Is It Possible to Borrow a Lump Sum of Cash at 0%?

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Last updated on November 3, 2020 Comments: 16

You’ll be hard-pressed to find genuine no-interest loans in Canada. But there is a financial hack that can come close to a 0% loan: the combination of a low-interest credit card cash advance with a low, or preferably, 0% interest balance transfer.

How Does It Work?

Cash advances are a credit card feature in which the cardholder can effectively ‘purchase’ cash with their card and withdraw it from an ATM or a bank. It differs from a debit or chequing account withdrawal in that, like any credit card purchase, the cash advance must be repaid in full, and it is subject to interest. A credit card’s cash advance interest rate may be higher than its regular purchase interest rate, and its interest is often applied immediately, without the usual credit card grace period. Though most cash advance interest rates are prohibitively high, a cardholder can minimize the cost of a cash advance by using one of a few credit cards with low cash advance interest rates.

The cash accessed from a cash advance shows up as debt on a credit card’s bill. The interest a cash advance is subject to can then be further minimized, or temporarily eliminated, by transferring the cash advance debt to a balance transfer credit card with a 0% interest promotion.

Advantages

Emergency Solution. Though not sustainable as a long-term solution to chronic cash flow issues, this hack can be a potential quick fix.

Flexibility. It may be more convenient to make some types of payments with cash rather than credit (e.g. a rent payment).

Cash at Low Interest. Pairing a cash advance with a balance transfer can give you the flexibility of cash with the low or no-interest relief temporarily offered by a balance transfer promotion.

Disadvantages/Risks

The cash advance-balance transfer combo isn’t without its faults, and if it’s not executed carefully it can exacerbate your financial issues rather than ameliorate them.

No Guarantees. Remember, a cash advance is subject to its own interest rate until you execute the balance transfer, and a credit card issuer is not obligated to approve your balance transfer card application. Check your credit score before you take out the cash advance and consider whether or not you will be categorized as a desirable applicant by the card issuer.

Balance Transfer Limitations. Keep in mind that banks generally prohibit balance transfers of debt that is already owed to them. For example, debt from a TD credit card will not be approved for a balance transfer to MBNA, which is a division of Toronto-Dominion Bank. Same goes for Scotiabank and Tangerine.

Additional Fees. Most balance transfers come with a one-time transfer fee between 1–3%. A cash advance may be subject to a one-time fee as well, plus withdrawal fees at the ATM.

Post-Promotional Interest Rates. A balance transfer’s attractive, low-interest promotional rate won’t last forever. After the promotion ends it will likely jump up considerably, and if you are unable to pay off the debt before the promo’s end, your cash flow issues might multiply. Carefully evaluate a promotion’s advantages and disadvantages before deciding if a balance transfer is right for you.

Credit Score Hits. Taking out a cash advance can increase your credit utilization ratio, which will have a negative effect on your credit score. Plus, each credit card application results in a hard credit check. Having several hard checks in a short period of time can hurt your credit score and will not inspire confidence in future creditors.

Alternative Borrowing Solutions

Only you understand the comprehensive picture of your financial situation and whether or not a cash advance–balance transfer combo is a financially responsible strategy for you. If you’re uncertain of your capability to be approved for a balance transfer promotion or to repay the transferred balance after the transfer’s promotional period ends, you might instead consider other alternatives.

Solo Cash Advance

Some cards, like the Scotiabank Value Visa, might have low-interest cash advance promotions that negate the need to follow a cash advance up with a balance transfer. Just remember, a promotional cash advance interest rate won’t last forever; after the promotion ends its interest rate will increase.

Solo Balance Transfer

If you’re not strictly in need of cash per se, you might forgo the cash advance and utilize just a balance transfer instead. You can make purchases on your credit card and then transfer the credit card balance using a top balance transfer card.

Low-Interest Personal Loan

Though you won’t be able to find a 0-interest loan in Canada, you might be able to find a low-interest loan. The best personal loans in Canada might offer interest rates as low as 3%. If you can get an interest rate close to that on a personal loan, you could ultimately pay less money for a loan than you would via the cash advance–balance transfer maneuver after factoring in the cash advance interest rate, ATM fees, the balance transfer fee, and the post-promotional balance transfer interest rate. Loan interest rates can vary substantially from one lender to the next, and the best way to find the lowest interest rate available to you is to use a loan search platform like Loans Canada, which will cross reference your basic financial info (income, existing debt, etc.) with a wide network of Canadian lenders.

