A Complete Guide On Credit Card Balance Transfer

Today all banks try to induce their customers to shift the outstanding amount on one credit card to another by facilitating balance transfer that too at a cheaper rate. It is generally believed that low interest rates or even zero interest rates are available for balance transfer but this interim relief is just an eye wash and is offered for introductory period only (say 3-6 months). Once you have completed the grace period, it will return back to the normal interest rates, that is, what the previous card company was charging from you.

What is a balance transfer?

Balance transfer is a facility given to credit cardholder who enables them to switch outstanding credit card balances or debt from one credit card to another one which is relatively used less or even new.

How does it benefit?

For a savvy consumer, the balance transfer can be a viable method of reducing debt. The process leaves the person free to pay down the debt on credit card without incurring additional charges. It benefits the card holders when the interest rates are high on their current card as against the card on which the balance has to be transferred. Such facility proves boon for those who are not satisfied with the services of their present credit card company. Thus, by exercising the switching option, cardholders can enjoy low interest charges or sometimes zero per cent charges and other services.

Another reason why an individual could prefer balance transfer is when any exciting offers are made to him. For instance, there could be a situation when a card issuer offers a long interest-free period. The person will get a fairly good period for enjoying interest-free credit and hence, it might be a good option. Moreover, other conditions such as high limit, low interest rates and convenient payment dates make things attractive for a cardholder and could become the reason of switching. It is advantageous to bring down the balance in that interest-free period so that when again the higher interest rate kicks in, your budget does not badly impacted. Most importantly, switching to another card can only temporarily save you from the burden of high interest rate. So judiciously use this window of opportunity to reduce your loan burden and do not start splurging after bringing down your outstanding. 

How to select the best balance transfer credit card?

Finding the right balance transfer credit card requires some research work from your side. You will want to set out all the options available in the market so that you can easily compare them. So, make the whole process easy by lining up all the offers on the basis of various parameters, like interest rates, fees and credit limits. This will help you see which offer would be worth looking into. In today’s internet driven world, you can take the help of different websites that can help you in comparing various cards options and interest rates without spending a lot of time.

How does balance transfer really works?

As a first step, you have to inform the credit card issuer, from whom you would avail of a balance transfer facility. The credit issuer will send his officer with a form, which you have to duly fill by citing details of your old credit card. Generally, it takes 7 to 10 working days by the credit card company to send a demand draft in the name of your old credit card issuer at your place. After submitting this demand draft to the old card issuer, you will get clearance for your outstanding amount. Now, you will only need to pay the transferred amount to the new credit card company.