Credit Card Balance Transfer Basics
Approval Criteria
- Good on-time payment history (not necessary payment in full)
- Credit card in good standing – not barred
Balance Transfer Limit
- Average minimum is RM2,000
- Maximum is 90% of the card limit
Fees
- Processing fee (fixed – RM50 to RM) or Handling fee (2-8% of amount transfer)
- Late payment fee (1% or RM10.00)
- Financial charges (1.5%/mth of the due amount)
- Early settlement penalty (varies from banks to banks)
Important Basic
- Do not use balance transfer to roll your outstanding debt
If you do that, you are at best prolonging the debt payment – you will be perpetually on debt. Remember, sooner or later, the special promotion rate will expire
- Do “clean” your card first and stop using your card until BT is fully settled
Reason – you monthly payment goes to settle the balance transfer first before it reaches your current charges or residue/original balance. In another word, if you carry existing balance and keep using the card, these charges will only get paid when you paid more for your monthly BT or fully settled your BT. At the meantime, these outstanding balance (existing and new charges) carries a 18% p.a. interest rate.
- Check the special low rate validity if no payment is made
Some banks would revoke/cancel the special low promote rate that you sign on if you missed the monthly payment even thought the promotion period is still not expire yet. Immediately you will be slapped with the standard 18% p.a. Remember, do not missed any monthly payment, at least pay the minimum payment.
- Do not transfer the maximum amount to avoid over limit penalty.
Reason – processing fee is included and counted in the total amount transferred. If you transferred maximum amount allowed to your card, the transfer fee would push you over your credit card limit and you will be slapped with an over limit fee – RM50 or 2% of the over limit, whichever is higher. Or in the event you only made the minimum payment and as a result, the related financial charges push your card over the limit.
- Pay the balance transfer at the same billing date of your credit card.
Balance transfer billing cycle follows your credit card and charges will be slapped if you failed to pay on time. Therefore it is critical to pay attention to when the balance transfer is approved and how it is matched up with the card billing date. Remember to check when the special promotion rate will expire so that you know what is going to hit you on your next billing date. Best to aimed to pay off the balance transfer a month in advanced.
- Look beyond low interest rate
Interest rate should not be used as a single deciding factor in choosing balance transfer plan. You should always look at the total cost - interest rate and repayment period. Low rate but long repayment period is not necessary better than higher rate but shorter repayment period. Do your math.
Did you enjoy this post? Please Subscribe via RSS. Please also share you comment with other readers..