What You Ought to Know About Balance Transfers
The term “Balance Transfer” refers to the process where a portion of funds, either money or credit, is moved from an account in one institution to another. A balance transfer can be a valuable tool to manage your debt, if you know how to go about it. In this article, you will read about the pros and cons of balance transfers along with what you need to know about balance transfers in India.
Pros and Cons of Balance Transfers
The Two Sides of the Balance-Transfer Coin
Every story has two sides, the same principle can be applied to balance transfers. If you have decided that this is the track you want to follow, then you need to know all the elements in play including the advantages and disadvantages of balance transfers.
Tempting Interest Rates
This is probably the first factor that got you thinking about making the leap. It makes it appealing because when you think about your finances in the long run, it makes sense to retain as much as you can. With balance transfers, you are given that chance.
Although the term “fee” would tend to make you sceptical, you will have to work out whether the fee charged is worth the shift. In almost all cases, the fee is nominal compared to the figures of the prior interest rates.
Read the Fine Print
Although this strategy is a fine finance management tool, it only works if you play fair and abide by the rules. So read the contract carefully, even the small print. This would help give you a better understanding of the agreement you are entering into with the institution.
Types of Available Balance Transfers
The various types of balance transfers in the financial world include credit card balance transfers, and loan transfers.
Home Loan Balance Transfers
A Home Loan balance transfer is where you are given the choice by a new financier to opt for lower interest rates on your Home Loan payments. If you have your debt balance transferred to a service provider like Bajaj Finserv you can rest assured that your Home Loan will come at the some of the lowest interest rates in the country.
Personal Loan Balance Transfers
With a personal loan balance transfer, you will find the interest you pay in the long run would be comparatively lesser. With Bajaj Finserv for example, if your loan transfer eligibility is met, they would take on the balance of your Personal Loan at much more competitive personal loan interest rates.
Credit Card Balance Transfers
A credit card balance transfer is apt if you have large amounts to pay off on your card. The amount you have to pay will be covered by the institution you transfer it to. The company, in turn, offers you a lower interest rate.
The Upside and the Downside to Balance Transfers
A balance transfer could be what you need to pay off your debts faster. When looking at the bigger picture, these transfers help in saving money. But they can be risky to take on as well. With balance transfers, you open yourself up to more debt by spending more. For instance, credit card balance transfers would reduce the payments you make on your existing bill but it can also lead to you spending more on either the old card or the one with lowered interest.
Balance transfers would be convenient for you if you are looking to clear your debts while keeping a check on how much you spend in the process. With the right research and strategy, this entire scheme is pretty much a no-brainer.