Everything about Credit Card Balance Transfer

With demonetisation of Rs 500 and Rs 1000, Indian economy is on a run to cashless economy. The future of transactions in Indian economy will be dominated by plastic money more than ever before. So it is very important to gather maximum information about the card payment methods and types of cards available in the market today.

But before you apply for best credit card, you should know about different aspects of credit cards. Right from card expenses, to card interest rate to benefits of plastic payments, you should keep yourself well abreast about all the aspects.

Besides offering quick and convenient payment option to you, your credit card offers you a unique option to transfer balance of your one card to another card. Yes, using credit card balance transfer you can swap your high interest dues to less costly account!

Transferring dues of a card to a new card with lower rate of interest is too attractive a deal to miss for you as the customer. Isn’t?

One of the key reasons to offer such a facility by your card company is to attract new customers. You can also compare the facility to a number portability being provided by your telecom company.

Generally when you get a new card, it offers you host of benefits such as interest-free lock in period, loyalty points, cash back and so on. Like telecom companies banks are steadfast in offering instant approval credit cards. The transfer of balance is as fast too. So the best time to use credit card balance transfer is when you have mounted huge credit in one account.

When you fail to pay back your card bills, the charges on overdue along the interest rate become too much to carry on with. It is best to look out for ways to pay back as soon as possible and balance transfer helps you do the same. If you lack the strategy to pay back you should never opt for balance transfer. As long as your new card stays current you would save on balance transfer.

Card transfer balance helps you only simplify your financial life. It is a great means to consolidate dues on multiple cards to a single account as it saves your time and energy to track the payments every month.

You can even balance transfer your auto loan, travel loan or other loans with EMIs to a zero interest credit card. However the loan terms should be such that you can use the option.

The idea of swapping your high interest dues to low/or zero interest card appears too tempting but it is not without a balance transfer fee. The transfer fee is lower than the interest you were paying on your old card, but it would be close to 3% of the total amount you are transferring. So always calculate the real cost of balance amount transfer before opting for it.

Also, before you make the move you should closely check out the lock in period of offer. The benefit of extremely low interest rate would not last forever. The teaser rate would generally stay for 6 to 12 months so you should plan everything accordingly. As, after this initial period, regular rate would be levied and it would be too much to bear after having paid the transfer fee.

Another very interesting feature about balance transfer cards is that the benefit is offered only on the transfer of balance to the new card and not on the new purchases. So, you need to be careful while making new purchases with this card as you would be charged at a regular rate and APR.

Knowing all these benefits of balance transfer one may consider transferring the balance on the second card to a third card as and when the teaser rate expires! It may appear the best way to avoid the real time expenses of credit payment. But not at all. It doesn’t work like that.

When you switch on from one card to another with high balance, CIBIL is watching the pattern. Low interest accounts with high balances all the time would bleed your score and ruin your CIBIL rating. You would not be able to get a card and credit in the future at all with multiple such balance swaps.

As long as you have a good score, a financial institution would be interested in offering you credit solutions. Failing to pay back your dues or a possibility of entering a debt trap would only damage your credit score and thus it will become even more difficult to pay back your existing dues. So always think wisely when you opt for credit card balance transfer.