What is a balance transfer credit card?
A balance transfer involves transferring your outstanding debts from one or more credit cards into a balance transfer credit card from a different bank with lower or zero interest fees. The goal? To save money on interest!
Assuming you are RM8000 in debt on your credit card with a 15% interest rate per annum. You decide to transfer this balance to a different credit card with 0% interest rate for the first 12 months. Provided you pay off the full amount within those 12 months, you save RM1200 on interest! (Not included the upfront fees/balance transfer fees required).
Banks do this in the hopes of converting you over to their bank, which is why you won’t be able to do a balance transfer from let’s say, a Maybank card to another Maybank card. But, they also earn from among others – balance transfer fees, handling fees, as well as the the high interest rates applied when a debtor doesn’t pay off the amount within the stipulated time frame which is usually 6 or 12 months.
Is it a good idea to do a balance transfer?
As great as it sounds, this method isn’t for everyone. If you don’t have a solid plan on how you’re going to pay off the transferred amount within the time frame, doing so might buy you time, but eventually result with you even deeper in debt.1. Watch out for the small print.
If it sounds too good to be true, it probably is. Issuers may prompt you with their claim of 0% interest rate, but inquire more and you may find out that the 0% interest rate only applies for the first 6 months. After those 6 months, the rate may jump to an exorbitant 18%!2. Take into account the fees.
There’s usually an upfront handling fee of typically 3%. So if you transfer RM 10,000, the upfront fee will be RM 300. Though many cards will offer free upfront handling in exchange for a small interest rate. For example, the HSBC Advance Visa Platinum credit card which offers you the option of no one-time upfront handling fee but charges 1.99% per annum.3. Remember not to swipe!
Just because your card is interest free, that doesn’t mean the additional purchases made with that same card are interest free as well! So keep that in mind when you’re tempted to make more purchases to refrain from racking up even more debt.
What is the best balance transfer credit card?
When it comes to choosing a balance transfer card, it’s important to compare thoroughly. We’ve compiled all the info you need to know including interest rates, minimum transfer amount and the various fees and charges involved all right here!
How to apply for a balance transfer credit card online?
At Loanstreet, all you have to do is press apply on the card of your choice and fill in your details. You will receive a phone call from us within 1 working day in order to check your eligibility, after which we will submit your application to the banks. From then on, you will deal with the banks directly until your application is approved and your credit card is received.