Move your existing debt to a new balance transfer card at a lower interest rate.
Pay off your debt faster and save on interest. Transfer your balances to a low-interest credit card.
Let’s break down how balance transfers work.
A balance transfer facility allows you to move your existing debt — from other local cards’ balances — to a new card with a lower rate, sometimes as low as 0%. Lower rates typically run for 6 to 18 months, after which the interest reverts to a higher rate. Some financial institutions may also allow balance transfers for other types of debts, such as medical payments, student debt and even personal loans.
During that introductory period, you can make serious headway in paying down your debt with the bonus of simplifying your many bills to just one.
A lower annual EIR (effective interest rate) can result in significant savings.
Look how easy it can make paying down your debt:
1. Find a balance transfer facility that meets your needs.
2. Confirm how much you’re eligible to transfer.
3. Submit your application and transfer amount.
4. Wait five to seven days for application approval.
5. Confirm your transfer — and start saving.
Credit card issuers make money when you pay interest, so why would they charge 0% when they could charge at least 2% or more per month?
The card eventually reverts to a higher rate. Failing to pay off your entire debt during the 0% intro period will leave you with the standard interest rate for your card. Once that happens, your new credit card issuer can potentially make thousands of Philippines Pesos (PHP) off you in interest.
Persuading you to switch is tough. Many users are reluctant to switch banks, and merely acquiring a new customer can cost a provider thousands of pesos. Offering a discounted interest rate is one of the cheapest ways for banks to woo potential customers. Simply put, these cards are a cheap form of marketing.
Overwhelmed with debt and unable to pay down your balance against a high interest rate?
The average credit card monthly interest rate is 2% to 3.54% in the Philippines, which may compute and rack in a lot of unnecessary interest on purchases you’re trying to pay off. Transferring that debt to a new card with a lower intro rate could be a solution to paying it off faster.
Our guide empowers you to determine if transferring your credit card balance is the right solution for your budget and needs.
A balance transfer is the result of moving all or part of your existing debt to another card provider or lender, typically to save money on the overall interest you’d pay on that debt.
With your standard high-interest card, the majority of your monthly payment first goes toward the interest you’ve accrued on your purchases — the rest is applied to the purchases themselves. Balance transfer cards offer new customers the opportunity to transfer most types of debt to a different card with a low or no intro APR. And buy some breathing room to budget your finances more wisely.
A 0% interest balance transfer facility can offer 6, 12 and sometimes 18 interest-free months. Your full monthly payment is applied to paying down your total debt, which can save you money in the long run, keeping more of it in your pocket rather than the provider’s.
More about balance transfers
You can transfer more than just credit card debt to your new card, depending on the lender — auto loans, medical bills and student debt, for example.
Current 0% intro rates offers are at their longest in years, resulting in bigger potential interest savings for you.
To keep your 0% interest rate offer active to its last eligible day, you’ll typically need to make at least minimum payments each month on time. Setting up autopay can keep you on track.
Good creditworthiness is required to apply for the best balance transfer terms. But by shopping around, you can find solid balance transfer credit cards for those with poor credit.
Doing a balance transfer to a credit card is much like applying for a typical credit card. The main difference is that it comes with an opportunity to transfer high-interest debt to a new card, offering a lower rate on those transfers for a limited time. In this way, your new credit card helps you pay down your old debt — or pay it off completely.
When you apply for a balance transfer, you’re asked to list your creditors and the amount you want your new card provider to repay them.
On approval, the amount that’s ultimately repaid to your old creditors is determined by the credit limit you’re approved for on your new card. A strong credit history typically results in a higher limit — and therefore a bigger bite out of your owed debts.
That’s not to say having some bumps in your credit history completely takes you out of the running. You’ll find plenty of providers approving balance transfer applications from those with poor credit too.
Did you know?
When applying with a new card provider, you provide an idea of how much you’re hoping to transfer. But it’s only after you’re approved that you can complete those transfers, typically within a strict transfer period. Read the fine print to know how many days or months you have to get it done.
After you’re approved, the new credit card company pays off the creditors you listed on your application. If you don’t qualify for the total amount you requested, your creditors are typically paid off in the order you listed them on your application. The transfer stops when your credit limit is reached — less any fees per transfer. You can typically call your credit card provider or initiate your transfers online after approval.Back to top
What are the benefits of a balance transfer credit card?
