Experts Reveal How to Transfer Credit Card Balance

Understanding Balance Transfer Credit Cards — A Friendly and Expert Guide

Hi If you are also troubled by rising credit card debt and wondering how to get rid of it, a balance transfer credit card can prove to be beneficial for you. Simply put, it is a way to reduce or temporarily eliminate your credit card interest — giving you relief from paying off the debt.

Now I will explain to you in detail how it works, how to use it correctly, what are its advantages and disadvantages, and what are the options if you are not eligible for it. Everything exactly as if a finance expert friend is explaining it to you.

What is a transfer credit card balance?

Suppose you have a credit card with a 20% interest rate and you have built up a bill of ₹4 lakh on it. Every month you are able to pay only the interest, but the principal amount remains the same.

In this situation, a balance transfer credit card can be a lifesaver. To transfer credit card balance means moving the outstanding amount from your old high-interest card to a new one that offers 0% interest (APR) for an introductory period typically lasting between 12 and 21 months

That is, where earlier you were paying only the interest every month, now you can use the same money directly to pay the principal amount — that too without any interest.

How does transfer credit card balance system work?

Now that you are thinking of transferring credit card balance, understand some important things:

1.You can’t transfer a balance between two credit cards issued by the same bank. For example, if your old card is of HDFC, then you cannot transfer it by taking another card of HDFC.

This facility is only for transferring credit card debt. Some cards also provide the facility of personal loan transfer, but this is not available in every card.
How much balance the new card will accept depends on the credit limit on it. If the limit is less, then you will not be able to transfer the entire amount.
The benefit of 0% interest is available only for a limited time – and for this the transfer has to be done within 60 to 120 days of opening the account.
It may take several days or even weeks for the balance transfer to be completed. Till then keep making the minimum payment on the old card.

Transferring your credit card balance to a balance transfer card can provide key advantages, such as interest savings and streamlined payments.:

Interest savings: With 0% APR, all your money is spent on paying down principal, not interest.
All debts in one place: If you have multiple cards, transferring all your balances to one card makes it easier to make a single monthly payment.
Debt relief: With no interest, you can get out of debt faster.
Improve credit score: Keeping old cards active instead of closing them increases your overall credit limit and lowers your credit utilization ratio — which improves your score.

Understand its disadvantages too

Like everything else, it can also have some disadvantages:

Transfer Fee: Most credit cards charge a balance transfer fee ranging from 3% to 5%. For instance, if you transfer $1 lakh, you could end up paying as much as $5,000 in fees.
Interest-free time limited: As soon as the 0% APR period ends, high interest rates are applicable again.
Your credit limit might be lower than the amount you want to transfer, which means you may not be able to move your entire balance.
Penalty risk: If you make a late payment or spend above the limit, the 0% APR may be canceled and heavy interest may be charged.
Other charges: Late fees, annual fees, cash advance charges, etc. may also be charged.

How to maximize savings?

Now that you have successfully transferred credit card balance, follow these tips:

Add the total outstanding and charges. If you transferred a debt of $50,000 and charged a 3% fee, the total would be $51,500. Now divide this amount into interest-free months.

For example:

Outstanding: $50,000

Charge: $1,500

Total: $51,500

Term: 21 months

Monthly payment: $2,452

Make payments on time. Even a single late payment can end the 0% APR.

Avoid new expenses. 0% does not apply to new expenses.

Remember the due date. Set a calendar alarm to tell when the period is ending.
How to transfer balance?

Process to transfer credit card balance:

First gather complete details of the old loan — card number, amount, bank etc.
Choose a good balance transfer card and apply. Request the transfer while applying.
Keep making the minimum payment on the old card until the transfer is confirmed.
Do not close the old card — keep it aside, but keep it active.

How to choose the transfer credit card balance?

When you plan to transfer credit card balance, keep these things in mind:

Choose the card with the longest 0% APR.
Where there is little or no transfer fee, it is a better option.
Know what the normal APR is — if the loan is not repaid, the same interest will be charged.
Try to know the credit limit.
The annual fee should not be high.
Avoid foreign transactions or cash advances.
Focus more on repaying the loan than on rewards.
Fraud protection and other features can be a bonus.

Final Thoughts

Transferring credit card balances is a great solution — but use it wisely and with discipline. This is your chance to be debt-free without getting caught in the trap of heavy interest.

Aim to repay all dues within the deadline. Only then will it really pay off. With the right planning and discipline, you will find yourself moving towards financial freedom.

Question 1: What is a transfer credit card balance ?

Answer:
A transfer credit card balance lets you move the outstanding balance from your old credit card to a new one that offers a 0% introductory interest rate

Question 2: For how long does the transferred balance remain at 0% interest?

Answer:
Most cards offer 0% interest facility for 12 to 21 months. Some cards may offer a shorter period, like 6 or 9 months. After this period, the normal interest rate (APR) becomes applicable.

Question 3: What happens if I am unable to repay the transferred loan on time?

Answer:
If you are unable to repay the loan in full during the 0% APR period, the normal interest rate is applicable on the remaining loan, which can usually be between 15% to 25%. This may again increase the interest burden.

Question 4: Can a balance transfer credit card improve my credit score?

Answer:
Yes, if you make payments on time and do not close old cards, your credit utilisation ratio reduces and this can improve your credit score. But if you default on payments, it can also lead to a poor score.

Question 5: Can I make new expenses during a balance transfer?

Answer:
Technically you can, but it’s not advisable. This is because new expenses usually don’t attract 0% APR, and may be charged regular interest immediately.

Also read our new news which is Cox Communications Charter Merger: What It Means for You