Before you start thinking of going in for a balance transfer, you need to first know what a credit card balance transfer actually means. To put it in the simplest of terms, balance transfer in credit cards means that you transfer the amount you owe on one card to another card. By doing this you actually end up paying for the first card and owe that amount on the other credit card. One main reason why someone might go in for a balance transfer could be that the other card offers lower interest rates which would mean it would be cheaper to pay it back through the other card.
There are many banks that offer credit cards that have balance transfer facilities available on them. Some such banks are:
The balance transfer facility provided by ICICI Bank allows the balance of any credit card to be transferred to their cards. The repayments for such transfers can be done in either 3 or 6 months’ worth of instalments. There is an interest charged on the amount that is transferred and is payable along with the amount transferred. The bank also offers the option to foreclose the payments provided all the balance amount and interest is paid up.
The facility for balance transfers of credit cards offered by SBI again follows the same general principle and can be initiated by either logging into the credit card account or sending the bank a specific SMS or even just calling up their customer care facilities. The repayment periods can be 2 months or 6 months however, an interest of 1.7% per month is charged only if the tenure is 6 months.
The facility offered by HSBC for balance transfers can be taken for tenures that range from 3 months, all the way up to 24 months. The interest rates are also charged as per the tenure and a processing fee may also be applicable. Just like SBI the balance transfer facility can be utilised by either calling the bank, sending them an SMS or even by simply sending them an SMS. HSBC does offer the facility to foreclose on the balance transfer, for which no extra fee may be charged.
Even Kotak Mahindra bank offers balance transfer facilities. They will allow a minimum of Rs. 2,500 to be transferred. There is no limit on the maximum amount as long as the amount being transferred is not more than 75% of your credit cards limit. There is a processing fee that will be charged for the options, and it is based on the amount that is being transferred. The application process, once again, can be initiated through calls, SMS or the online portal maintained by the bank.
Axis Bank too offers this facility and with them, the minimum amount that can be transferred is Rs. 5,000. The tenures available are 3 months and 6 months, with the shorter of the two not attracting any interest while the latter, 6 months, will have an interest charged on the transfer.
The facility provided by Standard Chartered Bank allows customers to transfer balances of up to Rs. 5 lakhs to their SC credit cards. The interest rate charged for the first 6 months is about 0.99% a month, after which the interest rates associated with the card will be charged. Customers can also make a payment of a minimum of 5% of the transferred amount each month and the facility can be availed by sending the bank an SMS indicating you wish to avail a balance transfer.
Here is a table that depicts and compares the credit card balance transfer features offered the topmost credit card issuers in India.
|Credit Card Issuer||Processing Fee||Rate of Interest per month||Applicable Lower Interest Rate Period|
|Axis Bank||1% of transfer amount or Rs.199, whichever is higher||0%||3 months|
|State Bank of India||2% of transfer amount or Rs. 199 whichever is higher if the period is 60 days and zero if the period is 6 months||0%-1.7%||60 Days-6 Months|
|Standard Chartered Bank||NA||0.99%||6 Months|
|Punjab National Bank||Rs.172 or more depending upon the transfer amount||0.99%||6 Months|
|Kotak Mahindra Bank||Rs. 349 per Rs. 10000||0%||NA|
|HSBC (Convert due payment to EMI)||1% (minimum Rs. 149)||0.99% for tenures between 3-12 months 1.25% for tenures 18 months and 24 months||3,6,9,12 months|
Credit card balance transfer is the best option to pay off huge and pending credit card bills. However, transfer of credit card balance makes sense only when the bank that you are transferring your balance to offers rates that are more lucrative than the original credit card on which you have pending dues.
The most important point to note about credit card balance transfer is that you can transfer only that amount to your new credit card which is within its credit limit. So, if your second credit card has a limit of Rs.50,000 and your pending dues from previous credit card are Rs.75,000, then only Rs.50,000 can be transferred to the new credit card under the balance transfer scheme.
There are forms which various banks furnish to facilitate application of credit card balance transfer facility. The following information needs to be furnished while applying for credit card balance transfer.
Most banks require a few documents to be furnished in order to accept your request for credit card balance transfer.
The most rewarding feature of credit card balance transfer is that the entire pending amount gets paid in the form of a demand draft that is issued by the new credit card company towards your old credit card. This saves you the burden of additional interest payment on the credit card pending bill. The interest now that you will pay will be decided by your new credit card. Generally, the interest charged to avail credit card balance transfer facility is less than what is charged by banks on credit card pending bills. However, this lowered rate of interest is only applicable for a specific period of time after which standard interest rates apply. Thus, it is crucial to pay off your credit to the new credit card issuer within the stipulated time in order to avoid hefty interest rates.
No matter how convenient and lucrative credit card balance transfer sounds it is always a good practice to know all important aspects of it before availing the same. Listed below are some points that significantly affect your decision of availing credit card balance transfer to pay off your existing credit card debt.
Credit card balance transfer is a very popular and convenient feature of credit cards. This options helps cardholders get out of circular debt cycles that keep growing worse due to compounding rates of interest. Let us look at some of the most striking benefits of credit card balance transfer.
When you do go in for a balance transfer, you will need to keep a few things in mind. The first being that some banks will offer this facility only if the balance being transferred is for a credit card not issued by them. Most banks don’t pose any restrictions on the type of card for which balance transfers are being availed. There may also be conditions that govern the minimum and maximum amounts that can be transferred. All conditions and rates mentioned here are decided by the banks and could change at any time so it would be best to confirm the same with the bank before actually applying for balance transfer.
If you have an existing credit card with balance being charged a high rate of interest then it is advisable to go for credit card balance transfer to save up on interest payment.
You can only transfer an amount equal to the credit limit of the new credit card. For example, if the outstanding credit card balance on your existing credit card is Rs.75,000 and your new credit card has a credit limit of Rs.50,000 then only Rs.50,000 can be used for transferring balance. Rest needs to be paid by the you out of your own pocket.
How profitable is balance transfer for you depends upon the interest that you are currently paying on our existing credit card versus the rate of interest plus charges being charged by the new credit card. If the difference is substantial then you will surely save some extra money that you might be paying as interest amount.
No. Credit card balance transfer is a quick and almost hassle-free process. The time taken usually is a few days and varies from bank to bank.
It isn’t a good idea to keep transferring your credit card balance. And banks too do not entertain constant balance transfers. As such the number of times you can transfer your balance is a subjective thing which is purely at the discretion of the bank you have in mind.
Process to Check Credit Card Balance for: