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What Is a Balance Transfer, and Should You Do One in India?
A balance transfer can help you save money by moving your debt from a high-interest credit card or loan to one with a lower interest rate. This guide simplifies the concept for Indian borrowers and helps you decide if a balance transfer is the right option for you.
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Updated Oct 14, 2024 · 3 min read
Written By: Shanti Singh
Lead Writer 
Edited by Priya K.
Fact Checked
Steps
1. What is a balance transfer?
A balance transfer involves moving your outstanding debt from a high-interest credit card or loan to another lender offering a lower interest rate or more favorable terms. This approach reduces your EMI burden and interest payments, helping you pay off your debt faster.
For instance, if you have a credit card charging 36% interest annually, you could transfer the balance to a card with a 0% introductory APR or a personal loan offering a lower rate.
MinEmi Tip:
In India, balance transfers are available for credit cards, personal loans, car loans, and even home loans. MinEMI helps you compare the best options suited to your financial goals.
2.Who Should Do a Balance Transfer?
A balance transfer is ideal for individuals facing one of the following situations:
Struggling with High-Interest Debt: If most of your monthly payment goes toward interest rather than reducing the principal, a balance transfer can help you save significantly.
Need to Consolidate Debts: If you have multiple debts across credit cards or loans, transferring them into one manageable account can streamline your repayments.
Mid-Tenure of Your Loan: Transferring a loan during its early or middle tenure can result in maximum interest savings. MinEMI can calculate the ideal time for a transfer.
Improved Credit Score: If your credit score has improved recently, you might qualify for better terms, making a balance transfer worthwhile.
Temporary Financial Challenges: If you’re facing financial hardship, a balance transfer can provide breathing room by reducing your interest burden temporarily.
Loan Tenure Tip:
Use MinEMI’s Balance Transfer Calculator to find out how much you can save by transferring your existing debts.
3. Who Can Do a Balance Transfer in India?
Eligibility Criteria: Balance transfer offers are typically available to borrowers with a good credit score (650+). Lenders also consider your income and existing debt before approving a transfer.
Transfer Limits: The new lender may not approve the entire outstanding amount for transfer. The limit depends on your credit profile and the lender’s policies.
Restrictions: Transfers are not allowed between loans or cards from the same bank. For example, you cannot transfer a debt from one SBI card to another SBI card.
Loan Tenure Tip:
If your credit score is below 650, MinEMI can help you identify lenders who cater to your profile.
4.How to Do a Balance Transfer in India
- Compare Options with MinEMI: Use MinEMI’s platform to explore balance transfer offers from various lenders.
- Check the Fees: Understand the processing fees, transfer charges, and prepayment penalties involved. MinEMI lists these costs upfront for transparency.
- Apply for the Transfer: Submit the necessary documents, including your existing loan statement, ID proof, and income details.
- Obtain NOC: Get a No Objection Certificate (NOC) from your current lender and ensure all outstanding dues are cleared during the transfer.
- Pay Down Your Balance: Once the balance is transferred, focus on repaying the new loan or credit card balance to maximize savings.
MinEmi Tip
Checking with your primary bank for pre-approval options can save time and give you access to preferential rates based on your banking relationship.
5. How Much Can You Save with a Balance Transfer?
Your savings depend on several factors:
- Existing Debt Amount: Higher debt means higher potential savings.
- Current Interest Rate: Transferring from a high-interest loan or card can lead to significant savings.
- Balance Transfer Fee: In India, transfer fees typically range from 1% to 3% of the outstanding amount.
- Repayment Duration: The longer your repayment period, the more interest savings you can achieve.
Even so, our balance transfer calculator can give you a general sense of what you could pay if you didn't do the transfer, compared with what the transfer would cost.
Balance Transfer Calculator
Transferring debt to a credit card or loan with a lower interest rate can save you money on interest while you pay off your debt.
Details Current Loan After Balance Transfer
Transfer Loan Type: (required)
Details of New Loan
6. When Not to Do a Balance Transfer
- Near Loan Completion:If most of the interest has already been paid, transferring won’t save much.
- High Processing Fees:If the fees outweigh potential savings, a balance transfer may not be cost-effective.
- Poor Credit Profile:A low credit score may result in higher interest rates on the new loan.
7.How to Choose the Best Balance Transfer Option in India
- Compare Lenders:Look for lenders offering lower interest rates and minimal fees. MinEMI simplifies this process.
- Consider Tenure Flexibility:Ensure the new loan or card offers a repayment period that aligns with your goals.
- Check for Additional Benefits:Some lenders offer top-up loans or additional credit limits during balance transfers.
How MinEMI Simplifies Balance Transfers
MinEMI is your one-stop solution for balance transfers in India. From identifying the best lenders to calculating savings and guiding you through the process, MinEMI ensures a seamless experience. With expert insights and real-time tools, MinEMI helps you make smarter financial decisions.
Start Your Balance Transfer Journey with MinEMI Today!
Frequently asked questions
Can MinEMI help with balance transfers for low credit scores?
How much can I save with a balance transfer?
Can I consolidate multiple loans with a balance transfer?
Are there hidden charges in balance transfers?
Can I transfer my loan to the same lender?
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