Many credit card companies offer balance transfer feature on their credit cards. This feature is keenly promoted by them as a way of attracting new customers. On the other hand, customers opt for these cards as it provides them an opportunity to save on high interest rates on the outstanding balances of their existing credit cards.
What is balance transfer on credit cards?
Using the balance transfer facility, credit card holders can transfer the outstanding balance on one credit card to another credit card, usually with a lower or even zero interest rate on the balance that is transferred. Depending upon the company's policy, the cardholder may also be given the option of paying the balance amount as equal monthly installments (EMIs).
Balance transfer facility is also used to consolidate outstanding balances of many cards to one card, making it easier for the cardholder to manage repayment of credit from several cards. It also helps in cases where a cardholder wants to close an existing credit card which is not used often.
Process of balance transfer
Before opting to transfer the outstanding balance of an existing credit card to another card, cardholders must know the process of balance transfer on credit cards.
Step 1: Inform the new credit card company
When a card holder wants to transfer the balance of his existing card to another card, he should inform the new credit card issuer that he wants to avail this facility from them. For this, customers can visit the new credit card company in person or submit their requests through websites.
Step 2: Submit the duly filled forms
When such requests are made, credit card issuers send their executives to the new clients with a balance transfer form. The customer has to fill the form providing his old credit card's details and attaching the old card's bill statements.
Step 3: Clear the outstanding balance on old credit card
In about 7 to 10 working days, the customer will receive a demand draft from the new credit card issuer, at the address provided by him. The DD has to be submitted to the old credit card issuer to clear all outstanding balances on the old card.
After this, the customer has to repay only the transferred amount to the new credit card.