Read the latest news about Balance Transfer in Singapore and the best money saving tips.
Why do people take balance transfers?
A balance transfer is best for those who have racked up hefty credit card debt. It helps you to better pay off your outstanding credit card bills by offering a 0% interest rate, but it charges a small processing fee. This credit card debt can be consolidated across different credit card providers.
What are the prominent features of a balance transfer to look out for?
With most balance transfers offering 0% interest rate, you can select a balance transfer based on these 2 main factors:
Why does the balance transfer tenure / repayment period matter?
Balance transfers are attractive, offering 0% interest rate. However, this 0% interest rate applies to the specified tenure or repayment period only. You will not be subject to interest rate charges if you pay off your balance transfer loan amount within this period. This also means that after the tenure, you will incur high-interest charges (similar to credit card interest rates) on the outstanding amount.
Read this to find out how much you can save in interest when you use a balance transfer.
A balance transfer is a type of unsecured, short-term cash facility. It can help you transfer outstanding balances from one or more credit cards to a low or 0% interest account or credit line. A balance transfer can also provide you with quick cash in times of need, providing as little as S$500 to as much as S$120,000. Balance transfers are also usually subject to a one-time processing fee on the approved transfer amount.
When you apply for a balance transfer, you are consolidating your outstanding balances, such as credit card bills, to a new loan. The balance transfer amount that you borrow will be deposited into a bank account of your choice.
Read the article for more information on how balance transfers in Singapore work.
A balance transfer is a one-time loan that is disbursed to you upon application. A processing fee is charged upon approval of the balance transfer.
A line of credit is an account that you can access multiple times and withdraw funds from, whenever the need arises. Interest is only charged on the withdrawn amount. Banks will usually charge an annual fee to keep your line of credit open.
Most balance transfers offer 0% transfer rate with a low processing fee. This is unlike a personal loan that has interest rates ranging from 3.5% to 11% p.a. A balance transfer allows more flexibility in your monthly repayments; you have the option to pay just the minimum or to pay beyond the minimum monthly sum.
A personal loan, on the other hand, requires you to repay a fixed monthly amount every month until your debt is fully repaid. You could also be penalised with an early repayment fee if you repay your debt early.
Similar to other credit products such as credit cards and personal loans, a balance transfer could affect your credit score if your payments are late or if you fail to make payment at all. Failing to stay on top of your loan repayments will not only cause your debt to grow, but also affect your credit score negatively.
On the flip side, consolidating multiple debts into a single credit facility like a balance transfer can also improve your credit score, provided that you make timely repayments for this new loan.
If you have many outstanding credit card bills to pay, a balance transfer could be the loan for you.
You can apply for a balance transfer if you are struggling to meet the credit card payments for your credit card bills. Rather than paying the 25% to 28% p.a. interest charged by credit cards, you can opt for a balance transfer with 0% transfer rate and low processing fee.
You can also apply for a balance transfer if you are in need of cash urgently, especially when you have a large, short-term expense to pay for, such as a medical emergency or wedding. A balance transfer would provide the funds required and also help you to avoid the higher interest rates on other types of loan facilities.
However, you should ensure that you are able repay the full amount each month to avoid incurring late payment fees and additional interest rate charges.
One-time processing fee: For balance transfers, banks usually charge a one-time processing fee of between 1.5% to 4.5% of your approved loan amount.
Transfer rate: Banks in Singapore usually offer a 0% transfer rate for balance transfers (as long as you make full repayment within the agreed tenure).
Length of the repayment period: Balance transfer repayment periods in Singapore can range from 3 to 24 months.
Fees you may incur when you get a line of credit:
To decide on the balance transfer that is best for you, you can compare based on:
You can also filter based on the provider. For example, you may choose the bank that you do most of your banking with, or a new one that offers new-to-bank promotions such as cash or lower interest rates.
Most balance transfers offer 0% transfer rate. The main difference lies in the processing fee. Processing fees differ based on the loan tenure and can range from 1.5% p.a. to 4.5% p.a. You also read this article for the best balance transfers in Singapore 2020.
Promotions for balance transfers can vary throughout the year. Check out the balance transfer comparison page on SingSaver for the latest balance transfers available. You can also read the article for the best balance transfers in Singapore 2020.
A balance transfer is a good option for those that are unable to pay off the outstanding balances on their credit cards. It could also be useful for those that have too many outstanding credit card bills to pay off and would like to manage a single loan rather than juggling multiple credit card bills.
You would likely incur a processing fee. While this processing fee is relatively low when compared to the interest rate being charged on your credit card, it can be a significant amount.
For example, a S$10,000 loan with a 3% processing fee works out to be S$300. This processing fee is also a cost that you would not have to incur if you paid your credit card bills on time, on your own.
While there is no limit to the number of times you can do a balance transfer, whether your balance transfer is approved depends on your credit score. Your credit score is affected by the amount of credit that you have taken up, as well as other factors such as whether your repayments have been made on time. A higher credit score would give you a better chance of being approved for your next credit product.
A balance transfer typically takes 3 to 7 working days. However, there are banks such as Standard Chartered that are offering loan dispersals within 15 minutes of application, especially when you apply via MyInfo. This allows you to get the cash in your bank the moment your loan is approved.
Generally, you do not have to be an existing customer to do a balance transfer with the bank of your choice. However, there are banks that require you to own their credit card or bank account in order to apply for a balance transfer with them.
To apply for a balance transfer, you have to be:
Do note that some balance transfers are only available to Singapore citizens or Singapore Permanent Residents.