If we said that Banks are giving away free money you’d say we’re crazy, right? Wrong. Used wisely a Balance Transfer credit card can save you a fortune in interest. Some cards offer 0% interest over a short contract term.
Here we answer a few frequently asked questions about Balance Transfer credit cards:
1. Can I transfer the balance from more than one credit card?
Most banks allow you to transfer the balance from more than one card provided you have the available credit limit on the receiving card.
2. How much can I transfer to my new credit card?
Most Balance Transfer offers only let you transfer60%-80% of the available credit limit onto the receiving card but some will allow you to utilise all your total available credit limit.
3. Is there a minimum amount I need to transfer to my new credit card?
Most Balance Transfer offers require a minimum transfer amount of at least RM1,000 while some can require as much as RM3,000.
4. How do I transfer my balance from my current credit card to the new credit card?
Some banks will deal with a Balance Transfer over the phone. Other banks ask you to fill out a form and send statements of the credit card you want to transfer from. Whatever method you choose it would be good to keep a separate file handy just for Balance Transfers (make photocopies) so that you can track what you have transferred from one card to another.
5. What are the best credit card balance transfer deals?
12 Months interest is charged at 0.30% per month with first 6 months at 0% interest
24 Months interest is charged at 0.375% per month with first 12 months at 0% interest
AmBank 36 Month:
If you transfer RM 5,000 - RM 20,000 you are eligible for some great gifts such as the HTC Desire C, Samsung Galaxy SIII, Sharp Aquos 39" Full HD LED TV, 11 inch MacBook Air and much more. You also should not be put off by the high interest rate, once you take into account the value of the gifts the real annual interest is closer to 4%.
MBF 0% For Life:
The 0% interest rate for life is only valid for balances under RM3,000 - anything above RM3,000 will be charged a one-time upfront balance transfer preferred interest of 5.99%. In order to maintain the 0% interest you have to transact at least RM300 per month on the card until the principal is fully repaid. Finally, you have to make minimum monthly payments of RM99 until the balance is paid off.
6. Can I still transfer my balance to a new credit card if I have missed a lot of payments on my current credit card?
Most banks allow you to transfer as long as you card is not blocked. Credit card companies can block your card if you have used up your entire credit limit or if you have not made your minimum payments for several months in a row.
7. Are there any extra fees in addition to the advertised interest?
This varies from bank to bank so read the fine print carefully. Some banks advertise low or 0% interest rates but will charge you a one-time upfront fee instead. Other banks have legal or admin fees hidden in the Terms & Conditions.
8. Do any of the Credit Card Balance Transfer deals allow an early repayment without having to pay the full interest on the original transfer?
There are two charges you need to be aware of when it comes to early repayments.
Some banks will charge you an early settlement fee of up to RM100 if you repay the Balance Transfer before the program officially ends.
When it comes to the interest charges on the Balance Transfer, some banks will want you to repay all the monthly interest as if you had maintained the Balance Transfer until the program officially ended.
For example, even if you repay a 24 month Balance Transfer deal after only 18 months, you may have to repay the interest from months 19-24. Again, read the small print or call the bank to confirm.
9. Do any of the Credit Card Balance Transfer deals apply the special rate to new purchases too, or is the Balance Transfer rate only applicable to the amount transferred?
You can only enjoy the special rate for the amount that was originally included in the Balance Transfer. The promotional rates are not extended for new purchases on the same card. This is very important, see point 12.
10. Can I apply for a Credit Card Balance Transfer to an existing credit card, or do I need to apply for a new credit card with the bank?
This varies depending on the promotion and the bank so you will need to check each promotion’s Terms & Conditions.
11. If I miss any repayments on the Credit Card Balance Transfer deal will I still enjoy the low promotional rate?
No. Almost all Balance Transfer offers only apply the low promotional interest rate if you repay the outstanding balance to the agreed schedule.
Any failure to make the required payments on time will usually lead to the bank applying their normal finance charges of up to 18% to the outstanding balance
12. What’s the biggest mistake people make with Balance Transfer credit cards?
They use them. Seriously, if you’re considering a Balance Transfer to help you pay off current credit card debt the best advice we can give is: Don’t Use That Credit Card. Put it in a glass of water, put that glass in the freezer, forget it exists until you’ve paid off the transferred debt.
Why do we say this? Well, credit card companies allocate payments to those debts with the greatest interest first.
If you’re using your Balance Transfer card for everyday purchases your payments will be applied to those debts first, and not to the low or no interest rated balance you transferred from your old card.
Your greatest priority is to pay off the Transferred Balance within the contract term.
Image: MintLife Blog