In the context of credit card balance transfer, it is a way for people to transfer credit card debt from one account to another. This is typically done when the person wants to pay off their debt quicker by transferring the balance from a high-interest card to a low-interest card.
The bank will usually charge a fee for this service, which will be deducted from the balance being transferred. For example, if someone has a $10,000 balance on one credit card and they want to move that over to another account with a 0% interest rate for 12 months, they might have their bank charge them a $120 fee. In that case, there would be $9,880 left on that new credit card after the balance transfer is completed.
Balance transfer allows you to move outstanding balances on one or more credit cards to another card with a lower interest rate. Balance transfer is the process of transferring your outstanding balances from one or more credit cards to another card with a lower interest rate. This will allow you to pay off your old, high-interest debt in a shorter time period. The new cardholder will be given a grace period in which they won't have to start paying the balance transfer fee until all of their old balances have been repaid.
The popularity of balance transfers grew hugely in 2008 when the US Congress passed the Credit Card Act, which made it much harder for lenders to add penalties and fees on top of high interest rates. The legislation also restricted what information could be buried in the terms and conditions.
The balance transfer fee is an amount that will be charged for each transaction that takes place during the duration of the balance transfer period. It usually ranges from 3% - 5% and it helps cover the cost of all transactions made during this period, which can include new purchases, cash advances, and more.
Balance transfers are designed to help people who have multiple outstanding balances on their credit cards and want to consolidate their debt into one account. The best thing about balance transfers is that you do not have to pay any interest for 12-21 months while you are transferring your balances from one card to another. When it comes time for repayment, you need only repay the amount transferred plus any fees that were applied at the time of your request. Once the term over, will endup paying actual credit card interest rates which may various from bank to bank and card to card. But mostly it may start from 14% to 34% of interest rate.