Is MBNA balance transfer card saving you money?

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The MBNA balance transfer card offers incredible value especially if your looking to save money and reduce your interest. 

MBNA offers a variety of credit cards to meet your requirements. I want to share the best MBNA balance transfer card that offers low interest. It’s called: MBNA True Line Mastercard credit card. 

I have personally applied for this card and can share my experience and value that I received. This could be your sought-after card for those looking to reduce their credit card debt, line of credit, consolidate other debts or just looking to review your debts in general.  

No Annual Fee 

This MBNA credit card has no annual fee which is a valuable perk giving you the peace of mind of borrowing without any additional annual fee payments. 

If your looking at building your credit score, this credit card could be your starting point if this is your first credit card or looking to establish consistent credit. 

Credit Score 

By applying for credit, you are trying to prove to the lender that you can be trusted with an agreed upon amount.  

As you pay this agreed amount on time and consistently you are building your credit and your credit score.  

Balance Transfer 

The MBNA credit card while it functions as a regular credit card has an additional benefit based on its available offer. That offer is at times a 0% interest for 12 months on balance transfers with no annual fee.  

This is money in your bank. What this means is you get to save money by applying for a balance transfer with the available balance on your credit card. 

Let’s say you apply and get approved for a credit limit of $10,000. 

This means you have an available balance of $10,000 to use and pay. You have some commitments and are looking to borrow or require $3,000 and your local banks offer you an interest rate or Prime plus fixed percentage (also known as spread).  

This spread may range from 2% to 5% or higher depending on the bank, your portfolio, assets and other products that you hold.  

This could mean the cheapest rate you could obtain in the market in Canada as of this post could range anywhere from 5.5% to 10%.  

Balance Transfer fee 

As per our example earlier with you obtaining $10,000 in available credit limit and requiring $3,000 for some commitments.  

The MBNA credit card provides you access to the $3000 that you require for a small transfer fee which could range from 2% to 3% or any other rate as MBNA determines.  

This means assuming you are provided with a rate of: 

2% : This will be a one-time fee paid up front due on your first statement after you obtain the balance transfer = $3000 x 2% =  $60 

6%: If we compared the MBNA balance transfer fee to any other bank rate assuming you get a conservative 6% if you have a good credit score and on-time payments = $3000 x 6% = $180 

Prime rate versus MBNA Balance Transfer 

As we can see from the example, the MBNA balance transfer offers the best immediate savings by reducing your interest rate from 6% to 2% assuming that was your offer from the lender.  

One of the biggest additional savings is the MBNA balance transfer fee which is a one-time fee and is fixed unlike the Prime rate. 

This is a very important distinction as the Prime rate is never fixed or static and will always move based on the market, political and economic factors, which we have no control. On the other hand, with a fixed one-time fee you have control over what you will pay and for how long to plan to financial needs.  

If you have a plan to pay off your $3000 over 11 months (we will exclude a month to be safe from the 12 month no interest plan) and include your one-time interest of $60. 

Payment strategy 

I will detail a simple payment strategy providing you with two options to either ensure maximum cash flow or equal payment plan for your comfort and provide a comparison to a local bank rate.

Number of months	MBNA payment strategy: Focusing on cash flow	MBNA payment strategy: Focusing on equal payments	Local bank rate @ 6% for 11 months
1	$60	$60	$289.09
2	$10	$300	$289.09
3	$10	$300	$289.09
4	$10	$300	$289.09
5	$10	$300	$289.09
6	$10	$300	$289.09
7	$10	$300	$289.09
8	$10	$300	$289.09
9	$10	$300	$289.09
10	$10	$300	$289.09
11	$2910	$300	$289.10
Total	$3060.00	$3060.00	$3180.00

As per the payment strategy detailed above, you notice you have control on paying down your MBNA credit card over 11 months in this example by choosing either any equal payment plan or the minimum amount or any other higher amount you choose.

Most other short terms loans from local banks will charge you higher interest rate that are fluid based on the prime rate. Having a clear balance transfer plan can help you save and achieve your goals.

Promotional Offers and Value 

I never recommend to close any no annual fee credit card unless you are unable to maintain the credit card or have a very high debt ratio and unable to make minimum payments on time or at any time.  

Credit cards generally provide numerous benefits if used well, paid on time, consistently and adhering to all the credit card guidelines.  

Important Details 

As with any credit card, pay attention to the following: 

• Fees and charges: Ensure to review if your credit card has any fees such as one-time fee, balance transfer fee, promotional fees, annual fees.
• Promotional offers: Review the promotion if any to understand, how long the promotion is available and what are the specific terms of the promotion. Promotions change from time to time and as per the lenders requirements.
• Balance transfer: If your intending to use a credit card for a balance transfer it is recommended not to use that same card for any other services to avoid any additional interest. Ensure the card has no annual fee to obtain the maximum benefit.
• New transactions: Avoid any new purchases on the same credit card if you have availed a balance transfer.
• Create a payment plan that works well with your needs to gradually pay down the outstanding on your credit card you have transferred in an efficient manner

Summary

The MBNA balance transfer card offers you an efficient way to pay down high interest charges through a low interest balance transfer fee depending on the promotion offered.

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