Majority of the people avail a credit card for reward points that make transactions more lucrative. These points can be redeemed for discounts, cash backs, gift vouchers, etc. making future purchases more affordable.
Cards like the Bajaj Finserv RBL Bank Super Card even provide up to 20,000 reward points as joining bonus.
Again, you get pre-approved offers with such cards that make availing them quicker and easier. Pre-approved offers also come with business loans, home loans, personal loans, and various other financial products.
Other than these, there are complimentary airport lounge accesses, fuel surcharge waiver, offers on dining, free movie tickets, and several other features which make credit cards one of the most favourable ways of spending.
However, one lesser-known feature that credit cards come with is the balance transfer facility. You can transfer the balance or outstanding dues of one card to another offered by a different issuer.
Balance transfer on credit cards offer 0% introductory interest rates. So, transferring your existing balance can be more beneficial.
Below are 5 reasons why you should opt for a balance transfer facility:
1. Your credit card company just increased the interest rates
This is one of the prime reasons to opt for a balance transfer facility. Transferring your existing balance to a more affordable card will be beneficial. So, look for another card with low interest rates and same or more features.
2. You want to consolidate debts
It will be a smarter move to opt for a balance transfer facility if you have high outstanding dues with one or multiple credit cards. You not only have to pay a high amount but also incur interest on the same.
The more you delay paying the bill, the more interest you have to pay. Furthermore, the company may also charge you additional fees for late payment.
3. You always have a balance with your card
Opt for a balance transfer credit card if you always have a balance with your existing card. Paying high interest rates every month can be painful, eating up a large part of your income.
4. You always have a balance but also want to avail rewards
You may want to avail accelerated rewards on your credit card transactions. In such situations, go for balance transfer and avail credit cards which come with additional features and benefits.
5. You want to improve your credit score
One of the best ways to improve your credit score is through credit cards. A high credit score makes you more creditworthy and enables you to get unsecured loan easily. It also gives you the power to negotiate the interest rates.
However, you need to use your card properly to improve your credit score. The most crucial point is to keep your credit utilisation within 30-50% of the pre-set limit.
Transferring your card balance can be advantageous for improving your credit score if you have crossed this threshold.
Not only does your overall credit utilisation reduce, but you also can make payment easily with a 0% interest credit card.
Things to remember before opting for balance transfer facility:
I. You have to pay a fee
Your current company may charge a fee when allowing a balance transfer. This fee can either be at a flat rate, a certain percentage on the balance, or both. Do consider the fee before availing this facility.
II. The introductory rate is for a fixed period
The 0% introductory rate on balance transfer is for a fixed period. Generally, the rate is valid for 6 to 12 months.
III. Closing your old card will impact your credit score Transferring your old card balance and then closing it will lower your credit score as your credit utilisation will go up.
Consider all of the above mentioned facts before opting for a balance transfer credit card. You can go for cards like the RBL Super Platinum Credit Card as an alternative as they come with various industry-first features.