Is a huge credit card bill weighing on you? No tension...this trick will not let you become a defaulter

If you too have a huge credit card bill hanging over your head, then the trick of balance transfer can be useful in this case. Through this, you can save yourself from getting entangled in the debt trap.

Credit cards are becoming a necessity for people these days. If you do not have money in your pocket, then with the help of a credit card, you can easily do shopping. Also, you can get better discounts during shopping. Whatever amount a customer spends through a credit card is like a loan, which has to be repaid within the grace period. If repaid within the grace period, no interest is charged on that amount. But if the grace period is missed, then a lot of interest has to be paid.

This is where getting entangled in the debt trap begins. If you too have a huge credit card bill on your head, then the method of balance transfer can be useful in this case. Through this, you can save yourself from getting entangled in the debt trap. But for this, you should have more than one credit card. Let us tell you what is credit card balance transfer, when is it a profitable deal for you and when is it a loss.

Know what balance transfer

A balance transfer is a facility related to credit cards, in which bill payment is done by transferring a balance from one card to another. For this, the limit of your second credit card (from which you are transferring the amount) must be high because you can transfer only up to 75 percent of the amount of your credit card. The bank from whose card you take the money for balance transfer, that bank charges you GST and a processing fee in return for this facility.

What is the benefit of credit card balance transfer?

The benefit of a balance transfer is that you can end the loan of the first card with the amount of the second credit card. However, this makes the loan of the other card (from which the amount has been transferred) outstanding. But the advantage of this is that you get a new grace period. If you repay the amount in that grace period, then you do not have to pay any interest. Also, you avoid becoming a defaulter and your credit score does not get spoiled.

What is the method of balance transfer?

There can be two ways 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. For this, you will need the details of both the cards. Also, you can choose the method of repaying the balance transfer, lump sum, or EMI option.

Balance transfer can become a problem in this situation

If you take balance transfer once or twice, then there is no problem, but if you choose this option every day, then it affects your CIBIL score. Apart from this, if you choose the balance transfer option and are unable to repay it within the grace period, then the risk of getting trapped in the debt trap once again increases because the interest on the credit card bill is very high and it is charged based on compound interest.