Business News Desk, Credit card is becoming a necessity for people these days. If you don’t have money in your pocket, you can easily shop with the help of a credit card. Also, you can get better discounts during shopping. Whatever amount a customer spends with a credit card is like a loan, which has to be repaid within the grace period. If paid within the grace period, no interest is charged on that amount. But if the grace period is missed, then a lot of interest has to be paid. This is where getting trapped in the debt trap starts. If you too have a huge credit card bill on your head, then the trick of balance transfer can be useful in this case. Through this, you can save yourself from getting entangled in the debt trap. But for this you should have more than one credit card. Let us tell you what is credit card balance transfer, when is it a profitable deal for you and when is it a loss.
Know what is balance transfer
Balance transfer is a facility related to credit card in which bill payment is made by transferring balance from one card to another. For this, it is necessary that the limit of your other credit card (from which you are transferring the amount) is high because you can transfer only up to 75 percent of the amount of your credit card. The bank from whose card you take the money for balance transfer, that bank charges you GST and processing fee for this facility.
What is the benefit of credit card balance transfer
The advantage of balance transfer is that you can clear the loan of the first card with the amount of the second credit card. However, this makes the loan of the second card (from which the amount has been transferred) outstanding. But the advantage of this is that you get a new grace period. If you repay the amount in that grace period, then you do not have to pay any interest. Also, you avoid becoming a defaulter and your credit score does not get affected.
What is the method of balance transfer
There can be two ways to transfer the balance. The first way is that you have to call the customer care of the bank and get the balance transferred from them. The second way is that you can transfer the balance yourself from the bank’s app or website. For this, you will need the details of both the cards. Also, you can choose the method of repaying the balance transfer as lump sum or EMI option.
Balance transfer can become a problem in this situation
If you take balance transfer once or twice then there is no problem, but if you choose this option every day, then it affects your CIBIL score. Apart from this, if you choose the option of balance transfer and are unable to repay it in the grace period, then the risk of getting trapped in the debt trap once again increases because the interest on the credit card bill is very heavy and it is charged on the basis of compound interest.
