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Credit Card Balance Transfer

Credit Card Transfer

Last Updated 25th Sep 2021

  • A credit card balance transfer means shifting your debt from a higher interest credit card to a lower interest credit card.
  • The amount you qualify to transfer to the second card depends on the credit limit defined/set in the second card.
Interest Rate 1.99% - 3.60%
Joining Fee ₹ 199 - ₹ 1,25,000
Annual Fee ₹ 99 - ₹ 20,000
Late Payment Fee ₹ 100 - ₹ 1,300
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Top Banks Offers Credit Card Balance Transfer

Bank Name Balance Transfer Rates Processing Fee Credit Card Limit for BT
HSBC Bank 1.08% 1.00% Upto 95% of the credit limit
Standard Chartered Bank 0.99% 1.00% Upto Rs. 5 Lakhs
HDFC Bank Case to Case 1.00% Upto 75% of the credit card limit
SBI 1.27% 2.00% Upto 75% of the credit card limit
ICICI Bank 1.25% Nil Upto Rs. 3 Lakhs
Axis Bank 1.00% 1.50% A minimum of Rs. 5000

What is a Credit Card Balance Transfer?

A credit card balance transfer implies that the money you owe to one card is transferred to another card. With the help of a credit card transfer, you pay the amount owed to the first credit card and owe the balance to the other credit card. Credit card holders' main reason to use balance transfer is that the other card has lower interest rates.

How to Transfer Balance from One Credit Card to Another?

The easiest way to pay off massive and unpaid credit card payments is by availing of the option of credit card balance transfer. But using a credit card balance is relevant only if the bank you are moving your balance to offers better rates than the initial credit card.

However, note that only the credit limit amount is transferable to your new credit card. For instance, suppose you wish to transfer ₹ 80,000, but your second credit card's credit limit is ₹ 50,000, then you can only transfer ₹ 50,000 under the balance transfer option.

Banks have various forms to allow the use of credit card balance transfers. While applying for a credit card balance transfer, one must keep in mind certain details:-

  • Expiry date
  • Outstanding
  • Details
  • Maximum credit limit

When you opt for a credit card balance transfer, the new credit card issuer pays the whole outstanding amount on your existing credit card in the form of a demand draft. This helps you in avoiding the burden of extra interest on the pending bill of the credit card. Your credit card issuer decides the interest you will pay. The interest rate for credit card balance transfer is usually lower than the interest charged by banks on credit card bills outstanding. Therefore, this reduced interest rate is only valid for a certain time, after which regular interest rates may apply.

To avoid high-interest rates, it is important to pay your dues to a new credit card issuer within a defined time frame.

Documents required for Credit Card Balance Transfer

To approve your application for credit-card balance transfers, most banks need a handful of documents.

  • Photocopies credit photocopies
  • Credit card bill statements of past 3-6 month
  • Proof of residence

Salient Features and Benefits of Credit Card Balance Transfer

Credit cards offer a very convenient feature popular among credit card holders is credit card balance transfer. This alternative encourages cardholders to get away from the debt cycles

getting bigger due to aggravating interest rates. Following are some of the important features and benefits of credit card balance transfer.

  • It allows you to save the excess interest you pay due to accrued and overdue credit card payment
  • Compared with other credit payment mechanisms, credit card balance transfers are convenient to eliminate the accrued debt.
  • Balance transfers are processed in a very small frame of time which makes it convenient for clients in clearing their dues
  • Cardholders can transfer debt from one or more cards by using this feature.

Cardholders are given a buffer time to pay the debt they are left with. The interest rates are very nominal or zero for this period.

Some Important Points to Remember while using Credit Card Balance Transfer

Credit card balance transfer may sound easy and lucrative, but cardholders should understand all important things before exercising the option. Hence, we have mentioned some points below that are relevant to the decision of using a balance transfer to pay your credit card's debt.

  • Using a balance transfer option lowers the credit limit accordingly. For instance, if a cardholder's credit limit is ₹ 1,00,000 and has transferred ₹ 60,000, then the effective credit limit for all other credit card purchases will become ₹ 40,000.
  • The easiest approach to use a balance transfer option of the credit card is to pay all of the dues during the free or nominal interest rate period. After that, regular credit card interest rates will be applicable, which will require higher payments.
  • The lower interest rates for credit card balance interest does not extend to new credit card transactions. These purchases will be at the credit card issuer's regular interest rates.
  • A balance transfer facility is usually offered to those clients who have been credit card users for at least a year. This ensures that a cardholder doesn't jump from one issuer to another to avail lower interest rates. However, some banks provide this service only with six months of history.
  • Although, there will be some portion of the credit limit left to use after the balance transfer. But it will be prudent to avoid using your remaining credit limit until all the balance transfer payments are fully paid, and all charges are settled.

FAQs

Do balance transfers affect your credit score?

A balance transfer may have a dual effect on your credit health. A balance transfer can harm your credit score through increased single-card utilization, reduced credit history length and the addition of a hard inquiry to your credit report. And it may also improve your credit health by increasing the overall credit card utilization and clearing your debt quickly.

Is it good to get a balance transfer credit card?

A balance transfer is the most important choice if you require months to pay high-interest borrowings and have sufficient credit to qualify for a 0% introductory APR. Such a card can save you a lot of interest and give you an edge to pay off your balance.

Should I close my credit card after a balance transfer?

Balance transfers don't cancel credit cards. Nor are you required to close the account once you are done with a balance transfer. Having your old credit card account open might be a smart idea even though you don't want to use it.

Which is the best balance transfer credit card?

Finalizing the best balance transfer credit card depends on specific features that vary from bank to bank. Such specific features are Interest rates, tenure, processing fee.


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