Credit cards are a convenient financial tool, allowing you to shop even without immediate cash. However, every swipe is essentially a loan, and timely repayment is key. Miss the deadline, and hefty interest charges begin to pile up, leading to potential debt traps. One way to manage large credit card bills is through a balance transfer.
What is a Balance Transfer?
A balance transfer lets you shift your outstanding credit card bill to another card, providing you with extra time to repay. However, you can transfer up to only 75% of the available limit on the second card. Processing fees and GST apply.
Benefits of a Balance Transfer
It gives you a new grace period to repay the debt without accruing interest. This can help you avoid missing payments, protect your credit score, and prevent becoming a defaulter.
How to Perform a Balance Transfer
- Call your bank’s customer service for assistance.
- Use your bank’s app or website to transfer the balance yourself.
You’ll need details for both credit cards, and you can choose to repay in full or convert it into EMIs.
When Can a Balance Transfer Be Risky?
Using this method frequently can harm your credit score. Failing to repay within the new grace period can lead to compounding interest, which can quickly spiral into more debt.
Balance transfers are helpful in the short term but should be used wisely to avoid long-term financial trouble.