Balance transfer credit card: What is it and how to apply for it?

While credit cards are handy financial tools to enjoy the privilege of ‘buy now and pay later’ facility, unhealthy financial habits like irregular repayment of the monthly bills can potentially push one towards a debt trap. As per a Reserve Bank of India report, the outstanding credit card dues reached Rs.1.08 lakh crore in April 2020. Such an outstanding amount is more indicative of faulty financial management than any other cause.

However, while there are various ways to manage credit card debts, a balance transfer credit card proves to be beneficial in addressing such financial pitfalls for card-savvy Indians. Similar to a loan balance transfer, individuals can repay their credit card outstanding balance conveniently availing this facility.

What is a balance transfer card? 

Credit card dues can prove to be financially overburdening in the long run if the debts keep on piling, as the issuer levies a hefty interest plus late fees with each passing month of delay. In such a scenario, individuals can get rid of the outstanding credit card dues availing a balance transfer credit card. 

Such a facility works primarily in two ways.

• You can transfer the outstanding balance to a new credit card with reduced interest rates.

• You can transfer the same to a new issuer who offers competitive interest rates and other add-on facilities like extended interest-free period and so on. 

You can choose a card that suits your purpose, typically when availing such an option. However, only a few selected credit cards offer this facility. So, you must make sure to select a card that offers such a facility. Additionally, when looking for customised cards as per your spending requirements, you can look for the different types of SuperCard of every lifestyle and need. 

Advantages of balance transfer cards

A balance transfer credit card allows cardholders to overcome surmounting debts without much hassle. Therefore, individuals who are struggling to repay their credit card debts can make the most of this facility.

• Reduced interest rates

One of the reasons individuals opt for a balance transfer card is to avail lower interest rates for easy debt repayment. Therefore, besides looking for cards suiting specific expenditure needs like the best credit card for online shopping, it is equally important to possess a credit card with this facility to make repayment easier. 

• Helps with multiple debts

Another perk of carrying a balance transfer credit card is easy consolidation of multiple credit card debts into one card at affordable rates and charges. You can thus avail such a card with a high credit limit and replace all your existing card debts with one such card debt for affordable repayment.

NBFCs like Bajaj Finserv also extend pre-approved offers that simplify the credit availing process and help save time. Such an offer is available for several financial products like personal loans, business loans, etc. You can check your pre-approved offer instantly by submitting your name and contact number. 

• Buffer time

Transferring the balance to another issuer allows you some buffer time to arrange finances. You can utilise the time to manage the penalty fees and other fees that you are yet to pay to your existing issuer.

However, one needs to remember that the new issuer often charges hefty processing fees and other applicable charges to approve this facility. Hence, compare with different issuers for competitive interest rates and favourable terms to make an informed decision.

How to apply for a balance transfer credit card? 

Following is a step-by-step guide to applying for a balance transfer credit card. 

• First, measure your outstanding debts, penalty charges, interest rates, etc.

• Next, look for a credit card with a lower rate of interest.

• Proceed to check the credit limit for your selected card/s considering your due balance.

• Enquire about all the fees related to the transfer and decide if the cost is worth it. 

• Apply for a credit card with a new issuer, preferably online.

• Transfer the debt and repay conveniently.

Balance transfer cards like SuperCard  come with customised ‘transfer and pay’ facility that allows cardholders to utilise almost 80% of the total credit limit for these purposes. All you need to do is clear all the outstanding balance of the last 30 days to qualify for the facility.

Therefore, a balance transfer card is a smart option to reduce your credit card interest and save money. However, you must also gauge your repayment capabilities before making higher spends using a credit card for efficient debts management. When availing a new card, you can also seek customised payment tools such as the best credit card for online shopping, or travel, to meet your spending needs efficiently.