Credit Card Balance Transfer refers to the transfer of the amount from one credit card to another. Some people practice this to gain rewards and to save themselves from heavy interest levied by their credit card companies. Balance Transfer facilities are not commonly used as people aren’t aware of these facilities, but almost all banks offer them on their selected cards at a price.
Using a balance Transfer Facility might be of good use if your card has a high-interest rate or offers minimum to no rewards. One should always go for Balance transfer Credit Cards if he or she feels they’ll require these facilities or they have a card with heavy interest rates. Let’s see how these facilities work:
How does Balance Transfer work?
Balance transfer Credit cards pay the dues off your one credit card and give you a certain amount of Grace Period to pay for those dues using this card. Whenever you feel you have money to pay those dues, you can pay them on your Balance transfer Credit Card. In layman’s terms, Your due of your one credit card is paid by another credit card, and now you have to only pay for the second credit card on its due date, giving you a certain grace period for your first credit card.
Since facilities are not free, there are certain charges for a Balance transfer termed as the Balance transfer fee. A balance transfer fee is levied by the bank or your card issuer if you opt for this facility.
Some card companies might offer promotional offers in which you have no interest charges or balance transfer charges for these payments.
Should you opt for one?
A balance transfer card might be of good help for those who own a credit card with heavy interest charges. If your Balance transfer credit card offers a longer grace period and low-interest rate, it’s a green light, go for it. If you do not use your credit card a lot or on a daily basis, this feature is of no use as it would cost you unnecessarily just to maintain these features.
Bottom Line
Since this facility is of no use to people who don’t own a lot of cards, I would recommend this to people who own a lot of credit cards and want a little grace period before they can pay for their credit card bills. This facility would come in handy if you often fall into the debt traps of credit cards and want just a bit of time to pay your credit bill.
Additional Reading: Reasons Why Your Credit Card Application Can Be Rejected