Credit card balance transfer is a program that is usually offered by a credit card company to attract new customers. Typically there will be some incentives to entice you to do a credit card balance transfer from different banks.
In Malaysian credit card market, most banks will give a very low APR (annual profit rate) also known as interest rates and 0 charges on transaction fees to entice credit card holders to do a balance transfer while changing credit card issuers. The low interest rates usually last for a few months and normal interest rates would be used again provided you make your payment on time.
Usually there is a minimum amount of debt before you can apply for a balance transfer. Most Malaysian banks will offer better interest rates with higher amount being transferred. Effective use of balance transfer may save you good money.
Lets take an example of RM 2,000 credit card debt at 15% p.a. from Bank A.
RM 2,000 * 15% p.a = RM 300 Interest yearly.
Bank B offered a balance transfer at 0% for the first 6 months with 0 transaction fees , interest will be reverted to a normal rate of 15% p.a from month 7 onward.
RM 2,000 * (15% p.a – 6 months of interest) = RM 150 Interest yearly
Hence , a RM 150 savings is made when doing balance transfer. It is also very important to understand the normal interest rate of offered balance transfer.
Besides savings of interest rates, you will also be able to consolidate your credit card debts into a single statement making things easier to manage.
