Credit cards give you the ease of paying for goods and services which you buy. They allow you to purchase on credit and then pay the dues later on. Since credit cards allow you credit purchases, they have an interest rate attached to them. If you don’t clear the credit card bill on time, a high interest is charged on the outstanding balance of the card. The interest rate varies from card to card. If you find another card whose interest rate is lower than your present card, you can choose to transfer your credit card balance to that card. This is called credit card balance transfer. The entire outstanding amount of your existing card would be transferred to the new card.
Advantages of credit cards Credit card balance transfer proves to be beneficial because of the following reasons –
Lower interest rates
The main reason why credit card balance transfer is done is to avail a lower interest rate on another card. As the new card promises a lower interest rate, your interest payments reduce and the card costs you less. As your interest payments reduce you can save money and the repayment of your dues on the new card also becomes affordable.
You can consolidate your debt
Credit card balance transfer allows you to transfer the balance of multiple credit cards onto one card. This is called consolidation of credit card debt. Consolidation of debt helps you to arrive at a single outstanding amount with a single payment date. You don’t have to remember multiple repayment dates of multiple cards. As such, the hassle of servicing multiple credit cards is removed and it becomes easy to service one credit card debt. Moreover, since the debt becomes easy to manage, repaying it also becomes easier.
You can get better terms on the new card
Besides the lowering of the interest rate, the new card might also promise you a higher interest free credit period and lower charges associated with the card. Moreover, the new card might also give you a better rewards program than your existing card. All these benefits would ensure that you get better terms and privileges when you opt for credit card balance transfer.
There might be bonus joining benefits too
Credit cards come up with various promotional offers from time to time. When you shift to a new card and if the card is offering you a promotional bonus privilege, you can cash in on such privileges and enjoy better rewards and benefits.
Dues to these aforementioned benefits, credit card balance transfer is often chosen by many individuals. However, before choosing the balance transfer facility, the following things should be kept in mind –
- There might be a joining fee and a balance transfer fee payable when switching to a new card
- Even though the interest rates would reduce, your credit card debt would remain the same
- Credit card balance transfer is allowed only if your credit score is good.
So, keep these points in mind before opting for credit card balance transfer. Compare the different cards available to choose a card with the lowest interest rate when you transfer and enjoy the benefits the transfer provides.
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