Adding a credit card to your wallet is a crucial decision to make. Once you have received the card it becomes way more difficult to manage it. Using a credit card wisely is the key to building a good standing account and a good credit score as well. But there are times when you face funding problems and it becomes strenuous for you to manage a credit card repayment cycle. To deal with these situations the credit card issuers have come up with the concept of the balance transfer.
For instance, you have high outstanding dues on your credit card and too with a high rate of interest. In those circumstances, a balance transfer feature can be of advantage to you because you are transferring the pending dues of one credit card issuer to another credit card issuer that offers an economical interest rate.
What is s Credit Card Balance Transfer?
A balance transfer is a way to get yourself a buffer time period to repay the credit card dues. Transferring dues of one credit card to another credit card is known as the Balance Transfer. In the times when you feel you do not have funds available to pay the dues then you can use your card with the balance transfer feature to pay the dues to avoid the debt situation.
In simpler terms, on using the balance transfer, the second credit card issuer pays the dues of the first credit card. Now you have a due on your second credit card which you will need to pay before the grace period of that card ends.
Is it worth using Balance Transfer?
Using a balance transfer feature is only useful when the processing fee is lower than the interest charges and you get a longer grace period. If these two aspects are not fulfilled by then using this won’t be fruitful for you. Moreover, the whole concept behind the balance transfer is availing of a low-interest rate, if the card with the balance transfer has high-interest rates then you must avoid using this feature.
This feature helps you in reducing your expenditure as well as any penalty if you were to face it.
Bottom Line:
To conclude, most credit card issuers offer a credit card with this inbuilt facility to the credit cardholder. Those who have multiple credit cards can take the advantage of this feature. If you are just beginning your credit journey and got your first-ever credit card then you must adhere to the timely repayment cycles as you won’t have this feature to save you from the expenditures and penalties. A credit card is like a coin, having both pros and cons, it depends on you which side you make the most out of it. It can be either your friend in need or can be your biggest foe, be careful while using it.
Coming back to the topic, now that you are well versed with the working of the balance transfer, you can use it to avoid wasting your money. Do share your experience with the Balance Transfer in the comment section.
Additional Reading - Your Complete Guide To Using Your Credit Cards
