When you are thinking about ways to reduce the burden of costs from using a credit card, credit card offers come from other banks via email. Check for a while and it turns out the offer is more attractive than the credit card you are using now. For example, the interest charged is less than your credit card interest now. Plus a free annual fee forever. Then, the late fee is relatively small.
You are also interested and want to get the credit card. However, do you remember that if a credit card that has a bill swells and has not been paid, how can you have a new credit card? Relax, you may have a new credit card. Currently, almost all banks include a balance transfer feature as a credit card facility. Don’t know what balance transfer is? For more details, you can find out from the description below.
Balance Transfer, How it Works, and Benefits
Credit card balance transfer is the transfer of a bill balance from one credit card (currently used) to another credit card. So, in paying your credit bill balance, you no longer pay it to the old bank, but to the new bank whose credit card you choose.
As an illustration, to find out how it works, imagine that you pile up bills on your credit card at 10% interest. You find a credit card that is profitable and then makes a balance transfer. If the new credit card offers 0% interest for a period of 6 months, you only pay bills on the previous credit card with 0% interest alias without interest.
Of course, this is profitable if you successfully pay the bills within a period of 6 months. In other words, you are not burdened with interest on a new credit card in the settlement.
What Should Customers Look For?
From the explanation above, you may have already begun to understand about balance transfers and their benefits. Yes, as one said, you can pay off the old credit card without paying interest (provided the new credit card offers 0% interest at the start of use).
Then, what do customers need to consider before deciding on a balance transfer? There are a number of things to consider so that you truly benefit from balance transfers.
Balance Transfer Fee.
There is a fee if you make a balance transfer. These costs are intended as administrative costs. The amount is an average of USD. 20,000-USD. 25,000, depending on the provisions of the credit card issuing bank.
The magnitude of Interest.
Each bank offers attractive interest that is usually up to 0%. And usually, the 0% interest is given as a promo from the bank concerned. However, the interest promos have a certain period of time, around 3-6 months. After that, you are charged with normal interest. Here’s what you need to pay attention to. Choose a credit card that is normally smaller than the previous credit card.
The magnitude of the Maximum Balance Transfer.
This is what you need to know first, it turns out the balance transfer has a limit. You can make balance transfers a maximum of 60-90% of the credit limit approved by the bank. For example, the Bank Y credit card that you choose as a balance transfer destination sets a limit of IDR 10 million and a maximum balance transfer amount of 80%. From there, it can be seen, the amount of balance transfer that you can do is IDR 8 million.
Penalty Costs Due to Accelerated Repayment.
Be careful and do not intend to pay off credit card bills sooner than the agreed time. Because banks impose penalty fees for bills that have been paid off prematurely. However, if you really intend to pay off before the agreed time, be sure to know in advance how much the penalty costs to be borne.
Always Pay Full of Credit Card Bills.
For this one, do not let you neglect. If it is too late to pay or pay less than what has to be paid, the bank will charge your bills with normal interest.
Complete the requirements.
No complicated and easy to do, you only need to prepare: a photocopy of identification (KTP / Passport), a photocopy of another bank credit card (back and forth), and a photocopy of the billing statement ( billing statement ) of the bank’s credit card for the past month.
Pay attention before making a balance transfer
From the explanation above, you might start to know what needs to be observed. Yes, things, such as balance transfer fees, interest rates, maximum balance transfer fees, and so on, are the first things you have to look at.
Beyond that, you need to pay close attention and find out the reputation of the bank to which you will choose the credit card as the balance transfer destination. Then added with the experience of customers who have felt the balance transfer at the bank you choose. By examining and weighing those mentioned earlier, you will feel the true benefits of balance transfers.