How to Save Money Using Credit Cards in Canada
How to Save Money Using Credit Cards in Canada
Posted on March 1, 2023
We don’t normally use credit cards to save money but there is one way you can use them to reduce the cost of any existing credit card debt you have. You can also use them to pay off other debt too. Let's talk about how you can save money using credit cards in Canada!
Use a 0% Credit Card
The easiest way to save money by using credit cards is to use 0% balance transfer cards. These are promotions offered by a wide range of credit card companies to entice you to take a card.
They depend on you transferring a balance and not paying it off in time to begin incurring interest.
If you transfer a balance and either pay it off before that time or switch it to another 0% card, you can theoretically shift your debt around without paying any interest at all.
If you’re trying to pay down your debt so you can get a car loan, this is a key way to do it!
How to Save Money Using Your Credit Card in Canada
The process goes a little like this:
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- Calculate your overall debt so you know where you are
- Look for a 0% or balance transfer credit card with a credit limit close to that amount
- Check the length of 0% term, 9 months or more is better
- Use the card to pay all or the majority of the debt
- Prioritize paying off any debt left over that is incurring interest
- Pay off the credit card until the interest free period is close to the end
- Apply for another 0% card and repeat the process
If you’re clever, you should find some great value cards that offer 9-12 months of zero interest.
Make sure they don’t charge transfer fees, as some cards are doing that. This can offset any interest savings you make, so do your math. A card charging a 1% transfer fee on $4,000 of debt adds another $40 to the amount before you even begin paying.
Don’t worry too much about the standard interest rate as you won’t be paying that. You only need to worry about standard APR if you plan to continue using the card once you have transferred the debt out or paid it off.
Making this Process Work
Credit cards change their offers all the time. There are a few around right now that don’t charge a transfer fee, or charge 1% and offer between 9-12 months interest free.
If you can find a card that you are eligible for, go for it.
But, as each credit card application uses a hard inquiry on your credit report, keep applications to an absolute minimum and only apply for credit cards so their rate is available when the previous interest free rate is about to expire.
It sounds like a lot of work but it takes less than five minutes to apply for a credit card and you can use your favourite calendar to remind you when to switch.
Soon, you’ll find the amount of debt going down from you saving money using your credit card and you will be eligible for a car loan.
Contact Unique Chrysler in Burlington for help, advice and competitive car finance.
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