Credit cards are convenient tools to make purchases and meet other emergency expenses when there is limited cash. However, interest rates are always a major concern for most cardholders. Many people end up having a stack of debts due to financial indiscipline.
Eventually, it becomes difficult for them to clear the debts at higher interest rates. In such a scenario, opting for a balance transfer credit card can be a great way to save more on the interests.
Putting it the simple terms, balance transfer in credit cards means you can transfer your existing outstanding balance from one card to another to enjoy lower interest rates. There are many NBFCs that offer balance transfer credit cards against a nominal processing fee to reduce debt burden from cardholders.
When should you avail balance transfer credit cards?
Opting for a balance transfer credit card can be ideal in the following situations:
a. Having more than one debt
You can use balance transfer credit cards to consolidate all the debts and escape paying higher interest rates. Doing so, you only need to manage single repayment covering all the existing dues.
b Pay off your debts faster
Balance transfer credit cards are also beneficial to pay off your debts faster. Its low or 0% p.a. introductory interest rates directly help in saving money on charges.
c. In need of a different card
If you are not satisfied with the features of your existing card, transferring the outstanding balance to a new card can be a smart move.
Benefits of balance transfer credit cards
●As its clear now, a balance transfer credit card helps to get rid of accumulated debts. It also comes with incentives like an interest-free period or lower interest rates which offer respite from the pile of obligations.
●Credit utilisation plays an important role in building the credit score. Transferring balance can aid in improving your credit utilisation. For example, you can pay off your debts faster if you transfer balance to a new card. This improves your credit utilisation that directly has a positive effect on the CIBIL score.
Moreover, the old credit card sees a 0% utilisation when you transfer the entire card balance to a new one. This also helps in improving your credit score.
●Lastly, with quick and simple processing for balance transfer, you have the advantage of a smooth transition between the lenders.
Things to consider before you apply
Terms and conditions – With balance transfer credit card comes a few terms and conditions. Companies may have a tab for a maximum or minimum amount for transferring which partly depends on your pre-set limit.
Credit score – Your new card company can ask for your credit score before giving approval. So, you need to have a healthy CIBIL score of minimum 750 or higher.
Eligibility criteria – Before availing the product, make sure you match the eligibility criteria. For instance, you should be between 25 and 65 years of age without any past default in payments. You can qualify for the balance transfer credit card by providing a few documents like photocopies of address proof, KYC documents, etc.
Compare lenders – Lastly, compare all the lenders and understand their fine prints to save on interests each month. For example, Bajaj Finserv SuperCard makes this balance transfer facility affordable with attractive interest rates.