Smart things to know about transfer of credit card balance

1) The transfer of credit card balance enables cardholders to move the outstanding balance from one card to another. Credit card issuers lure customers through lower interest rates on the balance transferred.

2) The balance transfer helps the holders of multiple credit cards by reducing the overall interest cost. It can also be used to consolidate credit in a single card to make it easy to manage and transact.

3) Some card issuers offer a zero interest period during the initial months, or a low introductory interest rate not only for balance transfers, but also on fresh purchases after the transfer or EMI-based repayments.

4) The companies may prescribe a minimum or a maximum amount, as a percentage of the credit limit of the new card, that can be transferred.

5) The minimum amount due on the existing card must be paid so that there is no default. It takes 7-10 days for the new credit card issuer to issue a demand draft in favour of the credit card issuer with whom the balance is outstanding.

6) A processing fee is typically charged from the customer for availing of the service.

The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Sunita Abraham, Girija Gadre and Arti Bhargava.