Have you received an attractive offer of a balance transfer from a renowned financial institution and are contemplating whether this is beneficial for you or not? Balance transfers sound extremely attractive, however, you must know certain aspects before opting for the same. Read on to know what exactly a balance transfer is and all that you would like to know in detail about this.

What is a balance transfer?

Balance transfer implies paying off all the balances and EMIs that are remaining on your current credit card or an existing loan by means of transferring it to an alternative credit account.

Processes involved in a balance transfer

• When you finally accept the offer of a balance transfer from an alternative financial institution, you need to let them know how much your pending credit is, at which bank it is located in, your account number and the amount you need to transfer.
• The new company will scrutinize your details and inform you about your eligibility for the same. Once the approval for the balance transfer is passed, the financial company will get in touch with the bank you have credit with and repay the amount pending. It takes approximately around a couple of weeks for the entire process to be completed.
• Suppose you have an EMI pending before the transaction gets completed, it is advisable to go ahead and do it in order to avert any late fee that can crop up due to the same.
• Normally these balance transfers charge around three to five percent of the amount that requires being transferred. So, make sure you ask about the amount they charge you a transfer fee.
• Once the balance transfer has been completed, there is no way it can be canceled and no chance of getting back any fee that has been charged for the same.
• Ensure that you take a transfer that stays within your limit and also, make sure that all your EMIs are paid right on time as this helps you to improve your credit rating and receive all kinds of promotional offers in future.
• Bear in mind the fact that transfer rates do expire. Although you tend to get attracted with unbelievably low annual rates, remember that these rates are not forever. Once you cross a period of one year or even six months, you will find that the rates of interest have risen to something ranging between twelve and eighteen percent which is actually an amount more than what you were trying to escape.

What are the benefits of a balance transfer

A low amount of balance transfer helps to clear your existing credit as this helps you secure a comparatively low EMI for a predetermined repayment period, such as  one or two years.

This actually aids to lower your debt as high APRs mean high rates of interest rather than principal.

Good news is that all your credit comes from one single institution and it becomes much easier to manage your EMIs under a single group rather than paying various EMIs to various banks on different dates.

Most companies offer attractive and low rates of EMIs on balance transfers that make it worthwhile making the balance transfer which in turn helps you to build a lasting relationship with the new company.

What kind of balances are transferrable?

Any kind of existing credit pending on any of your credit or gas cards or any pending loans of any kind can be transferred. It can also be a car loan, personal loan or any monthly installment that is being made every month that can be done via a balance transfer.

Checkpoints to be kept in mind while opting for a balance transfer

Although balance transfers may sound really advantageous and attractive, remember to keep the below-mentioned checkpoints in mind before opting for a balance transfer.

• It is better to stop looking or opting for a zero percent balance transfer as they may have some hidden charges. Just settle for a commendable offer that will help you wipe off your debts in one go and consolidate everything under one roof.
• Find out clearly whether the “intro APR offer” stands well only for balance transfers or whether they are applicable as far as normal purchases are concerned too.
• You need to bear in mind the fact that a balance transfer does not close your account automatically. You do need to get in touch with your creditor and get your account closed to complete it.