Saves you money. A low interest rate keeps more cash in your pocket and slashes unnecessary interest on purchases made long ago.
Gets you out of debt faster. Low interest allows you to pay down your debt more quickly by applying more of your monthly payment toward your principal balance.
Simplifies your finances. Transferring the balances of multiple debts can consolidate many monthly payments into just one bill.
Where does my credit score come into play?
How much you can transfer ultimately depends on your credit history and annual income. As the country’s centralised credit information system is relatively new and was only live early 2018, credit scores from various credit reporting bureau may differ.
In US, credit scores are scaled from 300 to 850. A credit score above 670 is generally considered good and will open doors for the most competitive balance transfer cards — those with low rates, long intro periods and high credit limits. However, you’re also likely to find decent options for people with fair or poor credit at a score of at least 580.
Can a balance transfer affect my credit score?
Yes. A “hard pull” on your credit report is part of how a provider determines whether to take you on as a borrower, so merely applying for a balance transfer card can shave anywhere from 5 to 20 points off your score. To minimise hard pulls, narrow down your options to only those cards you’re highly eligible for.
Other factors that affect your credit score are related to the card itself, including the total amount you’re transferring, your new available credit limit and whether your transferred balances can pay off a debt or account in full.
But you could find that a balance transfer credit card slightly improves your creditworthiness. This is because of something called your credit utilisation ratio, or the amount of your debt on one card compared to that card’s spending limit. For instance, a balance of P10,000 on a card with a P20,000 limit that’s transferred to a card with a P40,000 limit could minimally improve your credit by lowering your utilization ratio from 50% to 25%.
A general rule of thumb is to keep your credit card debt to at least 30% of your limit.
Consider each feature of a balance transfer credit card to make sure you prioritize what’s important against your immediate and long-term needs.
What to Expect
Intro interest rate
The intro interest rate is charged on any balance you transfer to the new card. A good intro interest rate is 0% for a specific period.
0%–low interest rate
Length of promo
You’ll find low-interest balance transfer offers that last from 6 to 18 months — and sometimes up to 24 months — depending on the card. Consider the interest rate, the size of your debt and the promo period to calculate whether you can repay your balances before your revert rate kicks in.
6, 15, 18, 21 or 24 months
When the promotional offer expires, your interest rate often reverts to a much higher APR — sometimes higher than average. Confirm your revert rate before applying.
Often 3.5% (monthly) or more
Some cards charge an annual fee, but you can find cards with no annual fee.
Other fees and rates
While balance transfers are your main priority, consider other rates and fees to stay out from under unnecessary interest and charges.
Consider the costs of late payments, returned payments, transactions abroad and purchase interest rates — which are often separate from the balance transfer promo.
Extras can range from travel rewards to cash back to free credit monitoring. Look for a card that best fits your lifestyle.
Like most financial tools designed to help those in debt, balance transfer credit cards aren’t without a few risks. Steer clear of these common pitfalls when you make your next balance transfer.
Neglecting to make payments
Don’t let a 0% interest rate trick you into thinking a card comes without costs. You’ll need to pay your minimum each month — preferably more — to repay your debt before the intro expires.
Ignoring the revert rate
At the end of your promo interest rate, you’ll pay the revert rate on any remaining balance. Look for a revert rate that’s lower than your current card’s rate to avoid ballooning debt.
Racking up interest rate penalties for late payments
To avoid losing your 0% intro interest rate, you must pay your minimum with your statement each month. If you struggle to make on-time payments, consider a card that won’t charge you penalty rates.
Paying high cash advance interest rates
Most cards don’t extend promo interest rates to cash advances. Because cash-advance interest rates are among the steepest out there you’ll want to avoid them altogether.
Forgetting about late fees on old cards
Depending on your provider, it could take up to 14 days for your balance transfers to complete. Don’t stop payments on your old cards until you know they’re closed. The last thing you need when dealing with debt consolidation is shelling out cash for fees.
Pro tip No. 1: Avoid using your new card for purchases.
With a balance transfer credit card, keep your primary goal in mind: Paying off your debts more quickly while saving on unnecessary interest.
One way to avoid building more bulk into your balance is by avoiding new purchases on your card. It’s not just that you’re adding new debt on top of old. But that newer debt will likely accrue higher interest for a longer time.
