Balance Transfer, usually termed BT, is a type of credit card transaction that moves the outstanding balance of one credit card to another credit card at a lower rate. By doing this, you actually pay off the outstanding balance of your first credit card and now you owe that amount on the second credit card. People generally opt for balance transfer when they have an outstanding amount on their credit card and they are not able to pay the amount outstanding in full. Sometimes, limited period offers are run by the banks wherein they offer low interest rates and other amazing deals on balance transfers.
By availing the facility of Balance Transfer, you can save on your charges and penalties incurred towards carrying a balance. The reason why people opt for balance transfer can be that the other card offers lower interest rates as compared to the existing card which means that it would be a better option to pay through the other card in monetary terms.
How does credit card balance transfer work?
Credit cardholders sometimes may face a situation where they are not able to the outstanding amount at once. In this situation, they may transfer the outstanding balance of the different credit card accounts to a single account. The interest rate charged on the balance transfer credit card (the card that combines all the outstanding amounts) is much lower. Also, sometimes under limited period offers, these cards offers low interest rate. This means you get to pay off the whole outstanding amount by transferring the balance to another credit card at cheap interest rates.
Benefits of credit card balance transfer
A credit card is a very tempting facility provided by the banks that the customers, sometimes, even without thinking about the repaying capacity, keep using the credit card. Or there may even be a genuine situation where a customer is unable to pay his credit card debt on time. This is when balance transfer comes into light. It can be really helpful when you are looking for a reduction in your debt. Following are the benefits due to which credit card balance transfer has become so popular these days:-
- Interest saving: You can save a good amount of interest by transferring outstanding balances on your current credit card to a low-interest-bearing credit card. This is treated as a great opportunity for those who want to get rid of their high interest-bearing debt as early as possible.
- Consolidated payments: While owning multiple credit cards, you will have to make multiple payments, pertaining to each card. A balance transfer can help you in simplifying your payments as installments will be consolidated into one installment and you will be able to keep a better track of your account.
- Rewards and Benefits: When you get a balance transfer credit card for the first time, the card issuer company may provide you with various onboarding rewards which can include cashback, reward points, etc.
Is balance transfer allowed within the same bank?
Typically, you are not allowed to transfer the balance between credit cards of the same bank. The reason behind this is that when you are transferring the debt, you are actually transferring the amount due from one card to another which will provide you with a low-interest rate. Banks generally make money out of interest and fee payments only. So earnings of the bank will be hampered if the debt balance is transferred to another card. Though there is no such law-abiding rule for this, it is simply denied because it is not beneficial to the bank.
But there are many banks that provide credit card balance transfer facilities. You can transfer the outstanding balance of a credit card of some other bank to their credit card account at low-interest rates. A few of them are –
- SBI Cards – SBI allows the customers to easily transfer the amount on their other bank credit card to the SBI Credit Card. All the SBI Credit Cardholders can avail this feature. You can easily pay the debt amount at low-interest rates. You can transfer a maximum of 75% of the SBI Credit Card Limit. To apply for the balance transfer-
– Login to SBI Cards website
– Select ‘Benefits’ and then ‘Balance Transfer’
– Fill in the details of your existing credit card and hit confirm
– Your request will then be sent for processing.
- HDFC Bank – This bank offers the facility to transfer the outstanding amount of credit cards to their new HDFC Bank Credit Card or even to the existing card. Also, one can easily transfer the loan amount running with some other bank to HDFC Bank credit card. You will have to follow the below-mentioned steps to avail this facility –
– Login to HDFC Bank Net Banking
– Click on the ‘Cards’ Tab
– Now click ‘Balance Transfer on EMI’ present under the ‘Transact’ column
– It will then ask you to enter the details of the other bank credit card as well as the HDFC Bank credit card
– The balance transfer is done immediately once after hitting the confirm button after entering all the details
- Kotak Mahindra Bank – Kotak Mahindra Bank also provides the opportunity to its existing account holders to transfer their credit balances running at a higher rate to the Kotak Bank credit card at low-interest rates. Also, you can transfer only 75% of the credit limit of your Kotak Mahindra Credit Card. The balance transfer request can be placed through either Net Banking, Mobile, or SMS Banking and even by contacting customer care. You can follow the steps mentioned below for placing a balance transfer request through net banking –
– Login to Kotak Mahindra Bank Net Banking
– Tap on the Credit Card Tab
– Choose the Balance Transfer on the EMI option and then enter the required details
– Your request will hence be forwarded for processing
Must Check: Best Balance Transfer Credit Cards in India
Balance transfers can be a beneficial way of handling credit card debts as they can help you in saving a whole lot of amount on interest and in return, you will be able to repay your debts faster. Though the credit card balance transfer within the same bank is not so popular as interest and fees are one of the sources of the bank’s earnings and upon transferring the balance to the card which bears a low interest, the earnings of the bank will be at stake. But the balance transfer can easily take place among different card issuing companies. But take your time and do detailed research and understand what the bank has to offer you in case of the balance transfer. Once you are satisfied with all the terms and conditions, only then apply for a balance transfer since this can help you save a lot of hundreds and thousands.