What is a Balance Transfer? How does Balance Transfer work? In this article, we have mentioned everything you need to know about balance transfer credit cards.
Having a credit card is one thing but using it to your advantage is another. In order to use your credit card wisely, you need to keep your credit card dues clear all the time, but there are times when you are not able to pay the bills in full and timely as well. During these times you would wish if you could have another way to pay the bills or get some extra grace period to pay the outstanding amount without any interest charges. Without any further ado, here is the one way that could save you from all the hassles.
There is a high risk in using a credit card as you can easily end up in a debt trap. To save you from this situation some credit card issuers provide a facility on their credit cards that can help you save a lot on the high-interest debt. This facility is known as Balance Transfer. They surely can help you but before you jump right into it you need to understand how exactly they work and what are the possible implications that you can face while using them.
The concept behind the balance transfer is to move one with a high-interest rate due amount to another credit card with low-interest rates. This gives you buffer time to pay off the outstanding balance with no or less interest rates. In simpler terms, the due amount of one credit card can be paid by another credit card that has the facility of a balance transfer, once that amount has been deducted from the second amount it becomes the outstanding balance on the second credit card which you will be required to pay.
Balance Transfer won’t make your debts go away magically, however, if used wisely can help you pay the outstanding balance easily as well as help you save the money in terms of interests and other fees. We can say it is a good idea but you need to research properly whether the processing fee on the balance transfer is costing you more than the interest rate or not. If it does then you should avoid using this facility.
Here are a few things you need to consider before using the balance transfer credit card:
Impact on credit score: You need to see whether using the balance transfer facility is going to impact your credit score positively or negatively. If it helps in building a good credit score then you must go ahead and use a balance transfer credit card if not then you would not want to harm your credit score.
Processing fee: Before you proceed with the balance transfer you need to see how much is the processing fee and whether it is costing you more than the interest rates of your first credit card then you need to avoid using the balance transfer facility.
Grace period: It is better to look for the grace period on the balance transfer credit card, if you are not getting the time to accumulate the funds to pay off the debt on this credit card as well then you need to avoid doing the balance transfer.
To summarise, a balance transfer facility can be your friend in need or can be the biggest foe. You need to check all the fees and charges before using it. If you happen to save money using this facility then you must use it otherwise don’t. Some of the credit card issuers that offer this facility on their credit cards are SBI Cards, HDFC Bank, RBL Bank, Kotak Mahindra Bank, ICICI Bank, and so on.
Additional Reading - A Beginner’s Guide To Credit Card Points And Miles
FESTIVALS IN INDIA
BAR & CAFES
TRAVEL & EVENTS
NEWS & POLITICS
CARS & VEHICLES
ECONOMICS & TRADE
PETS & ANIMALS
MOVIES & ANIMATION
HOME & GARDEN
GIFTS & OCCASIONS
BEAUTY PRODUCTS & SERVICES
BABY & CHILDREN'S PRODUCTS