What is Balance Transfer and when to go for it?

Ever heard about balance transfer?

Do you know how it works?

If no then, here we are to help you know what balance transfer is and how it can help you save a few bucks!

Balance Transfer as the term suggests is in the literal sense a transfer of balance from one loan account to another.

It is a system where you transfer the balance loan from one bank to another which the help of banks or financial institutions. Apart from this sometimes we also convert the balance from an outstanding credit card into a personal loan.

This system is mainly used by customers to reduce their credit liability as the liability on their current credit cards and loans happens to be in excess and sometimes becomes unmanageable to them.

Hence, in order to set off the liability and reduce it to some extent transferring it to another loan account singly or in a consolidated way is much more feasible.

But what exactly is a balance transfer and how can it work for you?

Let us dig more into the concept of a balance transfer to understand the process better.

So, suppose you have loans with multiple banks. These loans are for various purposes and have now reached the peak of interest individually. You are paying heavily on a regular basis in order to reduce your loan liabilities but it is still becoming unmanageable to you.

Here comes an issuer like 99creds of a loan in the picture who tells you about balance transfer. Now, 99Creds will tell you that all these loans which are a burden to you right now can become very simple and manageable to you if you convert them into 1 loan account with us. This may sound unreal to you but yes, a balance transfer is exactly what you just read.

Thus, now all your loans will be transferred to one loan account with the help of 99creds and you will be able to manage it better.

But, do you know the other benefits of switching loans from one bank to another? And why and when it is advisable to do so?

Let us know how can balance transfer benefit you in detail!

A balance transfer is the safest way of reducing your liability be it in form of credit cards or loans. This mechanism is generally used when there’s an excess of liability on an individual in multiple ways or when the liability and interests have reached a peak.

In simple terms when should you opt for a balance transfer? When the liability and the interest are unmanageable to you and are over and above your payback capacity.

But, how does a balance transfer work?

In this system generally, the issuers can offer you a new loan at as low as 10.25% interest. This may defer from person to person and bank to bank, but usually, the purpose of this scheme is to reduce the burden of interest on the loan holder or credit holder. Thus, when such an offer is issued it is generally with the lowest possible interest on the new loan.

It is still important to refer to the policies of your current loan with your bank as sometimes the bank’s policies have a certain lock-in period of say 6 months or 12 months and so you will have to wait till the completion of such before going for a balance transfer.

After being applied for the balance transfer the issuer bank/institution will coordinate with your bank and obtain information about your loan account and other required details if any. Later, when the details match and when all the formalities are done your loan or liability will thus be clubbed and transferred to the new issuer bank’s loan account.

Thus, with the help of a balance transfer, you will be able to reduce your liability for a certain period and can easily set off the balance liabilities in time or even before new interest starts.

Hence, it is always advisable to avail of such facilities and schemes in order to alter the situations and reduce the effects of recurring debts on our finances, thus reducing the financial burden on our shoulders.

For more such tricks and tips about financial management keep reading our blogs on 99Creds and get the best possible credit facilities with our services.