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Offset Your Credit Card Interest Charges With These Balance Transfers Options

balance transfers in singapore

Has your credit card debt been growing up recently? Need a quick fix for your credit card debt? Perhaps it’s time to get a balance transfer.

A balance transfer is a kind of personal loan which helps you pay back your debt in a lower interest rate. Usually, balance transfers have 0% interest and provide quick access to capital.

How Balance Transfers Work

With balance transfers, you can consolidate all your credit card debts in a single account with lower interest rates. Although balance transfers typically have 0% interest, you’ll still need to pay a processing fee (usually 1.5% to 5.5%).

Typically, these loans have a fixed period — 3 months, 6 months, or 12 months. Every month, you’ll be required to pay a minimum sum to cover your debts (1% to 3%). Here’s an example of how it works:

Suppose you have a balance transfer of 6 months and you have a loan of $6000. Each month, you’re required to pay at least $60 (1% of $6000). Let’s say that the 5th month, you’ve paid $300 ($60 x 5). By the end of the 6th month, you’ll need to pay the outstanding amount of $5700.

Balance Transfer Promotions

Currently, there are a number of balance transfer promotions going on. And the most popular ones are those with cashback perks! Here’s a breakdown of some of the most worth-it balance transfers:

DBS

  • $150 to $500 cashback
  • Applicable for 12 month balance transfers (expires 31 March 2020)

OCBC

  • $80 to $320 cashback
  • Applicable for online application (expires 31 March 2020)

UOB

  • $80 to $160 cashback
  • Applicable for online application
  • Applicable for 12 month balance transfers (expires 31 March 2020)

Best Balance Transfer Rates For Large Sums

Besides looking at promotions, a great way to decide which balance transfer you should get is to compare different processing fees and interest rates especially if you’re in need of a large sum of money.

Maybank

For large amounts of balance transfers, Maybank offers a great option for balance transfers. Among many other major banks in Singapore offering 0% interest rates, Maybank offers the lowest processing fee:

  • 0% interest rate for 6-month balance transfers (min $10 000)
  • 38% processing fee
  • 96% effective interest rate
  • 9% prevailing interest rate

HSBC

Like Maybank, HSBC also offers 0% interest rate for 6-month balance transfers. However, it’s more worth-it to get a balance transfer with HSBC if your balance transfer is at least $10 000 as you’ll get to enjoy better interest rates, particularly prevailing interest rates:

  • 0% interest rate for 6-month balance transfers (min $10 000)
  • 5% processing fee
  • 26% effective interest rate
  • 5% prevailing interest rates

Although most balance transfers have 0% interest rates, it depends on your banks’ balance transfer policies. Most banks’ 0% interest rates apply to 3 month and 6 month balance transfers. However, if your balance transfer is 12 months and above, interest rates could apply.

While balance transfers’ 0% interest rates sound attractive, make sure you think carefully before applying for it. You’ll need to be clear about the sum you need to loan and whether you can pay it back within 3 months, 6 months, 12 months, or more.

These factors play a part in determining the amount of interest rates you’ll need to pay and the processing fees involved. Regardless of how attractive promotions are, you’ll need to make sure your choice of balance transfer makes the most sense to your financial situation!

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