Credit cards provide consumers with a handy way to pay for goods and services without forking out physical cash. Such a convenience has its down side.
Sometimes it’s that little tempting treat you bought – or two, or three, or 25 – or, it could have been that hospital bill that couldn’t wait. Either way, stacking up large amounts of credit card debt is very possible and a very real problem for many Malaysians.
But it does not have to be the ominous situation it’s cracked up to be. There are effective ways to clearing your debt and a balance transfer is one of the best.
Demystifying the Balance Transfer
If you haven’t already heard of a balance transfer, it is basically the transferring of the remaining amount owed on your credit card onto a new credit card from another issuer.
On the face of it, it doesn’t sound too helpful. Why transfer your debt from one place to another? Well, because you can save hundreds to thousands of ringgit on interest when you do.
Almost every bank has a balance transfer programme that offers 0% interest for a certain amount of time. It’s the race to secure your business and to do so, credit card issuers are willing to slash your interest rates for a couple of months in order to gain your loyalty.
It’s a win-win situation if you, excuse the pun, play your cards right.
Some Notable Notes
Before you rush off to apply for one, here are some important things to note:
- Amounts: Depending on the bank and the credit limit they are offering you, you may be able to put the full amount of your existing debt into the new card. The norm however, is only 60-80% of the available credit limit. If the amounts are small, you may be allowed to transfer balances from more than one credit card.
- Fees: Some issuers charge for admin and other costs. More often than not, there is a penalty for repaying your balance earlier than stipulated. Always read the terms to know what you’re signing up for.
- Repayment: Be diligent in your repayment and never pay less than the amount agreed to in the balance transfer agreement. Failure to do so may result in the regular credit card interest rates applying.
- The 0% interest rate: This unbelievable rate for what is basically an unsecured debt won’t apply to new purchases so refrain from being tempted to use your balance transfer card for new purchases. Also, as above, if you don’t pay the scheduled amounts, you risk going back to the same old 16-18%.
- Best practices: A bit of rehashing but this bears repeating: Always pay the stipulated amounts every month and resist the urge to use the card until your transferred balance has been paid off. You’ll thank us for this, we promise.
Hot off the Presses
Here are some new balance transfer promotions from your friendly neighbourhood credit card issuers.
BSN offers a tenure from as low as 3 months with a minimum transfer of RM500 at an interest rate of 0.30% per month up to 36months with a minimum transfer of RM2000 and a rate of 0.375%. If you take just 6 months, its 0% interest.
The promotion is valid only until 30 April 2013. Get more info and apply here.
- Hong Leong Bank
HLB offers four different plans to suit your needs also beginning at a 3 month tenure to 12 months with an increasing interest rate from 0.40% per month to 1% per month for 12 months.
Promotion ends 30 June 2013. Read more and apply here.
- CIMB Bank
CIMB is offering 0% interest for 6 months until 31 December 2013. That’s not all, for existing CIMB Cardmembers, there are 3 plans you can opt for to clear your balance without transferring to another issuer! It’s set at 10% for 12 months, 11% for 18 months and 12% for 24 months.
Minimum transfer amount is RM1000. For added info and application, click here.
- HSBC Bank
The balance transfer deal from HSBC starts with an initial 3% interest for the first month and 0% for the next 5 months. That technically works out to 0.5% per month – similar to Maybank.
Minimum transfer amount is RM1000. For more information and to apply, click here.
- Public Bank
There are options offered by Public Bank for their balance transfer. It’s 0% for 6mths with a minimum RM3000 transfer, 2% for 12 months with a minimum RM1000 transfer and 5% for 24 months with a minimum RM3000 transfer. These rates are charged only one time.
Click for more information and to apply, click here.
- RHB Bank
With a minimum RM1000 transfer across their three plans, RHB offers 12, 18 and 24 months at rates of 7.30%, 8.67% and 8.41% per annum. Although, do note there is an extra initial interest rate of 4%, 7% and 9% respectively.
The plans are available only until 30 June 2013. For all the glorious terms and to apply, click here.
Maybank has designed 5 different plans to suit your needs. Ranging from 6 to 36 months, the interest rate flunctuates at 0.5% at 6 months to 0% at 12 months and 0.413% at 36 months.
For terms, terms and a spot of application, click here.
If you’d like to see a full list of issuers in a nifty comparison chart format as well as a longer FAQ article, check out our previous posting on balance transfers.