Learn the advantages and risks in a balance transfer: gain knowledge on how a balance transfer works and questions to ask

What is a Balance Transfer?

A balance transfer allows you to transfer all your debt (owing) from one credit card into another credit card. As a consumer, it helps you to save money. The new credit card issuer gains you as a new customer (and makes money if you miss a repayment and/or get into more debt).

Balance transfer advantages:-

  • Lower interest rate charged
  • Interest-free period
  • Consolidate debt and keep track of payments with a single consolidated debt
  • Period to pay off the balance before the rate increases.


What are Balance Transfer-related Fees and Charges

You will want to check on all the following possible applicable fees and charges:-

  • How long is the introductory 0% interest-free period given?
  • What is the minimum transfer amount which typically starts from RM1,000?
  • What is the maximum duration for the balance transfer which typically ranges from 6 months to 3 years (36 months)?
  • What is the interest rate charged after the 0% period?
  • What is the balance transfer fee charged which typically ranges from 0% to 5%?
  • What are the penalties or higher interest rate charged if you miss the monthly minimum repayment?
  • Is there any fee for early settlement of your balance transfer?
  • Is there an annual fee for the credit card or any other charges applicable?


Calculating a Balance Transfer

Credit cards have a tiered interest rate on your outstanding balance on daily compounding.

Tiered interest rates:-

  • Paid on time for 12 consecutive months: 15%
  • Paid on time 10 out of 12 months: 17%
  • Not paid on time less than 10 times out of 12 months: 18%


Check out our Balance Transfer calculator to figure out how much you can save.


What Else Should You Know?

Here are some other details on balance transfers which is useful in helping you make your balance transfer decision.

  • The balance transfer needs to be a credit card from a different bank than the one with existing credit card debt.
  • You can transfer debt from up to 3 different credit cards into a single balance transfer.
  • Don’t make new purchases on your credit card after the balance transfer. The lower interest rates only apply on the balance transferred and not on new debt.


Should You Opt for a Balance Transfer?

A balance transfer can help you save if you have racked up too much credit card debt. Figure out from your cash flow how much repayments you can afford monthly and customize a balance transfer plan that meets your needs. Make sure you make your repayments in full every month as otherwise you will face penalties and higher charges. The savings for a balance transfer can help you get out of debt faster provided you properly manage your finances and spending.



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