What is a Credit Card Balance Transfer – List of Cards That Offer & How To Do it?
Are you paying a heavy interest rate on your credit card? There’s a solution to pay the amount due on your card at a lower interest rate – opt for a credit card balance transfer. Opting for a balance transfer facility could help you clear your bills faster and at a lower interest rate.
Let’s navigate through what balance transfer credit cards are and how they work.
What is a Credit Card Balance Transfer?
Credit card balance transfer implies transferring your existing credit card dues to a new card. Let’s say that you have significantly high outstanding dues on your credit card. To add to your woes, you are paying a high interest rate on your card. In such a situation, you can opt for a credit card balance transfer, where you move your outstanding credit card dues to a new card at a lower interest rate.
This would help you pay off your credit card bills in a much economical manner and avoid any penalty charges that would have been levied due to missed or late payments. However, take note that a credit card balance transfer is just a facility. You will still have to repay the outstanding due amount. And missed payments could lead to heavy penalty fees.
Not all credit cards offer balance transfer. Let’s take a look at some of the cards or banks that offer this facility along with their benefits and other details.
How to Transfer the Balance from one Credit Card to another?
The credit card balance transfer is an effective way to pay off huge credit card bills. However, the balance transfer is only feasible when the credit card you are transferring the amount to offers benefits that are more lucrative than the previous card. For example, the card offers low-interest rates compared to the one on which you have pending dues.
However, the most important point you should keep in mind while transferring the due amount is that the amount to be transferred to the other credit card must be within the other card’s credit limit.
For instance, let’s assume that your due amount on credit card A stands at Rs. 75,000. But the credit card limit offered by credit card B to which you want to transfer the amount is Rs.50,000. Thus, you will only be able to transfer Rs. 50,000 to credit card B and the remaining Rs.25,000 will show as outstanding on credit card A.
The applicant must provide the following information while applying for credit card balance transfers:
- Credit card number
- Credit limit
- The expiry date of the credit card
- Outstanding credit amount
Most banks also require the following documents for proceeding with credit card balance transfer applications:
- Credit card photocopies
- Credit card bill statements of the last 3-6 months
- Address proof
You can pay the pending amount in the form of demand drafts issued by the new bank towards the old one.
List of Credit Cards that Offers Balance Transfer
Let’s check out some of the best balance transfer credit cards from top banks:
1. State Bank of India
You can activate the credit card balance transfer offer on the SBI credit cards by logging into the credit card account, sending the bank an SMS for the same, or even calling their customer care support. The repayment period varies from 2 months to 6 months.
Fees and Charges
- Interest rate: 0% to 1.7% per month (varies based on tenure)
- Processing fee: 0% to 2%
2. HSBC
The HSBC credit card balance transfer offers range from 3 months to 24 months, with varying interest rates based on tenure. Furthermore, HSBC also offers foreclosure on the credit card balance transfer and the bank does not charge any additional fee for it.
Fees and Charges
- Interest rate: 10.99% to 15.99% p.a.
- Processing fee: 1.5% (subject to a minimum of Rs.200)
3. Kotak Mahindra Bank
The bank allows a minimum transfer of Rs. 2,500 with no maximum limit. However, Kotak Mahindra limits the transfer amount to 75% of the credit card limit. Moreover, the bank charges a balance transfer fee depending on the amount transferred. The application process remains the same as mentioned for the above banks.
Fees and Charges
- Interest rate: Decided at the time of application
- Processing fee: Rs.349 per Rs.10,000 transaction
4. Axis Bank
The minimum amount the Axis Bank allows you to transfer is Rs.5,000. The tenure available at the bank stands at 3 months and 6 months. The 3-month duration does not attract any interest rate, while the interest rate is charged for the 6-month duration.
Fees and Charges
- Interest rate: 1% to 2% per month
- Processing fee: 1% of the amount
5. Standard Chartered Bank
Standard Chartered Bank offers customers the option to transfer balances of up to Rs. 5 lakh to their SC credit cards. You can also make a payment of a minimum of 5% of the transferred amount each month. The option can be availed through the same process as mentioned for the above banks.
Fees and Charges
- Interest Rate: Starting from 1.49% p.a.
