Published: September 17, 2020 | Updated: September 23, 2020 | Posted by: Venus Zoleta | Credit Card
Are your credit card payments becoming too much of a burden? If you’re paying high interest on your balance every month, it’s time to switch to a balance transfer credit card with a lower interest rate. Doing so prevents worst-case scenarios like accumulating huge credit card debt.
Manage your credit card payments better through balance transfer. Get started with this guide to balance transfer credit cards in the Philippines.
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A balance transfer credit card is a low-interest card where you can move the amount you owe on your other high-interest cards. Because of the lower interest rate, most of your payments will go toward your principal balance instead of the interest charges. This helps you save money on interest payments and pay off your debt faster.
This type of credit card also simplifies your payments by consolidating your balances on other cards into one monthly payment and due date.
The right credit card features spell the difference between paying off your balances fast and getting buried deeper in debt. Here’s what you can do to free up your finances with the best balance transfer credit card.
Pay close attention to the following when choosing from different balance transfer credit cards:
Once your balance transfer credit card is approved, an introductory rate (ranging from 0% to 2.15%) is charged on your transferred balance for a certain number of months. The lower balance transfer rate you get, the lower you’ll have to pay for your credit card bill during your installment period.
Banks set different balance transfer rates per installment term. For an apple-to-apple comparison, look at the balance transfer rates for the same installment term. For example, if Bank A offers 0.88% interest for 12 months and Bank B offers 1.50% for the same period, then you’ll get a better deal with Bank A.
Consider the amount you need to transfer to a new credit card. How much you can transfer depends on the issuing bank’s limits on balance transfer amounts. Banks set a minimum amount and require it to be within the unused credit limit of the balance transfer card. It’s a matter of choosing which bank matches your balance transfer needs.
Low-interest balance transfer offers last for a limited period only. With a balance transfer credit card, you can choose to pay your transferred balances in installments ranging from three to 60 months.
Shorter installment terms have slightly higher balance transfer rates, making monthly payments more expensive. But over time, this can save you on interest payments. On the flip side, longer terms are more manageable on the budget, but you’ll end up paying more interest.
When comparing and choosing from the available payment terms, consider your monthly budget, your balance transfer amount, and the balance transfer rate. This enables you to determine the right term for you based on what you can afford to pay per month.
There are costs involved in transferring your credit card debts. First is the processing fee, which is a fixed amount (usually PHP 100 to PHP 300) charged per approved balance transfer. Some banks charge it, while others don’t.
If you wish to pay off your transferred balance before the end of your installment term, the bank may charge a pre-termination fee, which is either a fixed amount (PHP 300 to PHP 550) or a percentage (usually 4% or 5%) of the remaining balance.
It’s also important to prioritize balance transfer credit cards with a low interest rate (charged after the end of the installment term) and low or no annual fee. If these two credit card fees are high, they’ll just offset the savings from the low balance transfer rate.
Lastly, consider the late payment fee in case you pay your credit card bills beyond the due date.
Which balance transfer program offers the most affordable monthly payment based on the amount you’ll transfer and your preferred installment term?
You have to compute for that figure to know which bank allows you to save the most on your transferred balance payments. Banks like BPI and Metrobank have a balance transfer calculator on their website for easy calculation of monthly amortizations for balance transfer credit cards.
For banks that don’t have an online balance transfer calculator, you can refer to their sample computation table and use their formula for computing the monthly installment.
RCBC has some of the lowest rates for balance transfer credit cards at less than 1%. With an RCBC credit card, you can pay your other cards’ balances in 3, 6, or 9 monthly installments at 0.99% interest or in 12, 18, 24, or 36 installments at 0.89% interest.
The best RCBC credit card for balance transfer is the Flex Visa because of its low annual fee and generous rewards. Plus, if you apply on or before December 31, 2020, you may qualify for RCBC’s no annual fee for life promo.
The Citibank balance transfer program offers flexible payment terms to cardholders. You may pay in 6, 12, 18, 24, 36, 48, or 60 monthly installments. Regardless of your chosen installment term, your transferred balance will be charged a low monthly interest of 0.99%.
Among Citi credit cards, the Simplicity+ has all the features that make it easy to pay off your balances from other cards. You’ll save more money with its waived annual fees for life and zero late payment and overlimit fees.
Get a lower interest rate when you transfer balances from your other cards to your Metrobank credit card, whether you’re a principal or supplementary cardholder. Metrobank’s balance transfer rate and terms are similar to Citibank’s, except that it offers a 9-month installment option.
