What is Balance Transfer ?
A balance transfer is a process where part or all of the outstanding debit balance (or debts), a cardholder owe to another lender, is transferred from one credit card to another. Credit card balance transfers are usually done by the cardholders who want to move the amount they owe to a credit card with a lower rate of interest, less penalties, extended time period to repay the dues and benefits such as reward points or travel miles.
A credit card balance transfer helps to pay-off the outstanding balance sooner, by decreasing the overall cost of what the customer owes. Transferring high interest balances to a card which offers a promotional lower interest rate will enable to save money on interest repayments. It can be a good way to keep track of the user’s balance and payments with every detail in one place.
The credit card companies offer free balance transfers in order to attract people to select their products over a competitors’. Along with this, they also offer an introductory period from 6 to 21 months where no interest is charges on the transferred amount. This helps the customer to save even more and payoff the balance faster if it is settled during the initial interest-free period.
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Advantage of Balance Transfer
Disadvantage of Balance Transfer
- Hurts Credit Score: If a cardholder does frequent credit card balance transfer or have a credit card due balance above 30% of the credit limit, then the credit card score might get decreased. It is important to maintain a good credit score to make sure that the user is eligible for balance transfer.
- Gets Expensive: It is very necessary to find out if the balance transfer is actually worth considering or not. This is because most people get enticed by the minimal interest rate when they consider for a credit card balance transfer and forget to pay attention to the processing fees which comes along the balance transfer
- Increases Risk of Debt: Credit card balance transfer may end up with a higher credit limit and this results in racking up more debts than the user initially started out with.
Banks allowing Balance Transfer
Some of the top banks in India offer balance transfer facility. Some banks allow customers to transfer balances up to Rs.5 lakh and offer nominal interest rates for up to 6 months before the interest rate associated with new card are charged. Here is a list of banks that offers credit card balance transfer services at attracted rates.
|Bank||Rate of Interest (per month)||Processing Fee||Applicable Period for Lower Interest Rate|
|Axis Bank||0%||1% or Rs.199 (whichever is higher)||3 months|
|State Bank of India||0% – 1.7%|
2% or Rs.199, (For 60 days), whichever is higher
Zero (for 6 months)
|60 days – 6 months|
|Kotak Mahindra Bank||0%||Rs.349 per Rs.10,000||NA|
|HSBC Bank||0.99% (3-12 months), 1.25% (18-24 months)||1% (minimum Rs.149)||3, 6, 9, 12 months|
|Standard Chartered Bank||0.99%||NA||6 months|
|Punjab National Bank||0.99%||Rs.172 or more||6 months|
Balance Transfer Frequently Asked Questions (FAQs)
Your age and your income are the primary criteria for the bank to decide your credit eligibility. For instance, a bank would be more willing to a younger person, earning a stable monthly salary. Such profiles have lower risk exposure.
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