Borrowing from Friends or Family

Can we take back what we said about there being no such thing as a no-interest loan?

The one exception to that might be borrowing from people with whom you have a special relationship, and who might be willing to lend you money with no interest. Many of us are embarrassed to ask our loved ones for financial help, but it will ultimately hurt less to swallow your pride than to swallow compounding interest rates.

FAQs

Unfortunately, there are no truly interest-free loans available from mainstream lenders in Canada. That said, you can obtain a low-interest loan if you have a high credit score and steady source of income, and you may also be able to obtain low-interest cash via a credit card cash advance followed by a low-interest balance transfer.
The cheapest way to borrow money from traditional financial institutions, like banks, is to ensure that your credit score is strong and that you have a steady source of income, which will qualify you for low-interest loans. If you do not have a strong credit score and your income is inconsistent, you might opt to instead borrow from friends and family.
Debt from a credit card cash advance can be balance transferred to another credit card, provided the debt is being transferred to a different financial institution. Creditors typically will not allow you to balance transfer a debt via a balance transfer promotion that they or one of their subsidiaries issue.
Zero percent financing can be a great way to save money on a car loan, but it is often only available to those with very high credit scores. Also, even if you do qualify, the dealer still needs to ensure that it will make a profit on the sale of the car, so it is unlikely that you’ll get any further cash incentives beyond the 0% interest rate.

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Author Bio

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Article comments

16 comments
John says:

Is this still available? If so, what do I have to do?

Aaron Broverman says:

Hi John,
Unfortunately no, this offer is no longer available, but you can get a 0% promotional interest rate on balance transfers with the True Line Mastercard for 10 months through MBNA

Steve says:

Hey there Greedy Rates. I’m a little confused. Does one have to be a Canadian citizen to take advantage of these 0% rates? Also, we have $5000 on a credit card, have a mortgage w/ a balance of $129k valued at $229k but looking to buy a rental for positive cast flow. Like to hear your suggestions for accessing cash to get the rental to rehab. Thanks

Aaron Broverman says:

Hi Steve,
Read the terms and conditions of the offer for any promotional credit card offer and you will find your answer. Yes, generally, you have to be a citizen of Canada (or at least a Canadian resident) to take an advantage of any promotional credit card offer.

kyle says:

u can buy my fourplex. 165,000 mort under 800
income from rents 2600
water bill 125
property insurance 225
taxes 125
needs some work tenats pay there own gas and power and tenat insurance.
its in churchbridge sk

Christian Lazaro says:

Since this offer isn’t valid anymore, can you use this exact same strategy with their other cards (True Line and True Line Gold) ?

Nate Siegel says:

Hi Christian,

Good comment. After the discontinuation of the MBNA Platinum Plus card, the market was missing a 0% balance transfer deal—but more importantly one that was flexible with many sources of debt. MBNA then came out with their two True Line cards, and just as you suspected these cards offer the same benefits. That’s 0% for 10 months, if we’re talking about the regular True Line card, and the balance transfer can be from a line of credit, other credit card or somewhere else.

For this reason MBNA also makes it easy to deposit up to the approved credit limit to another bank through the True Line card, because it has the same result for them anyway. That deposit you made with your credit limit and your new balance with MBNA, at 0.00% for now, are one and the same. Hope that helps explain a bit further. You can also opt to pay $39 for the True Line Gold card, which has a shorter 0.00% deal (only 6 months) but a lower post-promotional rate by 4.00% (8.99%). These numbers change if you have the Quebec versions.

GreedyRates Staff

Christian says:

Hey,

I just started a small business and I would like an option to use a credit card or get a loan for 0% interest for at least one year. I understand that one of the MBNA cards offers this, but are there any business cards that have similar characteristics to the MBNA?

I looked at some of the Amex cards that have 55 interest free days, but is that only for the first 55 days or for every month?

I look forward to hearing from you. Thanks in advance!

The GreedyRates Team says:

Hey Christian,

Congratulations on the beginning of a new business! You’re right that it will be benefitted greatly by a nice 0.00% balance transfer card—but do you have a balance to transfer? If not, do you have a large upcoming expense (business or otherwise) that you can transfer after-the-fact? In the case that neither are true, you may be better off opting for a business Amex card which offers those much-appreciated grace period days.

