What is Balance Transfer on Credit Cards?
When it comes to paying the credit card bill or paying any kind of miscellaneous expense, people are always looking at various ways they can reduce the interest or simply reduce the directly. There also comes a time when a person finds themselves unable to pay the due amount, this also affects their credit score in a negative way. And then they think to themselves that they should have had a low interest rate on these debts.
Many financial advisers suggest that credit card holders should keep their eyes and ears open when it comes to dealing with the payments of debts on their credit cards. Even if there’s just a small amount pending, that could later on haunt you with the high rate of interest and penalties which banks usually charge.
According to financial advisers, there are two ways deal with this kind of situation. The first one is to take another loan with low rate of interest and with that loan pay off the entire loan amount of your existing debt. After that, you can continue paying your new debt with comfort.
The second method includes balance transfer. In this you can transfer the outstanding debt amount to a new bank, which is providing the low rate of interest. There are many banks out there that offer 0% interest for initial 6 months (and in some cases even full year), in order to attract new customers.
Let’s Take a Look at Some of the Benefits of Balance Transfer –
• First and foremost, it saves that interest amount which you would be paying otherwise at your original lender.
• The process of Balance transfer demands less effort and processes quickly too.
• The amount of documentation needed in balance transfer is very minimal when compared to take a new loan.
• One of the major perks of balance transfer is, that you can uniform your payment mess by transferring multiple debts from multiple card to one single cards.
Con of a Balance Transfer – The process of balance transfer is effortless when compared to taking a new loan, but it does take some effort. Mainly, you will have to pay some balance transfer fee, which is calculated from the total outstanding amount. So, this means that if your outstanding debt amount is higher than. Then you would be charged a higher fees. I discovered this at the time when I applied for HDFC balance transfer.