Credit Card Balance Transfer

Credit Card Balance Transfer

A credit card is a convenient tool to make purchases and pay for them later. But, dealing with your credit card requires a good financial discipline. Moreover, keeping a track of the credit spends and consistent repayment are essential to get a good credit score. There will be times wherein one may go through a sticky situation and repayment becomes difficult. In such circumstances, balance transfer can be a saviour to manage the credit card debt.

Most of the popular banks in India allow their customers to transfer the balance from one credit card to another bank’s credit card. Here is what all you need to know about the credit card balance transfer.

What Is Credit Card Balance Transfer?

A credit card balance transfer can be defined as the transfer of one credit card balance amount to another, this can be seen as a method employed by many lenders (banks) to get customers to use shift to another credit card. The balance transfer is mainly done to enjoy low interest rate and avoid credit card debt on the existing card. However, the frequent balance transfer can lead to making poor financial choices in the long run.

Credit Card Balance Transfer to Another Bank Credit Card

A credit card balance transfer is targeted mainly at those who have considerable credit card debt and are having issues in repayment, these customers could be encouraged to shift to a new lender or another bank who could offer at a lesser interest rate. In this way the credit card holder is able to shift to a better card (in terms of interest rate) and reduce debt burden from existing cards.

Impact of missing credit card payments

There are heavy repercussions if you are not able to pay the credit card debt. In an increasing interest rate scenario, debt rises and with every missed payment or minimum balance could affect the overall credit history of the credit card holder. Once the credit score takes a beating, it is very difficult to rebuild, especially in times of rising debt and the individual falls into the vicious cycle of debt.

For example, when a customer has a credit statement with dues of Rs. 10000, now for this say the minimum amount due is Rs. 1000. Let’s say due to a cash crush the customer pays Rs. 1000 out of which majority say Rs. 700 will go towards the payment of interest for the balance to be paid with Rs. 300 goes towards the principle.

Thus, at the end of the next billing cycle balance of Rs. 9700 apart from interest to be paid and GST provided you had not used your card the previous month. If the customer uses a credit card to purchase items worth say Rs. 3000 then the balance will be Rs. 12700. This will just keep increasing each month.

As it is seen rising credit card will make life difficult for the borrower and a credit card balance transfer would be the way to ease this burden of debt.

Incentives for Credit Card Balance Transfer

A bank looking to acquire a new customer employs different methods to make the customer leave their current credit card issuer and switch to another card. The favourable methods that they use could be in the form of

• Low interest rates: As discussed above, giving a card at a lower interest rate than the existing card. This is the most widespread tactic that is followed by banks.
• Interest free periods: Sometimes banks could also declare a period as interest free period which could be favourable for the customer. The interest free periods could vary from lender to lender.
• Additional perks: Another commonly adopted method which is adopted by the cards department of banks is giving away reward points, airport lounge privileges and cashback points which tie up with exciting lenders and e-commerce sites. This could be a deal breaker in terms of shifting to another credit card. After all everyone wants to get a good deal at the end of the day.

Benefits of Credit Card Balance Transfer

Following are the benefits that a user gets by making a credit card balance transfer

• Quick and Easy: If the customer is able to meet the eligibility criteria of a balance transfer then the banks will allow the customer to transfer the balance from one credit card to another bank’s credit card within a short period of time. This is a timely help for the customer to deal with the credit card debt.
• Multiple Transfer: It makes more sense to transfer all existing credit card debts to the new card and most banks offer this facility. Now the borrower can payback all debts from one place.
• Incentives: A credit card balance transfer also comes with incentives like an interest free period and lower interest rates which offer some respite to the borrower.

Transaction Fee

A transaction fee or a commission is charged by the new credit card issuer when a borrower applies for a credit card, this could typically range between 1-5% of the debt that is about to be transferred. It is best to keep in mind the cost of processing fee while applying for a balance transfer and to opt for the lender that offers the best rate and that which would be completely beneficial to the borrower.

Features of Credit Card Balance Transfer

• Save on the interest payment to the other Bank
• Instant transfer
• Attractive interest rates
• Payments in 9 to 48 months
• Nil documentation
• Paperless money remittance

How to Transfer Credit Card Balance from One Card to Another Bank’s Credit Card?

The most common question in everyone’s mind would be on how to go about this balance transfer, we have tried to illustrate the process in a few simple steps.

Eligibility:

Customers who have had a good track record with a bank with respect to their credit card spends, transaction pattern and payment history, becomes eligible for a balance transfer on credit card from time to time, depending on the internal policies of the bank. Only select customers are given preference for balance transfer.

Modes of Fund Transfer:

Funds would be transferred via NEFT or Demand Draft. For NEFT, the customer needs to send an e-mail to HDFC Bank with the details of other bank’s name, customer’s name as per other bank details and other bank credit card number in which the balance transfer is to be taken.

Ho to Apply for Credit Card Balance Transfer

You can call the credit card customer care for balance transfer, and the executive of the bank will guide you through the process.

Credit Card Balance Transfer FAQS

1. I only have Rs.70000 as the credit limit in one credit card but have a credit card bill of Rs.85000 on my other credit card. Can I transfer the whole Rs.85000 balance to another credit card?

Yes, you can only transfer Rs.70000 from your one credit card to another credit card, but you can request the bank to increase your credit limit.

2. How long will it take to transfer credit card balance from one bank to another bank’s credit card?

If you meet their eligibility criteria, it will be taken up immediately and process gets completed in a minimum of 3 days.

3. Can I get a new credit card for the purpose of credit card balance transfer?

If you have a good income and stable employment and fulfil the eligibility criteria set by bank, you will be eligible to get new credit card for the purpose of balance transfer.

4. How to apply for credit card balance transfer?

You can apply for an HDFC Bank balance transfer credit card through

a) Official website of the bank

b) Visit the local branch to apply for the credit card balance transfer

c) CreditMantri: Visit www.creditmantri.com to create your credit profile and get the best cards that match your preferences