How TD credit card balance transfer can save you money

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I received in the mail what appears to be correspondence from my TD bank. Upon opening the envelope, I was truly honored to receive an exclusive offer to save on interest with a balance transfer.

While this offer applies to me, I wanted to share the value of having multiple credit cards and building on your relationship with various banks. I write this post to share some value on how you can save by securing a credit card and when an offer does arise you may receive the option to lower the interest you pay.

In this example, I am referring to the TD Aeroplan Visa Platinum credit card which offers incredible value and will help you save money and reduce your interest.

TD offers a variety of credit cards and banking products to meet your requirements. I want to share how you could benefit from the TD Aeroplan credit card.

I have personally applied for this card and since I like to travel at times with Air Canada its does have benefits in using the co-branded TD Aeroplan credit card which helps you earn Aeroplan points on eligible purchases which can then be redeemed for travel. This TD credit card is perfect if you like to travel, experience culture and even better your Aeroplan points will not expire as long as your TD credit card and Aeroplan is in good standing under their terms and conditions.

Annual Fee

The TD Aeroplan visa platinum credit card has an annual fee of $89 as of this post which could be rebated every year with a TD all-inclusive banking plan.

Credit Score

In Canada knowing where your credit score falls matters, as you may receive promotional offers, lower interest rates and may be considered for other lending products.

This is a great opportunity to build your credit score if your a new resident, immigrant or perhaps looking for a new banking product.

Balance Transfer

You may receive a promotional balance transfer which will help you lower the interest rate you pay on your non TD credit cards. The offer will enable you to transfer your non TD credit card balances to your TD credit card account if you have an available balance and are in good standing. This simply means you are current in your payment as per your statement and pay on time.

As you build your relationship with your bank and use your credit card while also paying for your expenses on time without any late payments, the bank may provide you with a promotional offer.

I will provide you an example of a promotional balance transfer offer. Let’s say you apply and get approved for a credit limit of $10,000.

Over a period of time, TD may send you a letter in the mail or contact you via your online banking message with a balance transfer offer.

We will use an example that you have another bank’s credit card with an outstanding of $2000 and for some reasons you know you are not going to be able to make the full payment.

Credit cards normally have an annual interest rate on regular purchases that range from 20% to 24% approximately with each bank deciding their rate.

Instead of paying a higher rate, if you qualify and receive a balance transfer offer you could transfer the $2000 to your TD credit card any pay only the promotional balance transfer which could range from 1.5% to 3% over a specific number of months.

Balance Transfer Fee

As per our promotional balance transfer example if you transferred over $2000 from your non TD credit card to your TD credit card using a 1.5% rate over 10 months this provides some savings.

Let’s look at the numbers in this example:

1.5% : This will be a one-time fee paid up front and most likely due on your first TD credit card statement after your TD credit card balance transfer has been approved = $2000 x 1.5% x 10 months = $25

For comparison we will consider the regular interest of 20% for 10 months:

20% : The rate of interest is in excess of $333.33 without factoring compounding interest or residual interest.

Payment strategy

I will detail a simple payment strategy providing you with two options if you receive a similar offer which provides a comparison to the regular interest rate.

Number of months	TD payment strategy: Balance transfer option @ 1.5% for 10 months	TD payment strategy: Regular interest @ 20% for 10 months
1	$25	$10
2	$10	$10
3	$10	$10
4	$10	$10
5	$10	$10
6	$10	$10
7	$10	$10
8	$10	$10
9	$10	$10
10	$1920	$333.33
Total	$2025.00	$2333.33

The payment table details a period of 10 months with a balance transfer interest of 1.5% versus the regular interest of 20% both rates over 10 months.

You will notice I have not factored any residual interest or compound interest for the regular rate as you are borrowing money at a higher rate. Since you are only paying the minimum amount of $10, this causes the residual interest to grow.

The additional amount is what causes the compounding effect as you are carrying forward remaining interest as the amount is not paid in full. By having a plan and receiving a TD credit card balance transfer offer you are able to save and plan your payments which will help you save and achieve your financial goals.

Promotional Offers and Value

Each bank at its own discretion may offer a promotional balance transfer. If one is provided this is an exclusive offer only for you which will help you save on interest by meeting all the terms provided.

These promotional offers have a specific period to avail and any transfer must be accepted and completed by the provided date to receive the promotional offer.

Important Details

• 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.
• 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.
• 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.
• 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 to get the best value for your offer.

Summary

The TD credit card balance transfer offers you an efficient way to pay down high interest charges through the promotional balance transfer at much lower rates compared to the regular interest rate provided on a credit card.

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