low interest rates or sometimes even zero interest rates are available for balance transfer. But you should know that these rates are for introductory period only (say 3-6 months) and once this grace period is over, it returns to the normal rates, that is, what your previous credit card company charged you.
Even still the rate of interest which you might be paying for your outstanding credit dues will always be higher than the balance transfer interest rate.
What does balance transfer mean?
Balance transfer is a facility offered by all the credit card issuing companies to cardholders which enables them to transfer the existing outstanding or debt of one credit card to another one that is less used or even new.
The credit limit of the new card or less used card on which you want to transfer the balance amount reduces proportionately to the balance transfer amount. Say the credit limit of your card is Rs 25,000 and you have opted for a balance transfer of Rs 10,000, then the credit limit on your original card will be reduced to Rs 15,000.
But here too you must remember that your balance transfer amount should not exceed 80 per cent of your credit limit. That is, if your credit limit is Rs 10,000 then the maximum balance transfer you can have will 80 per cent of this amount which is equal to Rs 8,000.
Balance transfer process
Before entering into balance transfer, it is important for you to know the process involved.
As a first step, you have to inform the credit card issuer from whom you would avail of a balance transfer that you want to avail of the balance transfer facility.
The credit issuer will then send an officer with a balance transfer form. Here you have to fill in all the details of your old credit card and also attach your latest bill statement.
Normally after 7 to 10 working days, the credit issuer will send a demand draft (DD) to your residence which will be in the name of your old credit card issuer. After you submit this DD to the old credit card issuer your outstanding gets cleared. Now you have to pay the transferred amount to the new credit card issuer.
Even still the rate of interest which you might be paying for your outstanding credit dues will always be higher than the balance transfer interest rate.
What does balance transfer mean?
Balance transfer is a facility offered by all the credit card issuing companies to cardholders which enables them to transfer the existing outstanding or debt of one credit card to another one that is less used or even new.
The credit limit of the new card or less used card on which you want to transfer the balance amount reduces proportionately to the balance transfer amount. Say the credit limit of your card is Rs 25,000 and you have opted for a balance transfer of Rs 10,000, then the credit limit on your original card will be reduced to Rs 15,000.
But here too you must remember that your balance transfer amount should not exceed 80 per cent of your credit limit. That is, if your credit limit is Rs 10,000 then the maximum balance transfer you can have will 80 per cent of this amount which is equal to Rs 8,000.
Balance transfer process
Before entering into balance transfer, it is important for you to know the process involved.
As a first step, you have to inform the credit card issuer from whom you would avail of a balance transfer that you want to avail of the balance transfer facility.
The credit issuer will then send an officer with a balance transfer form. Here you have to fill in all the details of your old credit card and also attach your latest bill statement.
Normally after 7 to 10 working days, the credit issuer will send a demand draft (DD) to your residence which will be in the name of your old credit card issuer. After you submit this DD to the old credit card issuer your outstanding gets cleared. Now you have to pay the transferred amount to the new credit card issuer.
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