Advantages and Disadvantages of Credit Card Balance Transfer: An Unbiased Review

Credit card balance transfer

With the increase in the usage of credit cards and smart payment options off late, the risks associated have increased as well. The high-interest rate that comes with making a purchase using the credit card leads an individual towards a debt trap.

But can you transfer your credit card balance to another person? If you are here, chances are you don’t have much knowledge about balance transfer credit cards. Say you are a credit card user and you need to pay off the purchases using it in full with the added interest amount. A balance transfer credit card is an offering from your bank or financial institution which allows you to transfer the debt to the credit card with 0% interest for a fixed period. It will let you pay off the debt, without the additional costs associated with credit card interest rates.

This article will guide you through the various advantages and disadvantages of balance transfer credit card. Read on to know more!


A balance transfer credit card offers you a number of benefits and added perks. It is a perfect way to get more out of your money and credit card.

Save your money

A balance transfer credit card has the least interest rate when compared to other credit cards. The 0% interest period though is valid for a fixed period for example 12-18 months, but you will still be saving a lot of dollars by transferring the existing debt of a regular credit card to the balance transfer credit card.

Debt elimination    

If you are investing time to read up on a credit card based balance transfer method chances are you will eliminate your debt faster than someone who doesn’t avail this option. When you clear your dues, you are often required to pay more than what you had bargained for since the interest rate keeps adding up to increase the net debt owed. Forget about the interest rates with a balance transfer credit card today!

Types of debts you can transfer

There are a variety of debts and sums that you can cotransfer to when using a balance transfer credit card. It’s not just the credit card debt but also car loans, student loans, purchases of appliances and any other form of debt. However, do read the offer documents carefully before opting for the method.

Debt streamlining

If you invest in a balance transfer credit card, you can streamline all your debts. Most of these balance transfer credit cards allow you to transfer debts from multiple sources. It’s all your debts in one place and no more forgetting to pay up a du on a long forgotten purchase. Chip away all your debts better through a balance transfer credit card.

Additional incentive and perks

The balance transfer credit card user gets additional perks from the bank or the financial institution. Not only can you pay off your dues and debts at a 0% interest rate within fixed time duration, but you also get additional features and bonuses. These might include airline mileage cards, and discounts on restaurants, movies, music, books, and electronic equipment. There might be cashback features and other reward points in store for you as well. Since every balance transfer credit card is different with respect to the rewards, you should carefully go over while selecting for a card based on the additional perks on offer.


As with every avenue and choice in life, there is a bad side to the balance transfer credit cards as well. Let’s go over the disadvantages now.

The transfer fees

Even though the balance transfer credit cards provide a 0% interest period for clearing of debts and dues, there is usually a transfer fee of 3% on all the transfers you make to the credit card. However, you need to keep in mind the negative notwithstanding, that you will still be saving a lot in the long run and usually for a luxurious purchase.

Credit score

You might think that since you will be paying off your debt, your credit score is bound to improve. Well, it does, but there is something that you need to keep in mind! A minor drop in the credit score is triggered whenever you transfer the debt or the existing balance. It is a short-term drop, but the option is perfect when it comes to planning long term.

Would you qualify?

The truth is most of us aren’t a model customer and our spending habits, redlining of a savings account and lack of judgment harms our base credit score. Banks want your business, but even they have to exercise caution. So balance transfer credit cards are provided to people with an average or higher than average credit. If you are deemed fit as an asset, you will get a balance transfer credit card, but if the credit card company considers you as a liability, your application will be face cancellation.

Avoiding misconceptions

Can you transfer your debt and after the 0% interest period end? No, it is a very bad idea and won’t work. The credit score is a marker of how responsible a consumer or buyer you are, thus its importance in the current business affairs. Multiple debt sources operational from the same credit card can severely damage your credit score. Eliminate your debt, lower the amount but never maintain a base debt.

Limited time on offer

The main advantage of a balance transfer credit card is the 0% interest rate when you transfer. But there lie the catch. The 0% interest rate is valid for a limited period. It might be six months or 12-18 months, depending on the financial institution and the card type. A shorter duration of 6 months might seem a good enough bargain, but it might not be enough to pay off a large debt.It is hereby advised to always go for a balance transfer credit card with a longer duration of the 0% interest rate.

However, one important thing to keep in mind is the fact that a balance transfer credit card is not unlike your regular credit cards when it comes to making new purchases. While transferring a debt, the card will apply for the low-interest scheme, but for a new purchase, the interest rate can be as high as 20%. Carefully understand and estimate for penalty charges before investing in a balance transfer credit card.

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