Do You Need a Balance Transfer Credit Card?

Many banks and credit card providers offer balance transfer credit cards, which are low-interest cards that allow you to move outstanding debt to them from other high-interest cards. This strategy is useful for helping you manage your credit card payments better and pay off your debts faster. A balance transfer credit card can also be used to simplify your monthly payments. You can consolidate your balances from other cards and transfer them to the new ones, so you only need to make a single payment every month. If your credit card payments are becoming too much of a burden or you’re paying high-interest rates every month, getting a balance transfer credit card can be a smart solution.

The lower interest rate of a balance transfer credit card means that the bulk of your payment is applied to the principal balance rather than miscellaneous credit card fees. However, you can still end up incurring high-interest charges or penalties if you don’t pay the minimum due amount or are late with your card payments. With that, it’s a good idea to understand how a balance transfer credit card works and the different factors that may affect your payments so that you are able to successfully use it for managing your debt. These will help you determine whether or not applying for a balance transfer credit card is the best choice for you.

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How to Get a Balance Transfer Credit Card

The first thing you need to do to get a balance transfer credit card is submitted a credit card application with another bank if you don’t have other existing card accounts. Make sure that the new card you are applying for is eligible for balance transfers. Once you’ve submitted the requirements, all you have to do is wait for approval.

Some banks will allow you to apply for a balance transfer together with your card application, while others may require you to wait for a minimum period before doing so. For example, some banks require cardholders to have 12 months of good credit standing, while others may allow you to get a balance transfer as soon as seven days after your credit card gets approved.

Once you qualify for the bank’s balance transfer program, you can get in touch with your new credit card provider and request to move your credit card balances from other banks to the new one.

Alternatively, you can apply for a balance transfer with your current provider if you have a credit card with a different bank. For example, if you have credit cards with Bank A and Bank B, you can compare the two and determine which one has the lower interest rate. You can then request that the issuing bank of the low-interest card transfer the balance from your other credit card.

Balance Transfer Credit Card Application Requirements

When applying for a balance transfer credit card, you may need to submit certain requirements via email, the bank’s website, or personally hand them over at a bank branch. Most banks will have requirements that include:

  • An accomplished balance transfer credit card application form
  • Copies of two valid IDs
  • The latest statement of account of your credit cards from other banks

Understand the Balance Transfer Rate

In the Philippines, the rate of balance transfer credit cards can go from zero to two percent. The exact rate can depend on the balance transfer amount and the repayment period.

When getting a balance transfer credit card, make sure to choose one with the lowest interest rate. This way, most of your payments will go toward the balance instead of the interest charges. You should also consider taking advantage of bank promotions that offer a zero percent balance transfer rate.

Some banks offer an introductory rate of zero percent for new credit cardholders. This is usually a short-term offer ranging from two months to six months from the card approval date. Within this limited period, you won’t need to pay any interest, so your monthly payments will go directly toward paying your debt. While this can be a great way to minimize your debt accrual, make sure to check the bank’s regular interest rate after the promo period elapses, as this could be higher or lower than the rate on your original card.

Know Your Installment Terms

Aside from the balance transfer rate, you need to consider the installment terms of the new card before getting one. This can affect your ability to pay off your debt. Typically, low-interest balance transfer offers last only for a certain period. Many banks can offer transferred balances for a period of three to 60 months.

When choosing the available payment terms, the installment period can affect your finances. For example, shorter installment terms tend to have higher balance transfer rates, which can result in higher monthly repayments. However, availing yourself of these terms can save you money on interest payments. On the other hand, longer installment terms may allow you to better manage the monthly fees, but you may end up paying more in interest.

Keep Track of the Available Balance Transfer Amount 

Balance transfer credit cards have limits on the amounts you can transfer. It’s common for banks to require a minimum amount, which is usually within the unused credit limit of the balance transfer card. Find out what this is and consider the amount you need when applying for a new card. It will help you choose a provider that can best cater to your balance transfer needs and avoid maxing out your new card.

Getting a balance transfer credit card is a good way to manage your credit card debts, as long as it has a lower interest rate than your current credit card. Take note that you still need to pay off your monthly amortization for the new card on time. Otherwise, you can incur charges and fees that may increase your payments. So, carefully consider all your options to determine if a balance transfer credit card will suit your needs and help you pay off your debt.