10 Things You Never Knew Credit Card Balance Transfers Could Do For You

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10 Things You Never Knew Credit Card Balance Transfers Could Do For You

With growing needs and increased cost of living, making ends meet may be challenging. Individuals relying on credit cards may face trouble with mounting credit card debts. Non-payment of credit card bills can lead to a drop in the credit score and downgrade the individual’s creditworthiness in the long term. While it is essential to pay all the outstanding dues on time, sometimes it may become difficult for individuals to settle all outstanding dues timely. There may be unforeseen circumstances that could hamper the short-term repayment ability. 

 

However, such issues can be resolved quickly. Individuals can apply for a credit card and transfer the existing credit card dues to the new card that provides a zero or nominal credit card interest rate on the outstanding amount. Credit card transfers are an effective way to solve liquidity issues, as they give the borrower a more affordable way to repay their outstanding dues. 

 

You can transfer your existing credit card balances to a Kotak credit card and enjoy an interest-free period of up to 90 days. 

Here is an overview of the ten key points of transferring credit card balances. 

  • Save Money

Transferring credit card balances helps you save money. Lenders supporting credit card balance transfers offer lower interest rates for borrowers. As promotional offers, some lenders may even offer zero interest rates for customers to facilitate smooth repayments on the outstanding amount. As a result, borrowers can repay the existing principal amount at a lower cost and save money. 

  • Transfer Amount

You can transfer the balance amount that is equal to the credit limit of the new credit card. Suppose your existing credit card balance is Rs. 80, 000. You apply for a Money transfer credit card with a limit of Rs. 50, 000. This implies that you can transfer only Rs. 50, 000 to the new card and have to bear the remaining Rs. 30, 000 from your finances. 

  • Outstanding Dues

Transferring existing credit card balances facilitates more affordable repayment terms for borrowers. However, the amount eligible for lower interest is limited to the outstanding dues transferred. Further purchases made on the new credit card will not be subject to lower repayment terms. 

  • Debt Term

Transferring outstanding credit card balances to a lower interest credit card enables customers to make faster payments by providing better repayment terms for the outstanding dues. Customers can direct their funds toward principal repayment, not interest, which helps close debt faster. 

 

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  • Processing Time

Credit card balance transfer is quick and takes only a few days. Customers struggling with significant credit card burdens can resort to this technique to ease their repayments and restore liquidity. 

  • Debt Simplification

Using multiple credit cards and keeping track of all the dues can be cumbersome. Choosing a credit card to manage all the outstanding balances is a more straightforward way to manage debt. 

  • Additional perks

Applying for a credit card can give numerous perks to customers, such as availing discounts, cashback, free flights, etc. A balance transfer proves even more beneficial if your existing credit card does not offer such benefits. 

 

Know more about the different credit cards offered by us. 

  • Number of balance transfers

There is a restriction on the number of times you can transfer the balance from an existing credit card to a new one. Lenders may not entertain customers constantly taking advantage of the process. The number of transfers allowed is solely at the discretion of the lending institution. In addition, with each balance transfer, you have to pay a small fee. 

  • Deal Term

You can avail better debt repayments using a credit card balance transfer, such as getting zero or a very nominal interest rate. However, such features are available only for a limited duration. For instance, a lending institution may approve a balance transfer at a zero interest rate for six months. This implies that at the end of six months, customers have to pay regular interest rates. It is advised that customers thoroughly review the balance transfer term before applying.

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  •  Credit Score

Taking an additional credit card to facilitate more manageable repayment can cause a short-term dip in the credit score. However, it boosts your credit score in the long run. By taking an additional credit card, you are exposed to more credit, which may remain unused in the longer term, thereby improving your credit score.