With the increasing number of credit card defaults, individuals struggling to pay their credit card bills in full may find a balance transfer to be a useful solution. Balance transfers typically offer lower interest rates compared to regular credit card rates, and some issuers even provide introductory offers, such as zero interest for a limited period, which can be beneficial for quickly paying off credit card debt.

However, before opting for a balance transfer, it’s essential to comprehend the interest rates and changes in terms and conditions once the introductory period expires. Balance transfer fees can vary from one bank to another, ranging from 0% to 2% per month, depending on the card issuer.

Understanding the associated charges is crucial. Many card issuers impose a processing fee, typically between 1% and 3% of the transferred amount. Some banks may also charge a flat fee for balance transfers, which can range from INR 100 to INR 300 or more, depending on the card provider.

Using the balance transfer feature responsibly is vital, as frequent transfers and delaying interest payments can negatively impact your credit score.

Adhil Shetty, CEO of, suggests that before transferring your debts, you should check interest rates, balance transfer fees, and payment duration, and identify any hidden charges. Opt for cards that offer zero charges on a certain number of transfers, or choose a card with a low interest rate to avoid additional costs.

Paying only the minimum due can lead to substantial finance charges on the remaining balance, and new purchases may not qualify for the interest-free period. Rohit Chhibbar, head of Credit Cards Business at Paisabazaar, explains that by transferring the balance to another credit card, individuals can save on high-interest charges, as the entire amount is converted into EMIs at a lower interest rate. However, not all individuals with outstanding balances on their cards may be eligible for a balance transfer offer.

Comparing interest rates is essential. Cardholders should compare the interest rates on their existing credit cards with those offered by the new credit card to which they plan to transfer the balance. The goal is to secure a lower interest rate on the transferred balance, significantly reducing the cost of carrying debt.

Cardholders must also check if the new credit card charges a balance transfer fee, typically a percentage of the transferred balance. This fee could offset potential savings from the lower interest rate. It’s crucial to ensure that the new credit card has a sufficient credit limit to accommodate the desired balance transfer.

While balance transfers can be a suitable option, especially for those incurring substantial monthly credit card interest, individuals should consider whether they can save significantly and clear their dues promptly. A personal loan with a lower interest rate may also be a wise alternative. Personal loans offer longer terms than balance transfers, making them a better choice if more time is needed to repay the debt. On the other hand, a balance transfer with a zero percent or low promotional interest rate can be an excellent short-term solution for quickly eliminating credit card debt.

“A personal loan can be especially helpful in consolidating multiple credit card debts instead of transferring balances from card to card. Moreover, a longer tenure translates to a lower monthly EMI, but you would have to pay a higher amount in the long run as interest. Hence, carefully calculate the total cost of each alternative before choosing one,” advises Chhibbar.

Credit cards may charge interest rates of 2-3% per month, depending on the card type and grace period, while personal loans may be available at interest rates ranging from 12-20%. Individuals can negotiate for a lower interest rate based on their credit score and income. Banks evaluate the borrower’s profile and offer loans based on eligibility criteria.

Therefore, it’s crucial to compare options and select the one that imposes the lowest financial burden and helps you eliminate debts promptly before they negatively impact your credit score.


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