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How does Balance Transfer help? Credit Card holders should know, know when it becomes a problem.


The use of credit cards is increasing rapidly. In today's time, spending money from a credit card is exactly like taking a loan from a bank and spending it. Because of this, many times there comes a time when people do not have enough money to pay their credit card bills. If you ever get stuck in such a situation and you have many credit cards, then you can use the facility of balance transfer.

Through balance transfer, you can pay the bill of one card from another. This process is called balance transfer. Suppose you have an outstanding amount on one credit card, but you are not able to pay it. If you think of paying it next month, then you will have to pay late fees as well as interest on that money for about a month. This interest can also be charged at the rate of 36-48 percent per annum. In such a situation, if you have another credit card, you can transfer the balance from it at a very low interest rate.

There can be two ways to pay the bill of another card from any credit card i.e. to transfer the balance. The first way is that you have to call the customer care of the bank and get the balance transferred from them. The second way is that you transfer the balance yourself from the bank's app or website. However, for this, you will need card details. On the app or website of the card from which you want to transfer the money, you will have to fill in the balance transfer amount and the details of the card to which you want to transfer the money. At the same time, you can also choose the way to repay the balance transfer. Either you have to pay a lump sum amount or take the option of EMI.

If you do not transfer the balance, then you will have to arrange money from somewhere to pay the entire bill on your card. Otherwise, you will have to pay late fees and huge interest or take a loan and pay its interest too. A big problem with the loan will be that you will not get the loan for a month or 2-3 months. On the other hand, if you transfer the balance, then the extra money you will have to spend will be less. On the other hand, due to not paying the bill, you will not come under the category of default, which could have spoiled your CIBIL. EMI facility is also available in balance transfer. In such a situation, the balance you are transferring from one card can be repaid gradually in EMI.

Balance transfer sounds very good, but if understood in simple language, you are taking another loan (payment from another card) to repay one loan (credit card). Although transferring the balance once or twice will not cause much problem, if you use it too much then it can affect your CIBIL score.

A big problem in this is that if you use balance transfer for different cards many times, then you can get trapped in the trap of a new loan while repaying the loan. If you pay the balance transfer amount on EMI, then gradually your monthly EMI may increase, which may become a burden on you.