Balance Transfer in Singapore | Guide on Balance Transfer Loans
Balance Transfer Loans | Loans
by Priyadarshini
29 October 2021
What Exactly is a Balance Transfer in Singapore?
A balance transfer is a short-term cash facility, which is a fancy way of saying it works like a loan. When you apply for a balance transfer, you are requesting that your current debt be transferred to this new loan. You will subsequently repay your debt in accordance with the conditions of the balance transfer rather than the terms of your credit card agreement. In this blog, we tell you about balance transfer in Singapore.
Features of Balance Transfer in Singapore
The balance transfer allows you to extend the time it takes to pay off your credit card debt without having to worry about accruing interest. Balance transfers often incur 0% interest, but they are not fully free because you must pay a processing fee, which is typically levied as a percentage of the amount of money accepted for the transfer. All banks offer 6-month and 12-month balance transfers as the most frequent, although some also offer 3-, 9, and 18-month transfers.
What is the Process of Transferring a Balance?
We are not urging you to take out further loans while you are already in debt. Instead, a balance transfer allows you to move your existing debt to a new facility. And one, that is expected to be less expensive in the long term. It works by allowing you to transfer your existing credit card balances to a 0% interest account. If the balance transfer is successful, you will no longer be required to pay the outrageous interest rates on your credit card.
When the transfer is approved, you must pay the processing fee. However, because the balance transfer facility charges interest, you will be able to repay your loan in peace after that. Assume you have a $2,000 credit card bill from Bank A and a $3,000 bill from Bank B. You decide to pay off this $5,000 debt with a balance transfer from Bank C, which charges a 2.5 percent transaction fee. As a result, you would have to pay a $125 upfront cost (2.5 percent x $5,000). Following that, you repay your $5,000 loan over a 6-month period with no interest.
What is the Maximum Amount you can Borrow with a Balance Transfer in Singapore?
Facing difficulty repaying credit card debt? Whether from one or many cards, you should consider a balance transfer. However, keep in mind that you can only transfer as much money as your bank’s credit limit allows. As a result, if you have debt on multiple credit cards, you may not be accepted for the whole amount.
The amount that can be approved for a balance transfer is not limitless. The debt amount for transfer is limited by your existing credit limit at the bank. So, if you’ve over your credit limit on multiple cards, it’s unlikely that you’ll be able to transfer all of your debt in a single balance transfer.
What if You Don’t Pay Back the Entire Amount on Time?
So, if you’re going to do a balance transfer to pay off your credit card debt, do it once and for all. Even if it means eating instant noodles every day for months. If you do not follow the repayment schedule, the bank may charge you their current interest rate. Which is usually similar to the credit card interest rates you were previously paying. In other words, you end up worse off than before. As you’ll be paying credit card-level interest rates after already paying a high processing fee.
