For example, if you have Rs. 50,000 pending on a card with a high interest rate, you can transfer it to another card with a lower interest rate, which gives you some breathing space to pay it off without incurring extra costs. However, please note that such offers often come with a processing fee. It is also advisable to stop making new purchases on the new card until you clear the transferred balance.

Stabilize Credit Score – Lowered interest rates will make it easier for the cardholders to make payment and hence stabilize their credit score. They can even improve it with timely payments.

Interest-Free Period – Credit card providers offer an interest-free period on new purchases post balance transfer as well. This way customer can make new purchases without incurring interest rate on it.

Other Benefits – Credit card providers sometimes offer teaser rates or other introductory offers to customers. These benefits may include longer interest-free periods, low interest rates, etc.

Balance Transfer Pros

• Helps you save on high interest charges by transferring balance to low/0% interest card.

• Makes debt repayment easier by consolidating multiple balances into one.

• Improves credit score if payments are made on time.

• Offers short-term interest-free period for financial relief.

Balance Transfer Cons

• Comes with processing fees usually 1-3% of the transferred amount.

• May tempt you to overspend using the new card limit.

• Missing payments or overusing the limit can negatively impact your credit score.

• Not everyone qualifies for balance transfer offers due to credit score requirements.

Processing Fee – Customers will be charged a processing fee for a balance transfer that can range anywhere between 1% and 3%. Some banks may also charge a flat fee.

Interest Rate – The interest charged on Balance Transfer can be 0% for a certain period. But, the interest rate is usually around 0.75% and may go up to the particular credit card’s finance charge.

The interest rates and processing fee charged on some popular credit card issuers are shown in the table below:

Cardholders who are carrying significant amounts of debt at a high interest rate may apply for a balance transfer. This will help them pay off the debts without incurring hefty charges.

Do note that balance transfer is best suited when the user can pay off the due amount within a few months. If he finds that it will take longer than a few months, perhaps a year or two, then a Personal Loan will be better suited.

However, those who want to apply for a new balance transfer credit card must meet the eligibility criteria set by the particular bank for that particular card variant.  Proof of identity, address and income will also be required at the time of new credit card application.