If your credit card balance has significantly increased, transferring the balance to another card can save you a lot of money.
Credit card companies often charge high interest rates on outstanding balances, and new purchases may not qualify for interest-free periods.
However, with a balance transfer, you can move the debt from one card to another, often at a much lower interest rate.
Benefits of a Balance Transfer
Many banks offer introductory balance transfer deals, allowing you to pay little or no interest for 3 to 12 months.
These offers vary by bank, but if you have a good credit limit, you may be able to consolidate multiple credit card balances into one.
This simplifies your debt and makes repayment easier.
Costs and Considerations
While a balance transfer can reduce your interest expenses, be aware that a one-time fee of 3-5% of the transferred amount may apply.
Additionally, the interest-free period on the new card will start, allowing you to save on interest costs immediately.
However, it’s essential to compare the interest rates and fees of the new card with your current one before deciding.
Plan Carefully Before Transferring
Before transferring a balance, do some research. Check the interest rate on your current card and compare it with the rate on the new card post-transfer.
Also, understand the fees and terms associated with the balance transfer to make an informed decision.
Special Offers from Banks
Some banks offer additional benefits, such as no interest on early repayment.
For instance, SBI Card does not charge interest if you repay the balance within 60 days of transfer.
If you choose a repayment period of 180 days, the interest rate is 1.7% per month.
