How to take benefit of credit card balance transfer

Credit Card is such a tempting facility provided by bank that generally person use it without considering repaying capacity or sometime there could be genuine situation where no other source of finance available hence if a person carry two credit cards of two different bank then he can use balance transfer facility. I will explain balance transfer facility, How to take benefit of credit card balance transfer and what could be terms and conditions.

Definition:

Credit Card Balance transfer means if you have credit card of ABC Bank which is having due amount of say Rs.50,000 and you have also credit card of XYZ Bank then you can request XYZ Bank for Balance Transfer against outstanding amount of credit card of ABC Bank.

How to take benefit of credit card balance transfer :

Balance Transfer Facility is generally provided without interest and customer need to pay only processing fees of 2% for either 2 or 3 Months period or Rs.360 per 10000 it depends on credit card Issuer Company. Here if you get deal of 2% processing fees for 2 Months or 3 Months then effective Flat Interest rate will be 12% p.a. in case of 2 months and 8% p.a.  in case of 3 Months. This is very low as compare to personal loan where banks are charging 15% to 20% p.a. reducing Interest rate.

Here one should keep bench mark of person loan rate, processing fees charged by bank for personal loan and also Pre payment charges if fund require for only 2 or 3 months. If total outflow on Balance Transfer (Interest+ Processing Fees) on same Loan amount and Tenure is lower as compare to personal loan then one should go for BT only otherwise vice versa.

Here if you have Balance Transfer (BT) facility available on both cards then after end of BT Period in one card you can pay from other card and so on. Kindly keep one thing in mind that you should use this facility only to repay your debt and not as teeming and lading. One can be at higher risk of non-payment of credit card dues and situation can be out of control.

Terms and Conditions of Credit Card Balance Transfer :

There always be some terms and conditions associate with Credit Card Balance Transfer.  I am giving inclusive list of T&C, some or all can be applied to credit card holder as it depends on credit card Issuer Company.

  1. Balance Transfer facility should be available on Credit Card
  2. Generally Balance Transfer carry zero percentage interest but with some fixed percentage of Processing Fees are levied by bank
  3. Credit is provided for 2 to 3 months with 2% Processing Fees but no Interest.
  4. Some credit card companies are providing balance transfer for 6 months with interest around 1.7% p.m. but without processing fees.
  5. After Balance Transfer period if customer failed to pay amount on due date then he is liable to pay very high interest of 3.5% p.m.
  6. During Balance transfer period, fresh purchase will attract interest of 3.25% to 3.5% p.m.
  7. Customer need to pay 5% of total outstanding including Balance Transfer every month which is known as Minimum Amount Due.
  8. Please also take care while repaying any other outstanding amount against your credit card it will be first adjusted against balance transfer and after cash withdrawal and after that against purchases hence it can result in non-payment of dues and attract interest on regular outstanding.
  9. Generally Maximum Balance Transfer Facility is available up to 75% of credit card limit.

Disclaimer:  Readers are advised to take caution and apply their own mind while availing Credit Card Balance Transfer. Interest rates, Processing fees details and other data used are for illustration purpose only and for better understanding of subject. FinanceFriend.in or its authors or publisher are not responsible for any loss or liability incurred by using this information.

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