Have you ever wondered how a balance transfer credit card can significantly improve your finances? But you did not go ahead, and do it because you are
Have you ever wondered how a balance transfer credit card can significantly improve your finances? But you did not go ahead, and do it because you are unsure of how exactly it works?
Don’t worry! You are not alone. Most people find the concept of a balance transfer credit card confusing, and they end up not using it to their advantage. That’s why we’ve compiled the ultimate guide to using a balance transfer credit card to help you understand how it works.
But first, let’s get understand the basics.
What is a balance transfer credit card?
Before you can use this feature of credit cards to your advantage, you must understand what it entails and how it can help. Your credit card balance is the total amount of outstanding debt that you owe to your credit card issuer and balance transfer credit cards enable you to transfer these high-interest balances to a low or zero interest credit card.
These low or zero interest offers are often introductory offers on new credit cards and can last anywhere between 9 to 21 months. So, all you need to do is transfer your high-interest debt to a low-interest card and pay of the debt at less or no cost.
However, it is highly recommended that once you have transferred your balance to the new card, you should shift your entire focus on repaying the debt. You must reorganize your spending habits and do the responsible thing by not making any new purchases with either the old or the new card.
Do most credit cards offer balance transfer facilities?
Yes, most credit cards available in the market today offer balance transfer credit card facilities just like the Bajaj Finserv RBL Bank SuperCard. With the RBL Credit card, you can enjoy this balance transfer credit card facility and a plethora of other benefits that can significantly boost your finances. The best part? You can own an RBL Credit Card at a nominal joining fee and a low credit card interest rate of just 1.16% pm.
But is there a catch?
Not really. While these offers do seem too good to be true, most of the time there is no catch. Except for the fact that a few credit card issuers (not all of them), charge a balance transfer credit card fee upfront. This fee can range anywhere between 3% to 5%. So, for example, if you transferred a debt of Rs. 1,00,000 to your new credit card that charges a 5% balance transfer fee for a 0% APR offer, you will have to shell out Rs. 5,000 upfront to simply avail of this offer.
It is therefore advisable not to get carried away by this offer. Instead, get in touch with your credit card issuer/relationship manager and develop an in-depth understanding of all the fine print before applying for a new credit card just for the sake of using this facility.
Here are a few things to bear in mind before choosing a balance transfer credit card:
- Make a list of everything that you owe and segregate the charges based on interest. Transfer only the debts that are of high interest in nature. Remember, this is not a bailout scheme, and you should not treat it as such.
- Compare your options. Look for different credit cards and weigh their offers vis-à-vis your debt. Crunch some numbers to get an overview of what you are getting yourselves into.
- Once you have chosen a suitable credit card for the balance transfer, check your credit limits to make sure it is high enough.
- After availing of this incredible feature, try to minimize your credit card usage so as not to add any new debt and work towards repaying this debt first!