How does a balance transfer work?

A balance transfer is a process where you transfer the outstanding balance from one credit card to another credit card. The balance transfer is typically done to take advantage of a lower interest rate on the new credit card or to consolidate multiple credit card balances into a single payment.

To initiate a balance transfer, you need to apply for a new credit card that offers balance transfer facility. Once you are approved for the new credit card, you need to provide the details of your old credit card balance to the new credit card provider. The new credit card provider will then transfer the outstanding balance from your old credit card to your new credit card.

After the balance transfer is complete, you will have to make monthly payments on the new credit card. Ideally, you should aim to pay off the entire balance within the promotional period, which is usually 6 to 18 months. This will help you avoid paying high interest rates on the balance transfer.

It is important to note that balance transfers may come with fees, such as balance transfer fees, annual fees, and other charges. Make sure to read the terms and conditions carefully before initiating a balance transfer.