- Processing fee: 1 to 5%
Also Read: Credit Card Cash Withdrawal: Should You Withdraw Cash with Credit Cards?
How to Find the Best Balance Transfer Card?
You can find the best balance transfer cards matching your requirements by following some simple steps and keeping a few crucial points in mind.
Compare the terms and conditions offered by different credit cards. More importantly, compare fees, interest rates, and credit card limits, and understand the cardholder benefits.
More importantly, some credit cards now have 0% annual charges apart from other benefits for new qualifying applicants. It can help you select the best balance transfer credit cards that best suit your requirement. You must keep the introductory period in mind to avoid paying more interest once it expires. Lastly, you should also consider the long-term benefits, such as cashback rewards.
Pros of Credit Card Balance Transfer
Let’s explore some of the most prominent benefits of credit card balance transfers:
- Save on interest: It helps you save the extra interest amount that you might have paid on the late payment on the dues you owe on your credit card.
- Pay off your dues quickly: It’s a cost-effective way to pay off your credit card dues as compared to other methods.
- Easy to apply: The quick application process makes it convenient for customers to avail the option of paying the dues.
- Grace period: In order to pay off their outstanding balance, credit cardholders are given a buffer period. During this period, there is no interest or a very nominal interest rate charged that is levied.
Cons of Balance Transfer
If you opt for a credit card balance transfer, you must, first, consider the drawbacks of the process.
- Transfer fee: There is generally a fee associated with balance transfers, which ranges from 3 to 5 percent of the transferred amount. If you transfer a large amount to another credit card, you might have to pay a hefty fee just to complete the transaction. In addition to the credit card balance transfer, the new credit card you opt for could also carry an annual fee.
- More debt: Balance transfer cards can increase the credit limit for cardholders. Unless you manage your expenses and spend wisely, you could end up with more debt than what you have originally started with. Multiple credit cards create multiple credit limits, eventually tempting you to make more purchases with the card from which you have transferred the dues.
- Strong credit score: In order to qualify for most balance transfer credit cards, you will typically need good credit or excellent credit scores.
Also Read: How Does A Credit Card EMI Work? 5 Things To Know Before Opting For An EMI
Important Points to Remember while Using Credit Card Balance Transfer
Listed below are some points you should keep in mind when availing a credit card balance transfer option to pay off your debts:
- Card balance reduction: When you transfer a credit card balance, your credit limit is reduced in the same proportion. For example, you have a credit card limit of Rs.75,000 and you have already transferred a balance amounting to Rs.50,000 to the same card. Eventually, the effective credit limit you have available for all other credit card transactions is only Rs.25,000.
- Pay your outstanding dues quickly: The best way of using balance transfers on credit cards is to pay off the due amount within the no interest or pay it within the nominal interest rate period. When this period expires, you will be charged interest rates as per the credit card’s standard rates.
- Interest on new transactions: New purchases on your credit card are not subject to the lower interest rate for credit card balances. Transactions such as these are subject to the standard interest rate offered by the credit card company.
- Card usage duration: A balance transfer is offered to customers who have used one credit card company for a year or more. It is to prevent credit holders from switching from one credit card company to another in order to get lower interest rates.
- Transact after transfer: It is always recommended not to use your credit card until 100% balance has been transferred and all subsequent charges have been cleared, even if you still have a credit limit left after transferring previous credit card balances.
Final Word
A credit card balance transfer can help you streamline your finances by paying off consolidated debts, saving you a significant amount of money on interest. However, it all depends on how you use the credit card balance transfer. Furthermore, you can maximise the benefits when you understand the ins and outs of balance transfers.
FAQs
Ans. When you have accumulated a considerable amount of dues on a credit card with high rates of interest and face trouble repaying it, you can opt for the balance transfer to avoid paying high interest and transfer it to a card that levies a lower interest rate.
Ans. No. Credit card balance transfer is an easy, quick, and almost hassle-free process. It usually takes a few days, and the period of doing so varies from bank to bank.
Ans. Banks don’t usually entertain constant credit card balance transfers. The number of times you can transfer the credit card balance is completely subjective to conditions set by a certain bank.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
