Credit card balance transfer deals
If you’re in a jam with your credit card bill, consider a balance transfer deal. It will stop it from ballooning every month and gives you time you repay your debt at a fixed cost.
Credit card debt is quite simply the most expensive loan you could have. If personal loans are frowned upon, letting your credit card outstanding rise over a few months is much worse. While you might think you’ll pay it over time, even if the interest is over 30% a year, the amount could easily swell far beyond your expectations. This is because, if you don’t pay your bill in full in one month, all subsequent purchases attract the high interest rate from the very first day. One way to solve the problem of this ballooning bill is a balance transfer.
What is a balance transfer?
Credit card providers offer a discount to attract new customers. The deal works like this:
1. The card company making the offer will pay off your bill, so long as it is under 80% of your credit limit, if you’re willing to transfer your account to them.
2. To transfer the credit, you may have to pay a processing fee. If you accept the offer from SBI, for example, you’ll have to pay 2% of the amount.
3. In exchange for this processing fee, your new card company will ensure that your balance doesn’t rise (if it is offering 0% interest for three months) or doesn’t rise by as much (if it is offering a low interest rate, of say 1.5%, for six months). Generally, if interest is to be paid, there will be no processing fee.
If you’re an errant customer, you should pick only deals that are offering a 0% interest rate. This way, in exchange for a flat processing fee, you are given a chance to clear up your debt within three months. On the other hand, if you’re just looking to move to another card provider, it makes more sense to pick a deal with no processing fee. Alternately, you could simply apply for the card altogether.
Balance transfer deals
|Card provider||Discounted rate||Months||Processing fee||Maximum amount|
|State Bank of India||0%||2 months||2%||75% of new credit limit|
|Axis Bank||0%||3 months||2%||NA|
|Kotak Cards||0%||3 months||Rs349 per Rs10,000||75% of new credit limit|
|Standard Chartered Bank||0.99%||6 months||Nil||Rs5 lakh|
|Punjab National Bank||0.99%||6 months||Rs172.50 per Rs1,000||90% of new credit limit|
|Axis Bank||0.75%||6 months||1%||NA|
|HSBC Gold/Platinum||1.25%||6 months||1.50%||90% of new credit limit|
|HSBC Gold/Platinum||1.25%||12 months||1.50%||90% of new credit limit|
|HSBC Classic||1.50%||6 months||1.50%||80% of new credit limit|
|HSBC Classic||1.50%||Perpetual||1%||80% of new credit limit|
|HDFC Bank||On call only|
|Citibank||On call only|
*updated on December 6, 2013