When Should you Go for a Balance Transfer?

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When Should you Go for a Balance Transfer?
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Why Balance Transfer?

• India is home to the largest millennial
  population around the world which we call the
  youth, which constitutes the largest student
  lobby and the maximum number of people as working
  population.
• According to a recent survey, Indian credit
  market has seen a significant growth in terms of
  borrowers through personal loans and credit
  cards. A study suggests that the credit card
  balances and the number of accounts have
  increased by 40 to the tune of ? 10,900 Cr at
  the end of Q3 2019-20.
• The growth in the number of newer accounts have
  been recorded at whooping 134 as the customers
  demands have continued to accelerate. 
• As the numbers keep increasing, and the tendency
  to cover routine expenses through the means
  of credit cards and personal loans require
  considerable knowledge in order to keep your
  financial health intact and free from the debt
  trap. In order to do so, Balance transfer is a
  feature which might help the borrowers to keep
  the costs of borrowing as low as possible.
• Balance Transfer is a very lucrative facility by
  which one can transfer their existing loan
  balance to another lender at a lower cost.
• Initially this facility was only available for
  the credit card balances, however now it can be
  done for personal loans as well as home loans.

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The Change in your spending habits

• Most of us accumulate unwanted debt by the way we
  spend.
• A credit card is a tool that makes the process of
  buying the things you need or desire relatively
  easier and you only pay when you have the money.
• In case, as a result of your spending habits in
  the past, you have accumulated debt which is
  extracting most part of your income, you need to
  change your spending habits else you end up in a
  series of balance transfers which serves no
  purpose.
• However, currently there is no limit on availing
  a number of balance transfers on your account,
  but the balance transfer cycle might increase the
  overall interest burden after a certain time.

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Ability to pay-off debt early

• Balance transfer is considered to be an easy
  solution for those who are not confident about
  paying off their existing debt within the
  interest-free period as provided by the credit
  card company.
• If a person does not pay the minimum balance due
  at the end of each billing cycle, they are liable
  to pay back the minimum balance with accrued
  interest which is a high price to pay. 
• However, one must avoid paying off balances after
  the stipulated time of a yearly cycle as the
  balance amount which is paid after the end of the
  initial interest-free period might show adverse
  observations on your credit report.

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Looking forward to a Loan

• The balance transfer feature might help you
  prepare for a loan as well as pay your credit
  card dues.
• In technical terms, the process of availing a
  loan and bringing all your debts under one
  umbrella is known as debt consolidation.
• If a borrower is under a burden of
  multiple credit card debts and is not able to pay
  back due to heavy interest burden, availing a
  loan with a balance transfer facility with lower
  rate of interest might provide some relief
  temporarily. 
• Balance transfers are easy to avail these days
  but are not instantaneous.
• It depends on various factors ranging from the
  type of issuer, credit history of the applicant
  and a number of other factors, depending on these
  your balance transfer could take as little as
  three days from a prompt lender or as long as six
  weeks to come into effect completely. And while
  your credit card issuer should be able to give
  you a sense of how long it will take, theres no
  way to know in advance exactly how long youll
  have to wait.

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Continuing

• In the meantime, instead of sitting with your
  hand-on-hand kindly be sure to pay at-least the
  minimum due to your existing creditors. Failing
  to do so could lead to late fees and damaged
  credit and could even disrupt the balance
  transfer in progress.
• Most of the banks also allow a top-up facility
  once you avail the balance transfer facility,
  which is particular to personal loans.
• However, the primary role of a balance transfer
  is to reduce the existing debt burden and avail
  lower rate of interest, in case of a top-up loan
  the applicant might end up attracting more
  burden.
• One must keep the option to withdraw funds open,
  if in case a sudden need arises.

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Thank You ? !!!