What is Credit Card Balance Transfer? The Ultimate Guide

A credit card is a convenient way of making payments. A credit card comes in handy when a person wants to make purchases or spend money on something that doesn’t have sufficient balance in their account. It is useful when some purchases must be made spontaneously. A person is given forty-five days to make the payment.The credit card owner should pay the bills on time. The credit card owner should pay the bills on time. The balance transfer comes as a saviour.

A credit card balance transfer is when a person who cannot pay the credit card payment on time decides to transfer it to another bank. Doing this allows a person to pay the credit card dues, but the balance gets shifted to another bank's credit card. This shifting of the credit card dues is usually done when the other bank offers a lesser interest rate. It means that it is a cheaper repayment option than the previous one. It is also done to avoid debt on the card, which will attract an exorbitant interest rate. This practice of shifting credit card balance transfer should only be done occasionally because, in the long run, it will lead to poor financial choices.

If the pending credit card bills are enormous, it may be difficult for a person to pay them. It makes sense to transfer the credit card balance to the other credit card if the interest rate offered is less. It should also be noted that the credit card balance transfer can only be of the credit limit of the other card. For example: if the balance of a credit card is Rs. 50,000 and the credit limit offered on the other card is Rs. 35,000. In this case, only Rs. 35,000 can be transferred to the new credit card.The process of transferring the credit card balance from one card to the card would involve the following things:

1. Name of the bank.
2. Submit Bank’s IFSC (Indian Financial System Code).
3. Credit card number. `
4. Amount to be transferred.

1. Credit Card Number
2. Expiry Date on the Credit Card
3. Credit Card Balance
4. Credit Limit

1. Address proof which can be a copy of an Aadhaar card, PAN card , Voter ID, Passport or Driving licence.
2. Photocopies of the credit card
3. Credit card statement of the previous 3 to 6 months.

1. Fund transfer mode: The pending amount of the credit card bill will be paid by the bank of the new credit card by way of NEFT or Demand Draft. For NEFT transfer, an email has to be sent to the bank (new credit card)giving the details of the previous bank. These details include:
2. Application of the credit card balance transfer: A person can make the application for the credit card balance amount by calling customer care of that bank. They will assist you with this query.
3. Eligibility: A person with a good track record with the bank will be eligible for a credit card balance transfer. This soundtrack record would mean payment history(credit card bill cleared before the due date), transaction pattern, and the amount spent on the credit card. It also depends on the bank's internal policy.Some forms must be filled out while applying for a credit card balance transfer. The information required to be filled in these forms is as follows:
4. Apart from this information, a few documents need to be submitted. These are as follows.

Also Read: What are The Interest Rates of a Credit Card?

Transferring credit card balances is a prevalent feature of a credit card. If the credit bills are not paid on time, the balance keeps increasing due to the compounding interest rate. It may get worst, and the credit card holder may find it difficult to exit from this debt cycle.Some of the benefits of the credit card balance transfer are as follows:

1. The processing of transferring the credit card balance is relatively quick. This fast processing enables the person needing a credit card balance transfer to get a new credit card effortlessly. It also enables the credit card holder to pay the pending dues immediately.
2. The pending amount accumulated with interest charges is paid in little time. It helps in saving the extra rate of interest that is charged on the credit card dues.
3. The debts can be transferred from one credit card to the other using the most feature available in credit cards, which transfers the credit card balance.
4. It is a convenient way to get rid of credit card dues, much better than paying interest on the accumulated amount every month or converting the balance of the credit card into an EMI (Equated Monthly Installment).
5. A buffer time is given to the person availing of this facility. A nominal interest rate is charged, and sometimes, no interest is charged.

Also Read: Can You Use Your Credit Card For Paying Taxes in India?

Credit card transfer is an excellent option to get relief from credit card debts. However, there may be some loopholes in it which every person thinking of transferring the credit card balance should be aware of:

1. Availing the credit card balance transfer facility will mean reducing the credit card limit. For example: if a person’s credit card limit of the credit card is Rs. 80,000. This person avails the credit card balance transfer of Rs. 50,000. So now, this Rs. 50,000 will get blocked on the credit card. The initial credit limit of Rs. 80,000 will now be only Rs. 30,000. It means that the person holding the credit card can only use it for purchases worth Rs 30,000 and not more than that. The credit card limit keeps increasing as payments are made. This credit card limit will be increased once the payment of RS.50,000 is made. If the person repays Rs. 25,000, the credit limit will be increased by Rs. 25,000. So the initial credit card limit will become Rs. 50,000. The remaining Rs 25,000 will be available only after payment.
2. The best way to pay the amount of credit card balance transfer is by clearing the dues at the earliest. It is a good option because zero interest or a nominal amount of interest is charged on the credit card balance transfer amount. After a certain period, a standard rate of interest will be charged. It would mean paying more because now the amount and the interest will be charged. Thus, it is advisable to use this facility only if the person is in a position to clear the credit card balance transfer amount in the stipulated period where the interest charge is nominal or zero. This information is provided to the person planning to transfer the credit card balance.
3. The low-interest rate is not for credit card usage. It is only for the amount used to pay the previous credit card due. The standard interest rate is charged on the expenditure on the credit limit amount. For example, supposing the limit on the credit card is Rs. 50,000, Rs. 25,000 is used as a credit card balance transfer. The available credit card limit will be Rs 25,000, subject to the standard interest rate.
4. Balance transfer of credit card is available for those individuals who have had a credit card for more than a year. New users cannot avail of this benefit. New users cannot avail of these benefits, so they stay within one card to get a lesser interest rate.
5. While a credit limit is available on the credit card, it is advisable not to use it. A good strategy would be for the person who has availed of the credit card transfer balance to repay the amount first. It doesn’t make sense to keep increasing the credit card repayable amount. This amount may increase and will fetch interest.
6. Remember the processing fee that the new credit card issuer will charge. Before opting for a balance transfer of a credit card, compare the different credit cards and choose the one that offers the best rate and benefits the person.
7. Some credit card issuers offer additional perks to lure customers who want to transfer credit card balances. They may make offers that are hard to resist. Such offers may include airport lounge access, additional reward points, cashback points, etc.

Also Read: Most Important Facts About Credit Card Interest Rates

Some people with a credit card believe the best way to pay the credit card dues is by paying a minimum rather than the entire amount. Such people need to realise the amount of interest the forward carry amount fetches. It also affects the credit card holder's overall credit history. It would also impact the credit card holder's credit score and increase the debt of the credit card holder.An example of the above statement to make it more transparent:When a person’s credit statement is Rs. 20,000 and the minimum amount due is Rs. 2,000. If the person pays the minimum due, which is Rs. 2,000. Now what happens is that out of Rs. 2000, the majority amount of Rs. 1,400 will go into paying the interest and the remaining Rs. 600 will go into paying the principal.Now what happens is that in the next billing cycle, the carry-forward amount of Rs.19,400 will attract interest and GST . This amount will be due if the person hasn’t used the credit card in this billing cycle. Now supposing the person uses the credit card to purchase something worth Rs. 4,000. The balance due would be Rs 23,400. This amount will keep increasing if the due amount is not entirely paid. Thus the person will fall into the cycle of debt.Transferring credit card balances would seem to be a feasible option for this person.

Most credit card divisions of banks offer credit card transfer balances to get more customers from the other banks. These banks are more comprehensive and not concerned about the type of card currently used by the person hoping to avail of this facility. There are limitations on the maximum and the minimum amount that can be transferred. The bank decides on the rates and applicable conditions, which could change anytime. Before proceeding with credit card transfer balances, confirm all possible clauses with the bank willing to provide this facility.