Last week, I mentioned that I applied for a low interest rate balance transfer credit card . I need some temporary financing and I think that such credit cards can give me a nice cash advance  for a low rate. I had been looking around to see what my options were. Sadly enough, there are no 0% balance transfer offers available in Canada at this time! The cheapest one I have found was at 1.99%. All right, 1.99% on $10,000 only makes $199 of interest after a year. So in the end, it’s not that bad (especially if you compare it to a 8% loan or a 15% credit card!). Since I have had a positive experience with MBNA  in the past (I once had a Montreal Canadiens credit card 😉 ), I decided to go with them once again.
After applying online, I decided to call MBNA to see if they had received my application (the last page of my application didn’t refresh properly). Interesting enough, I waited less than 2 minutes on the line before speaking to a human being.
The lady was really helpful and found my application right away. She asked me if I wanted to review the application on the spot so they can issue an immediate approval (thinking that my credit card bill was due in mid-June, I jumped at the offer!).
The MBNA process is quite straight forward. They validate your identity, the information that you filled in the application and go a little bit deeper (they asked me if I was a home owner, the amount of my mortgage payment, they looked at my credit bureau with me and validate all debt there are).
The nice thing is that they take your word for it. For example, she asked for more info on my salary but never asked for any proof. I just had to describe what percentage of my income was base salary and how much was variable.
After she had validated my application, she was able to give me my authorized limit… drum roll please…. $13,000! I was quite happy because this means that I will be able to pay off my parents in full 2 weeks from now!
The problem with balance transfer credit card offers
I have noticed that there is one huge catch to making a balance transfer to another credit card. The catch is that we are human! What does this mean? It means that while I might only need to transfer 8 or 9K, I will likely transfer 12,000$ to my regular credit card to ensure I have enough room to pay everything. The problem is that I have just created a $12,000 debt at 1.99% payable in full 10 months (or pay through the nose)… I will have to be very careful to pay it off on time!
How the credit card balance transfer works
Once I get my card, I simply have to call to activate the card. Then, they ask me how much to transfer and to which credit card. They make the payment for you so you don’t have to worry about anything. The most important thing is to make sure that your credit card bill is not due on short notice. If you are planning to get a 1.99% balance transfer credit card, I would suggest that you start the process just after you paid your credit card bill. Therefore, it will give you about a month to complete the transfer. In my case, it will take about 2 weeks to have everything completed (the card approved, receive it and transfer the credit card balance over to MBNA).
I received my card only a few days after calling. When I called to activate the card, they were quite fast to complete the whole process. A big thanks to Trevor and Ticker for the comment on my previous posts about the credit card terms and balance transfer fees. This gave me the occasion to ask the guy what the exact process was. Here it is:
– The balance transfer is done within a week. They send the money to the other credit card company by electronic transfer.
– If you miss a payment on your credit card, the 1.99% rate disappears and you jump to the killer regular credit card rate.
– If you go over your credit card limit, the balance transfer deal ends as well and you go back to a normal credit card rate.
– You have 10 months at 1.99%, after that, it’s over. So you are better off not fooling around with this debt!
– There is a fee of 1% of the amount transfered to organise the balance transfer
– The payment to my credit card took 3 days (they say 2 to 5 business days).
– The card is platinum but doesn’t look like one. The design is not that great 😉
– But, the fact that the card is platinum doubles your warranty on your purchases up to 2 years.
Overall, the credit card balance transfer won’t cost me too much and it will help me paying off the loan from my parents faster than expected. On the other hand, I will shortly setup a payment plan to make sure I pay off and remove this debt from my balance sheet by the end of the year!
So if you are thinking about doing a balance transfer, I truly suggest to try the 1.99% MBNA Platinum credit card :