A debtor should be aware of the following points before transferring their balance to a different credit card.
1) Credit Card Limit
There is usually a cap that a debtor can transfer to another credit card. This cap depends on the credit limit of the new credit card. To illustrate; A debtor has RM10,000 debt in Credit Card A and the credit limit in the new card, Credit Card B, is only RM8,000. The debtor can only transfer a maximum of RM8,000 from his Credit Card A to Credit Card B.
2) Processing fee
Certain credit cards allow Balance Transfers at no fee charged but there are also banks that would charge a transfer fee or processing fee. Such fees are usually a percentage of the transferred amount. The fees might not be a huge dent to one’s wallet but it is definitely something to take note of to avoid surprise charges.
3) Closure of old account
It is a misconception that a Balance Transfer process automatically closes the account of the old credit card. This is not the case and a credit card holder will need to manually deactivate the old credit card if they do not want to use it anymore. It is advised for credit card holders to ring their banks and cancel their old credit cards to avoid unnecessary charges like GST charges and annual fee charges.