The monthly grace period perk of 55 days applies every month. It means that you’ll get 55 days extra to pay your bill before being charged interest. This is something very useful, as charge cards often bump your interest up to relatively high rates if you miss a payment. Extra grace period days ensures this won’t happen easily, offering more flexible cash flows for your business in tighter times.

GreedyRates

Mandy Stierman says:

Currently, are you aware of any zero percent financing options either where the credit card has to be use directly or cash is available?

The GreedyRates Team says:

Hey Mandy,

There are two 0.00% financing options available as credit cards on the Canadian market right now. Both are from MBNA and require you to make use of your approved credit limit to be eligible, but only when transferring balances from another credit card, line of credit, or some other type of loan. If you’re talking about a credit card that has a 0.00% rate for purchases or non-transfers, then you’re out of luck.

The MBNA True Line Mastercard offers 0.00% for 10 months on transferred balances, has a $0 annual fee, and then applies a post-promotional rate of 12.99% on your balance transfers and purchases. The other MBNA card, the True Line Gold, offers a similar deal but for $39 annually: 0.00% for 6 months but then a much lower post-promotional purchase and transfer rate of 8.99%.

We understand that this isn’t the same as “cash on demand” at 0.00%, which is what you were looking for. However, remember that the way you transfer a balance is almost limitlessly flexible, so if you’re approved for a balance transfer deal and with a large enough credit limit, then you can simply use another card to withdraw cash or make a purchase, thereby adding to its balance before being transferred to MBNA.

GreedyRates

Ricky says:

Hi I have a lot of clients that are looking for these kind of credit cards with 0% Apr and also banks transfers I have people that are looking for up to 500000.00 credit limits would u be able to help me with that

The GreedyRates Team says:

Hey Ricky!

If you’re interested in a great 0.00% balance transfer deal, which can also be accurately construed as an “interest-free loan”, then it’s important to know that the MBNA Platinum Plus card is no longer offering this deal. MBNA moved it to two of their other cards—the True Line Mastercard and the True Line Gold Mastercard. Both are strikingly similar, but one has a slightly lower annual fee and slightly higher interest rate (the regular True Line card). Instead of 0.00% for a year, however, MBNA has reduced the promotion to 6 months, and only gives it to those who apply before August 30, 2018.

Additionally, we’re not sure if MBNA would approve a balance transfer for $500,000. They might respond well to a call and special request, but for such a large sum, they might prefer to handle it without any kind of credit product attached. It’s worth a try, however. If you’re approved, MBNA allows cardholders to use their balance transfer to send cash (up to their available credit limit) to other bank accounts and credit cards. So, if you get a loan from elsewhere and can cover it with your MBNA credit limit, you can simply transfer cash to the other bank to expunge your debt (thereby transplanting it to MBNA at 0.00%).

Let us know how it goes!
GreedyRates Staff

wilbert manalili says:

i need only 2000 to pay my bills and card cauze i resign in wrha due to illness so i have nk income ill w8 my pavkage for benefits thats a lumsum package to my employers (wrha)anyone known where can get a loan ? while still w8ting my lumsum ti the goverment

The GreedyRates Team says:

Hello Wilbert,

If you’re in need of a loan due to your recent illness-related resignation from the WHRA, then you came to a good starting point. We can help guide you towards the loan that suits your situation best, but it will likely come from a credit card–the MBNA Platinum Plus rather than a traditional loan. As you may have read in the article above, MBNA allows new cardholders who are approved before June 30th, 2018, to do a combination of balance transfers and/or cash advances at 0.00% interest. Your situation would greatly benefit from a debt consolidation tool like this.

People often use the Platinum Plus card to transfer outstanding balances on other credit cards, and get 12 months of interest-free relief. It can also be used in the other direction, like to pay off a line of credit or make a cash advance to another bank account–all at the same 0.00% for 1 year. For yourself, you need to pay bills (which are likely tied to your current bank account) and clear your current credit card’s balance as well.

If you’re approved for the MBNA Platinum Plus card, then you’ll be able to do a two-step maneuver that will take care of both issues at once. Use your current card to pay all your bills in full, and then transfer that balance to MBNA. You can also do a cash advance from MBNA, up to your available credit limit, to your current bank. Either way, you’ll be able to handle your pressing obligations and wait for your lump sum government package without worry.

GreedyRates Team

Furqan Uz Zaman says:

Please contact me, I need $50000.00 and want one small monthly payment to pay back this loan.