The usage of credit cards is on the rise and the number of banks offering premium cards has also seen a gradual increase. A recent analysis shows that money spends through plastic card has witnessed a 15% growth. The present young age population has a fair chance to grab a high profile job with a good package. This attracts the banks to draw these customers and turn them into clients for their hot selling cards. People do not mind spending extra bucks when they have the cards. Most people are very well aware of the ill effects of the cards and they use it wisely.
There is a concept called balance card transfer, which attracts some of the card users to a specific bank. So, what is this balance transfer and how beneficial it is? Let’s look at some of the points about it.
- The balance transfer helps the credit card users to transfer their huge outstanding amount in multiple cards to a single vendor. For example, if you have outstanding amount in your ICICI and HDFC credit cards, it can be combined to a single outstanding amount with Citi Credit Card.
- Banks try to lure customers by offering low interest rates for the balance transfer mechanism.
- This helps the customers to deal with a single bank instead of having too many banks and outstanding amount. The overall interest rate will be reduced which will help the card users.
- Do you know that some of the banks even offer zero interest rates for this feature as a special introductory offer? They also go to an extent of giving up to 6 months of holiday period when you make fresh purchases. This means, you do not have to repay the credit card bill for the fresh purchases for up to 6 months.
- Certain banks offer a higher seal on the amount of balance transfer that can be done.
- The banks will take about 10 days of time to issue demand draft in favor of your previous card banker once you have initiated the process.
- Banks will charge processing fee on these kinds of transactions.
When You Should Not Do A Balance Transfer?
If you think you have crossed your fiscal ceiling and will be unable to manage the multiple interest rates, you can switch over to a new card. It is advised to use the card only up to an amount of money where you can balance. Do not attempt to do balance transfer often. It might leave an impression that you are bad in managing finances and it will drastically reduce the credit scores. It will have a huge impact when you apply for housing loan or any other type of loans. It affects your credibility and banks will not be interested to help you when you need them the most.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.