Credit Card Balance Transfers: Yes or No?

If you’ve been a little to spend-happy with your credit cards, you might be glad to know that there is a way out from paying all those hefty interest charges on multiple credit cards. It’s called a balance transfer and you can apply for one with most of the banks in Malaysia. However, before you breathe a sigh of relief, here’s what you need to know.

What Is A Balance Transfer?
A balance transfer is a banking facility offered by banks for you to transfer all the outstanding balances from your credit cards to another in order to save money on the interest charges.

Balance Transfers Give Lower Interest Rates
The main benefit of a balance transfer is that it allows you to consolidate debt from multiple credit cards into one balance transfer that offers a lowered interest rate.
For example, the OCBC balance transfer at 4.0% p.a. interest for 12 months tenure:

Based on the calculations above, you could potentially save a lot of money on finance charges every month. And it’s true; balance transfer interest rates do help you save a lot of money on high interest charges. However there are other factors to consider.

The ‘Processing Fee’
Banks will usually charge you a fee for the balance transfer which is calculated based on the total amount you are transferring via the balance transfer. Always find out how much it is first before you sign up!

Is The Interest Rate Part Of A Promotion?
Don’t forget that the banks will often have promotions to draw you in to apply for a balance transfer. Enjoying 0% interest on the first six months is definitely a great deal, but what happens if you can’t pay off your balance transfer in six months? The answer is: you’ll be charged at whatever normal balance transfer interest rates offered by the bank. So always read the small print and plan to pay off your debt during the promotional interest period whenever possible.

How Many Credit Cards Do You Have Left?
We’ll say this again, the whole point of the balance transfer is of course to consolidate all of your credit card debts into one credit card. Your next step should be to minimise the amount of credit cards you have in order to avoid falling into the same debt trap again. But consider keeping a credit card that has zero annual fees (make sure you don’t use it for anything else) for emergencies, as it’s always good to have an emergency credit card.

The Final Verdict
Yes, balance transfers are a great way to consolidate your credit card debt. But if you constantly find yourself in the same situation over and over again, the problem isn’t in the credit cards, but your spending habits. Consider credit counselling with AKPK (Agensi Kaunselling dan Pengurusan Kredit) to get help in managing your finances and resolving your debt. is dedicated to raising financial literacy in our country and to helping everyday Malaysians make smarter and well-informed financial decisions in life.

Personal notes: I will vote for Public Bank 6 months Zero Interest Balance Transfer.