Managing your credit cards efficiently is a way to maintain financial discipline. As a credit card holder, it is important to track credit spending and make repayments consistently to maintain a high credit score.
However, due to financial hurdles, it sometimes becomes challenging to repay the due amount on time. Balance transfer on credit cards can be your saviour to consolidate your credit card debt.
What is credit card balance transfer?
A balance transfer is one of the ways to transfer the balance of a credit card to a different card. Credit card debt consolidation is the best strategy for managing funds. Debt can be consolidated from multiple credit cards. However, it must not cross your new card’s credit limit.
But not every bank provides a money transfer option on credit cards. So, you should research and find a bank that lets you do so.
If you currently have a hefty credit card interest, transfer the amount to a card with a lower interest rate.
How does a credit card balance transfer work?
The concept of credit card balance transfers is very simple. Your old credit card’s balance needs to be transferred to a new card. It will help you find a lower interest rate and better terms. However, the introductory low or 0% interest rate will last for only 6 to 18 months.
By transferring the balance, you will save a significant amount. For instance, if your current credit card’s interest rate is 15% and you transfer Rs 10,000 to a card with no interest, you will save almost Rs 1,500 in the first year.
Note: There may be an annual membership charge for some cards.
How does balance transfer credit cards benefit you?
Balance transfer credit cards can benefit you in multiple ways. Some of them are:
Minimise your financial burden
A balance transfer credit card does not charge a high-interest rate. The interest rates for credit card finance and balance transfers are very low. That is why you will have no financial strain.
Maintain your credit score
Due to the reduced interest rates, you will be able to maintain a healthy credit score.
Interest-free period
Even after getting your balance transferred, the credit card issuer will provide an interest-free period. So, you will be able to make new deals without incurring a high-interest rate.
A quick solution
If you have fulfilled the eligibility criteria, the bank will allow you to transfer the balance from a particular credit card to another card.
Multiple transfers
You can do multiple credit card debt transfers to another card. Many banks provide this facility to let borrowers pay their debts back.
Must Read: Simple Steps to Check Your Credit Card Balance
Interest and Fees on Money Transfer Credit Cards
Before applying for money transfer from a credit card, you should learn about the processing charge and interest rate. Banks impose 0% interest on money transfers for a particular period.
The processing fee charged by the bank for transferring the balance ranges from 1% to 3%. For instance, if the balance transfer amount is Rs 10,000, you need to pay Rs 349 as the processing charge.
You have to make your decision on a credit card money transfer after checking these details. This is because there is no way to cancel the facility if you have requested it.
Different ways to apply for money transfer credit card
There are various ways to apply for a free credit card in India and make fund transfers.
1. Net Banking
The easiest way is to use the net banking facility to transfer the balance. So, you can access your Net Banking account using your password and customer ID. You will find an option for transferring a balance.
2. App
Today, most banks have launched mobile apps for their customers’ convenience. Download the app and go to your account. You can easily access the option for transferring the credit card balance. You may also send your request via SMS.
3. Customer Representative
Another way to send the request is by contacting customer representatives at a bank like Kotak811.
Eligibility criteria for money transfer credit card
Every bank has different internal policies. It determines your eligibility for a balance transfer credit card depending on-
- Your payment history
- Transaction pattern
- Credit card spending
If you are eligible for getting the free credit card in India, you need to submit your-
- Identity proof (Aadhaar Card or voter ID)
- Income proof
- Address proof (Aadhaar Card)
Must Read: Eligibility & Documents Required For Credit Card
Important things you should know before transferring your credit card balance
If you want to make a balance transfer to reduce your credit card debt, you should remember some important things.
- Read the terms and conditions thoroughly before initiating money transfer from a credit card.
- Determine the cost of making the transfer. For instance, you should learn about the flat fee and processing fee.
- Make sure your newly chosen card lets you make the minimum payment. The initial interest will not cause you financial stress.
- Avoid using older credit cards to make big purchases because it will increase your debt.
- If you have a new credit card, you should pay on time to keep your credit score high.
- The minimum amount you should transfer is Rs 2500, while the maximum can be up to 75% of the overall credit balance.
- Once you have met the eligibility criteria, you have to wait at least three days to get your request processed.
Conclusion
After knowing what a balance transfer credit card is, if you have credit card debts, the easiest way to manage them is to transfer your credit card balance. Debts on multiple credit cards can adversely affect your financial status. Calculate the amount you will save on additional charges and processing fees while transferring the debt.
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