Credit Card Balance Transfers

A credit card balance transfer could reduce your monthly credit card repayments, saving you money and helping you to consolidate debt.

Just like any other line of personal credit, credit card debt is charged at a relatively high interest rate. This is primarily due to the higher risk associated with credit card loans, and the fact that that credit card debt is not very liquid: If a cardholder defaults on payment, it’s difficult to turn the outstanding balance into cash.

However, as a credit card user, there are ways to lower your interest payments. You could ask your bank to give you a lower rate, but this is not always successful – particularly if you haven’t always settled your bills promptly. Alternatively, you could apply for a balance transfer – a move that may be far easier, and more helpful to you, particularly if your credit card interest is high.

We’ve taken a look at credit card balance transfers in South Africa, and how they could help you to pay lower interest rates. You can also compare credit cards now to find the one that best meets your financial needs.

How does a balance transfer work?
Many banks offer a balance transfer facility, which enables you to transfer your credit card balance, and/or other store card debt from another financial institution, into another credit card. Essentially, it’s a means of transferring your debt from one card to another, offered by a different bank.

The new bank will generally give you a preferential interest rate for a set period of time, after which ruling rates will apply. The aim of a balance transfer is to help consumers to pay a low interest rate and consolidate debt, rather than pay several different outstanding card balances, each at a high interest rate.

It is important to note, though, that granting of a balance transfer option is dependant on the credit limit available to you on the specific card.

Should I consider a balance transfer?
If you have one or several credit cards, as well as store cards – such as clothing or jewellery accounts – a balance transfer may be the right step to take. You’ll be able to consolidate all your outstanding balances into one amount (dependent on your limit), simplifying monthly repayments. Moreover, preferential interest rates offered by another bank will reduce your monthly repayments, offering relief from high monthly credit card bills.

What are the other benefits of a credit card balance transfer?
Because banks are competing for customers, you could qualify for certain other benefits – besides the interest savings – when you transfer your credit balance to a new bank.

Some banks will allow you to choose your repayment period – either a minimum repayment percentage or anything from six to 48 months – and will even let you settle debt early, or make additional payments, without any penalties. In most instances, you won’t be charged any fees to switch, and you’ll find that the terms are more manageable than those you’re currently adhering to. The introductory lower-interest period will also help you to gain better control of your finances.

Apply online to find out whether you qualify for a balance transfer
Thanks to a quick online application facility, it’s easy to find out whether you qualify for a balance transfer. Compare credit cards and apply online now to enjoy lower interest rates from one of South Africa’s leading banks.