If you have erred to the dark side of credit cards over the years, a balance transfer can help you get over the hurdle without digging yourself a deeper hole.
Taking advantage of balance transfers will allow you to get out of debt more quickly and also save you money in the process. The beauty of the balance transfer facility is the very low introductory transfer rates that you get to enjoy for a specified period. If you’re paying a lot in interest on your current credit card balances, transferring those balances could benefit you by saving you money and time.
However, keep in mind that temptations and pitfalls will be there, and you can easily ruin your carefully laid-out debt payoff plan and incur further debt if you are not careful.
The wrong balance transfer can land you in an even worse position than when you began. It’s important to be realistic about your payment goals and fully understand what you are getting into to make the most of a balance transfer credit card. Here are some things you should consider to find a balance transfer card that can help you save some bucks:
Low interest to pay down balances
With the low rates that come with balance transfer cards, you can maintain your monthly payment with higher portion contributed towards reducing your debt and a lesser portion of it towards interest payment. When you transfer the balance from a higher-interest credit card to one with a lower interest rate, you are paying off credit card A with a new credit card B.
For example, if you’ve been paying 15% interest per annum on a RM10,000 debt, the total interest charges you would incur is RM988.34 over 12 months.
Without Balance Transfer
| Month | Outstanding balance after interest | Interest Charges | Monthly Interest Rate | Monthly Repayment |
|---|---|---|---|---|
| 1 | RM10,000.00 | RM125.00 | 1.25% | RM470.00 |
| 2 | RM9,655.00 | RM120.69 | 1.25% | RM450.00 |
| 3 | RM9,325.69 | RM116.57 | 1.25% | RM570.69 |
| 4 | RM8,871.57 | RM110.89 | 1.25% | RM687.26 |
| 5 | RM8,295.21 | RM103.69 | 1.25% | RM798.15 |
| 6 | RM7,600.74 | RM95.01 | 1.25% | RM901.84 |
| 7 | RM6,793.91 | RM84.92 | 1.25% | RM996.85 |
| 8 | RM5,881.98 | RM73.52 | 1.25% | RM1,081.78 |
| 9 | RM4,873.73 | RM60.92 | 1.25% | RM1,155.30 |
| 10 | RM3,779.35 | RM47.24 | 1.25% | RM1,216.22 |
| 11 | RM2,610.37 | RM32.63 | 1.25% | RM1,263.46 |
| 12 | RM1,379.53 | RM17.24 | 1.25% | RM1,396.78 |
One of the balance transfer packages that all BSN Credit Cards offer is 12 month plan with 0% interest for the first six months for balance transfer, and 0.30% per month for the subsequent six months. If you transfer that RM10,000 debt to a BSN card, this is how much you will save.
With BSN Balance Transfer
| Month | Balance Transfer from Other Credit Cards | Interest Charges | Monthly Interest Rate | Monthly Repayment |
|---|---|---|---|---|
| 1 | RM10,000.00 | RM0.00 | 0.00% | RM833.33 |
| 2 | RM0.00 | 0.00% | RM833.33 | |
| 3 | RM0.00 | 0.00% | RM833.33 | |
| 4 | RM0.00 | 0.00% | RM833.33 | |
| 5 | RM0.00 | 0.00% | RM833.33 | |
| 6 | RM0.00 | 0.00% | RM833.33 | |
| 7 | RM30.00 | 0.30% | RM863.33 | |
| 8 | RM30.00 | 0.30% | RM863.33 | |
| 9 | RM30.00 | 0.30% | RM863.33 | |
| 10 | RM30.00 | 0.30% | RM863.33 | |
| 11 | RM30.00 | 0.30% | RM863.33 | |
| 12 | RM30.00 | 0.30% | RM863.33 |
Total interest incurred over 12 months is only RM180, saving you RM808.34!
Repayment period
The longer the balance transfer period, the smaller monthly repayment you need to pay every month. However, most 0% balance transfer programmes are only offered for six months (at best). However, BSN offers different types of balance transfer packages to suit your repayment needs and we’ve found this to be the best deal on the market.
| Package 1: 12 months | Package 2: 24 months |
|---|---|
| 0% for the first 6 months 0.30%* for subsequent 6 months | 0% for the first 12 months 0.375%* for subsequent 12 months |
| Balance Transfer Amount = RM10,000 Monthly repayment = from RM833.33 to RM863.33 Total interest (Month 7 – 12) = RM180 | Balance Transfer Amount = RM10,000 Monthly repayment = from RM416.67 to RM454.17 Total interest (Month 13 – 24) = RM450 |
| Total savings = RM808.34 | Total savings = RM538.34 |
Annual fee
Just like choosing any credit cards, you need to know if the card comes with a hefty annual fee. It may not seem like much to you at the point of application, but an annual fee also means a 6% Goods and Services Tax (GST).
To ensure you don’t have to fork out more than you have to, opt for a card with a low or no annual fee. All BSN credit cards do not charge any annual fee, which means no paying extra for that balance transfer and more savings for you!
How else can you save with BSN Balance Transfer?
The primary advantages of a BSN balance transfer programme are:
You are allowed to balance transfer up to a maximum limit of 80% of their available credit limit. BSN also has pretty low minimum transfer amounts. Here are all the different packages:
| Plan | Tenure | BSN Balance Transfer Rates (per month) | Minimum Transfer (RM) |
|---|---|---|---|
| A | 3 months | 0.30% | 500 |
| B | 6 months | 0.30% | 1,000 |
| C | 9 months | 0.30% | 1,000 |
| D | 12 months | 0% for the first 6 months 0.30% for the subsequent months | 1,000 |
| E | 24 months | 0% for the first 12 months 0.375% for the subsequent months | 1,000 |
| F | 36 months | 0.375% | 2,000 |
* The interest rates are calculated on the principal amount of the transfer, and not on the reducing amount.
You will enjoy 0% rate for the month according to the plan tenure if full payment is made for the instalment amount. If you opt to pay the minimum payment of the monthly instalment amount, the card account prevailing interest rate or actual management fee shall apply to the outstanding balances (so always pay the full amount!). And you can only transfer an amount that’s within the credit limit on your new card, minus the fee.
Before applying for a balance transfer card, figure out how long you can take advantage of the balance transfer rate and how much of your balance you will be able to pay down in that time. If you will be able to make a significant dent in your debt by taking advantage of the low rate, even when you factor in the balance transfer interest charges, you should consider taking up the offer. However, if you’re considering a balance transfer offer just to take a break from interest and plan to continue accruing debt, it WILL end up working against you.
To make the most of a balance transfer, you should avoid making new purchases. Try to focus on aggressively paying down as much of your balance as possible before your offer period ends. Resist the temptation to add to that balance by purchasing more stuff. A 0% balance transfer is a chance to take a breath, pay down debt, get ahead on your savings – and not a card to use for digging a deeper debt hole.
The transfer fee will increase your balance and the interest-dodging habit can reflect poorly on your credit. Use balance transfers to take charge of your debt, not to avoid it!
