How to Save Maximum Interest with Balance Transfer Credit Cards

October 21, 2024 Imran arkaa

Balance transfer credit cards can be the best credit cards to pay off your outstanding debt easily and affordably. Many credit card issuers provide balance transfer facilities where you can transfer the balance of your existing credit card to a new card.

By opting for a credit card from another issuer that offers a low interest rate, you can transfer your outstanding due to your low-interest card and pay the bill in one go. This way, you can also enjoy zero interest rates for a certain period.

It is crucial to know the benefits and factors attached to the balance transfer process to maximise your savings.

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How Does Balance Transfer Work in Credit Cards

Transferring balance from a high-interest credit card to another low-interest card can prove to be a good money management tool. It will strengthen your financial health and money management ability. You should understand how it works to carry out the process effectively:

You need to apply for a new credit card with an issuer that allows you to utilise the facility of balance transfer.
You transfer the balance from other cards to the new card.
Once your outstanding balance is transferred, you pay off the dues in instalments.
Your interest amount reduces since the interest rate applicable on the new card is lower, which helps reduce your overall borrowing costs.
You must check the charges involved with balance transfer, such as processing fees and other additional cost.
For more savings, you can opt for a card providing zero interest rate or nominal interest rate for a specific time.

Key Factors to Consider While Choosing a Credit Card for Balance Transfer

To save on interest and bring your overall borrowing cost down, you must choose the card smartly. Here are some essential points you need to remember:

The minimum and maximum balance transfer set by your card issuer should be convenient for your needs.
Consider getting a secured credit card for this facility to get better interest rates and other terms.
Have a look at joining fees, processing fees, and other fees and charges applicable to the card to choose the best credit card for such transfers. Some banks may have a flat processing fee, while others charge between 1% to 3%.
Go ahead with card providers that offer low or zero interest rates for a specific period.
Look for a card issuer with quick processing. It will help you pay off your debt soon and avoid the accumulation of substantial interest.

Benefits of Using Balance Transfer Credit Cards

Here are some of the key benefits of using this facility:

If you have accumulated a large amount of outstanding dues by using multiple credit cards, you can opt for a balance transfer credit card. It will not only pay off your outstanding bill, but also allow you to enjoy other perks like low interest rates.
It can be one of the most convenient methods to pay off your outstanding bills. You have to only look for card issuers with low interest rates and other facilities like lower processing fees.
You can pay off outstanding bills and stabilise your credit score at the same time.
You can have a buffer time with your existing card issuer to pay other penalties, such as late fee payments.
Overall, it reduces your financial strain.

How to Apply for Balance Transfer Credit Cards

The application process for a balance transfer credit card is similar to applying for a regular card. After choosing the issuer, you can apply for the card online through various modes or offline by visiting the issuer’s office.

However, you should meet the eligibility criteria to get a balance transfer credit card. While the criteria vary with different issuers, here are the general criteria:

You should have a good credit score
Your minimum age should be 18 years
You should have a stable income
You should be salaried or self-employed

You also need to provide documents for identity, income and address proof during the application process. You must submit specific documents to carry out the balance transfer process too, such as credit card number, outstanding due, expiry date and credit limit.

If you have an existing card with an outstanding bill and high interest rates, a balance transfer can be an optimal option for you. As you reduce such instances, try to use your card smartly from the get-go. The One Credit Card can help you do just this by allowing you to track all your spends and set limits for different purchase categories. This helps you use your card more responsibly. In addition, you can earn up to 5X rewards on the top two spending such as grocery, fuel and more each month. Apply now and get started!