A credit card balance transfer can be defined as the transfer of one credit card balance amount to another, this can be seen as a method employed by many lenders (banks) to get customers to use shift to another credit card. The balance transfer is mainly done to enjoy low interest rate and avoid credit card debt on the existing card. However, the frequent balance transfer can lead to making poor financial choices in the long run.
How Does Credit Card Balance Transfer Work?
If the interest charges have compounded to a point that you are finding it difficult to repay the outstanding balance every month, you might consider using the option of credit card balance transfer. When you do so, a special credit card balance transfer loan with a fixed and economical interest rate is issued against your card. This loan money is then transferred from the new credit card to the bank account of the existing card and the dues are cleared in full. You can then pay back the borrowed amount in easy instalments. As a result, your penalty charges are obliterated and instead of paying up in one go, you can make low-cost payments every month.
How long does it take to process the Balance Transfer request?
If you are transferring the amount to an existing credit card then the request may be processed within a week. If you are applying for a new credit card on which you want to avail the balance transfer facility. Then it may take up to a month to process the request.
Features of Credit Card Balance Transfer
- Save on the interest payment to the other Bank
- Instant transfer
- Attractive interest rates
- Payments in 9 to 48 months
- Nil documentation
- Paperless money remittance
Benefits of Credit Card Balance Transfer
Following are the benefits a credit card balance transfer
- Quick and Easy: If the customer is able to meet the eligibility criteria of a balance transfer then the banks will allow the customer to transfer the balance from one credit card to another bank’s credit card within a short period of time. This is a timely help for the customer to deal with the credit card debt.
- Multiple Transfers: It makes more sense to transfer all existing credit card debts to the new card and most banks offer this facility. Now the borrower can payback all debts from one place.
- Incentives: A credit card balance transfer also comes with incentives like an interest free period and lower interest rates which offer some respite to the borrower.
How to Apply for Credit Card Balance Transfer?
- Apply for credit card balance transfer by submitting a request on the official bank website.
- Visit the nearest bank branch and request for a credit card to credit card transfer of balance.
- Call on the credit card customer care number and request the executive to tell you how to transfer the credit card balance to another bank account.
How to Transfer Credit Card Balance from One Card to Another Bank’s Credit Card?
The most common question in everyone’s mind would be on how to go about this balance transfer, we have tried to illustrate the process in a few simple steps.
Customers who have had a good track record with a bank with respect to their credit card spends, transaction pattern and payment history, becomes eligible for a balance transfer on credit card from time to time, depending on the internal policies of the bank. Only select customers are given preference for balance transfer.
- Modes of Fund Transfer
Funds would be transferred via NEFT or Demand Draft. For NEFT, the customer needs to send an e-mail to the Bank with the details of other bank’s name, customer’s name as per other bank details and other bank credit card number in which the balance transfer is to be taken.
What are the Fees and Charges to Transfer Money from a Credit Card to Another?
Credit card to credit card balance transfer attracts certain fees and charges. Some of these credit card balance transfer charges are listed below:
- Processing Fee: To transfer the outstanding credit card amount to a bank account, you will most likely have to pay a nominal processing fee of 1% to 3% of the loan amount.
- Transaction Fee: A transaction fee may be also charged by the new credit card issuer, over and above the processing fee, when applying for a credit card. This could be between 1% and 5% of the loan amount.
- Interest Rate: Some bank’s levy 0% interest charges for the initial period. Past this grace period, standard interest charges are applied that vary from bank to bank.
How to Transfer Money from One Credit Card to Another?
Balance transfer from one credit card to another credit card can be done in quick, easy steps:
- Check the outstanding due, interest rate, and the penalty charges you are paying on a credit card
- Search for a new credit card that is offering you funds at a lower rate of interest
- Check if the credit limit on the new card is enough to clear the outstanding debt on your current card
- Take into account all balance transfer fees and charges to calculate the final cost you are likely to incur
- Submit your credit card application and request the bank to transfer the balance and pay off your debt
- If approved, your credit card dues will be cleared
Who Should Apply for Credit Card Balance Transfer?
Cardholders who are carrying significant amounts of debt at a high interest rate may apply for a balance transfer. This will help them pay off the debts without incurring hefty charges. Do note that balance transfer is best suited when the user can pay off the due amount within a few months. If he finds that it will take longer than a few months, perhaps a year or two, then a Personal Loan will be better suited.