To save more on your credit card bill, go for a balance transfer credit card that charges low interest after the end of your installment term. The Metrobank M Lite Mastercard has a regular interest rate of 2.49%—among the lowest in the Philippines—so you won’t be paying high interest in case you can’t pay off your transferred balances.
Bank of Commerce offers the lowest balance transfer rate of 0.60% when you transfer at least PHP 20,000 balance from another card and pay it off in 24 monthly installments. The balance transfer rate is 0.88% if you choose to pay at least PHP 10,000 balance in 12 installments. If your transferred balance is between PHP 5,000 and below PHP 10,000, you can choose to pay in 3 or 6 months at 1.30% interest.
Enjoy the biggest savings when you get the Platinum Mastercard as your balance transfer credit card. Aside from waived annual fees for life, it also has a low interest rate of less than 3%.
BDO’s balance transfer program allows you to transfer not only credit card balances but also personal loan balances from other banks. You also have the option to consolidate your immediate family’s non-BDO credit card or personal loan balances to your own BDO balance transfer card.
If you transfer at least PHP 20,000 balance to your BDO credit card, you’ll get the lowest balance transfer rate depending on your chosen term:
This BDO balance transfer promo is valid until October 31, 2020. Regular rates of 1.75% to 2.15% apply to balance transfer amount of PHP 5,000 to below PHP 20,000.
The Gold UnionPay is one of the best BDO balance transfer credit cards because of its lower regular interest rate and annual fee waiver for the first three years. If your credit card transactions reach PHP 300,000 or more every year, you won’t have to pay annual fees at all.
Another credit card with a low balance transfer rate comes from China Bank. You can pay your transferred balances in 3, 6, or 9 monthly installments at 1.25% interest or in 12, 18, or 24 installments at 1% interest.
For maximum savings on your credit card payments, get the China Bank Freedom Mastercard with waived annual fees for life.
BPI’s lowest balance transfer rate of less than 1% is available on the 36-month installment option. If you want to pay off your transferred balance sooner, you may choose from 6, 12, 18, and 24 installment terms—all of which come with 1.50% interest.
If you’re looking for the best BPI balance transfer credit card, consider the Edge Mastercard that charges a low annual fee and earns rewards points.
Currently, only Security Bank offers a 0% balance transfer rate. New cardholders who applied for any Security Bank credit card (except for Cashback and Click cards) online can avail of this lowest balance transfer rate.
The 0% introductory rate is valid for 60 days from card approval date. After the two interest-free months, the balance transfer rate (which starts at 1.91%) applies to the rest of your monthly payments during your chosen term.
To maximize savings on your credit card bill, get the Classic Rewards Mastercard. It has the lowest annual fee among Security Bank cards while earning points fast.
The balance transfer application process varies per bank, but here’s the general procedure to give you an idea.
First, you should apply and get approved for a credit card with another bank. You can transfer balance as long as the receiving card is not issued by the same provider. Make sure that the new card is eligible for balance transfer.
Depending on the bank, you may file your credit card application and balance transfer request at the same time, as in the case of Metrobank and China Bank.
Meanwhile, some banks require cardholders to wait for a minimum period before applying for balance transfer. It can be as fast as seven days after card approval (as in the case of Security Bank) or as long as 12 months of good credit standing (as in the case of BPI).
Once you qualify for the bank’s balance transfer program, you can request to transfer your credit card balances from other banks through your new provider’s customer service hotline or website.
For your balance transfer application, you may be required to submit any or all these requirements via email, via online banking, or personally at a bank branch:
Your balance transfer application will go through a verification and evaluation process, typically lasting for eight banking days. While waiting for the bank’s decision, you should continue paying at least the minimum balance on your other credit cards.
If you’re approved, your new credit card provider will pay off your other cards’ outstanding balance to your old bank. Once the payment is reflected in the billing statement with your old provider, coordinate with the bank to close your credit card accounts.
The balance gets transferred to your new credit card account and deducted from your available credit limit. Afterward, you can start paying your balance transfer installments to your new credit card provider.
Read more: 10 Money-Saving Credit Card Hacks That Work
Balance transfer credit cards are a useful tool in keeping your finances under control. As long as you get the best balance transfer card and use it responsibly, you won’t have to worry about having credit card debt ever again.
(Photos from Freepik)