Credit Card Balance Transfer in India

Suggested Read: Credit Card Debt: How to Get Out of It

Video: Credit Card Balance Transfer Explained

A Credit Card Balance Transfer allows you to move your outstanding balance from one credit card to another, usually to a card with a lower or zero interest rate. This helps you save on high interest charges and repay your dues more easily.

For example, if you have Rs. 50,000 pending on a card with a high interest rate, you can transfer it to another card with a lower interest rate, which gives you some breathing space to pay it off without incurring extra costs. However, please note that such offers often come with a processing fee. It is also advisable to stop making new purchases on the new card until you clear the transferred balance.

Cardholders may sometimes face one or more credit card debts that they are not able to pay at once. In this case, they may transfer the entire outstanding amount from all the credit card accounts to a single account. The balance transfer credit card that consolidates the outstanding amount usually charges a much lower interest rate as compared to the finance charges. Do note that certain card providers even offer 0% interest rate for a limited period.

Reduced Financial Strain - Balance transfer credit cards charge a significantly lower interest rate when compared to finance charges. Credit card finance charges (interest rates) are about 3.5% p.m. while the interest rate on a balance transfer is usually around 1.8% per month. Some card providers may also offer 0% interest rate. Lower interest rate means lower financial burden.

Stabilize Credit Score - Lowered interest rates will make it easier for the cardholders to make payment and hence stabilize their credit score. They can even improve it with timely payments.

Interest-Free Period - Credit card providers offer an interest-free period on new purchases post balance transfer as well. This way customer can make new purchases without incurring interest rate on it.

Other Benefits - Credit card providers sometimes offer teaser rates or other introductory offers to customers. These benefits may include longer interest-free periods, low interest rates, etc.

Processing Fee - Customers will be charged a processing fee for a balance transfer that can range anywhere between 1% and 3%. Some banks may also charge a flat fee.

Interest Rate - The interest charged on Balance Transfer can be 0% for a certain period. But, the interest rate is usually around 0.75% and may go up to the particular credit card’s finance charge.

The interest rates and processing fee charged on some popular credit card issuers are shown in the table below:

Cardholders who are carrying significant amounts of debt at a high interest rate may apply for a balance transfer. This will help them pay off the debts without incurring hefty charges.

Do note that balance transfer is best suited when the user can pay off the due amount within a few months. If he finds that it will take longer than a few months, perhaps a year or two, then a Personal Loan will be better suited.

Cardholders can apply for the credit card balance transfer via Netbanking, contacting customer care, through SMS, etc.

However, those who want to apply for a new balance transfer credit card must meet the eligibility criteria set by the particular bank for that particular card variant. Details about the eligibility criteria and documentation can be found here. Proof of identity, address and income will also be required at the time of new credit card application.