfer fee on $10,000 is only $300. That’s a lot lower than $2,100!
Other than the 3 per cent balance transfer fee, plus the annual fee on the first statement, the rest you pay goes straight onto the principal amount owing during the first nine months!
“Balance transfers are for anyone of any age, as long as you qualify for a credit card,” says Christine.
The amount you can transfer depends on factors such as your available credit limit, account status, and the lender's approval criteria. In many cases, cardholders must have sufficient available credit to accommodate the transfer, and the account must be in good standing. Transfer limits may vary from one cardholder to another.
“If you don’t qualify for the amount you were hoping for, a balance transfer can still help, even if it’s not the full balance,” says Christine.
At the end of the day, the advisors at Cambrian want to help members as best they can. Book a meeting with a Personal Banking Advisor to discuss balance transfers and how they might work for you.
1. The 3 per cent balance transfer fee is a promotional offer and may not always be offered. Please refer to the terms and conditions.
2. Cambrian’s World Elite Mastercard has a fixed rate of 20.99% for purchases or 22.99 for cash advances.
We would be happy to discuss your unique situation with you.
Our goal is to make complex topics like this one, simple.