Here’s why: Your 0% intro interest rate likely won’t extend to new purchases. Worse, if your card is like most – whereby your monthly payments will first go to paying off debts with the lowest interest. A good idea in theory, it means that your monthly payments will first apply to the balances you transferred to the card initially. Unless you’re paying a lot more than your minimum, you might inadvertently give your newer balances more time to accrue interest at higher rates.
Pro tip No. 2: Make more than the minimum repayment.
If you’re only paying your minimum each month, you likely won’t be able to repay your entire balance before the end of your 0% balance transfer offer.
To avoid getting stuck with your revert rate, know how much you need to repay monthly to satisfy your full balance before your promo period expires. To calculate your repayments, divide the amount of your debt by the number of months in your balance transfer offer. Use this amount as your repayment goal for each statement period.
Here’s how you can pay off a P100,000 debt over a range of repayment periods:
Percentage of total required monthly to clear P100,000 debt
Monthly repayment amount on a P100,000 debt
How do I apply for a balance transfer credit card?
Applying for a balance transfer is just like applying for any other card, only you’ll list your creditors and the amounts you wish to pay to each. Eligibility varies by provider, but they’re typically open to Filipino citizen or foreigner living in the Philippines who are at least 21 years old. You will also need to have at least 1 year of regular employment status or at least 2 years of profitable business for self-employed individuals. Depending on your chosen credit card, the minimum gross annual income requirement ranges from P120,000 to 1 million pesos.
After you’ve confirmed your eligibility and weighed the interest rates, intro periods and fees of all your options, complete your balance transfer credit card application with your personal information and financial details. Be sure to carefully read the terms and conditions before submitting it.
Applying takes as little as 10 minutes online or over the phone.
Applying online requires you to provide your personal contact information, date of birth, valid ID along with your financial information. The financial details required could be as simple as your annual salary, income tax return or as detailed as divulging how much you spend a month.
List the account numbers for any credit card debt you want to transfer and the amount. (You can do this after approval.)
Carefully review the card’s terms and conditions, asking about anything you don’t understand.
Agree to the terms and conditions, and click Submit.
You’ll either receive an instant response online, or the bank will let you know in a few days, after it has reviewed your application.
Typical eligibility requirements
You must be at least 21 years old.
You must be a Filipino citizen or foreigner living in the Philippines
Recently applied for a balance credit card and not sure about your status?
Call your provider’s customer support to learn whether you’re approved or find out why you were rejected.
A balance transfer credit card is a valuable tool when used responsibly, helping you to save money while paying off your debts more quickly. And though you now know about the process and how they work, you have another step.
To truly get the most out of a balance transfer credit card, compare your options and find the one that best fits your financial circumstances. And put your plan to get free of debt into action.Back to top
Yes. To avoid losing your 0% intro rate, you need to repay the minimum amount due on time each month.
Applying for a balance transfer card is much the same as applying for any other credit card. The only difference is that your application includes a section dedicated to balance transfers. Here, you’ provide your creditors’ information, account details and how much of your old debts you’re looking to pay. If your application is approved, your debt is automatically transferred to your new card. You’ll need to contact your old bank to close your existing accounts after your transfers are complete.
With most providers, yes. It’s a convenient and simple way to make transfers. Check with your bank to see if it allows for online transfers.
While a few providers offer transfers completed in just a few days, it can take anywhere from one to three weeks. To avoid late fees and other penalties, make sure your old debt is fully paid before you stop payments to that card.
Generally, you can’t transfer a balance from one account to another under the same bank. If you’re unsure, talk with your provider about the option for transfers.
No. Rewards on balance transfers vary by lender, but most will not allow you to earn rewards on your transferred amounts. Review the terms and conditions for the specific card you’re considering to learn more.
Any balance remaining at the end of the introductory period, including the original balance transfer, reverts to a higher interest rate. To get the most out of your balance transfer card, make all efforts to pay off your balance within your promo period.
No. But you’ll need to carefully read the terms and conditions for your card to understand all potential fees and rates. Keep an eye out for balance transfer fees, the revert interest rate you’re charged at the end of your promo and annual fees you’ll pay to use the card. Make sure these fees aren’t more than your potential savings before applying.
While the card may offer 0% interest rate, you’ll still need to pay your statement’s minimum monthly. Ideally, you’ll want to pay more than the minimum to make sure your entire balance is repaid before the promotional period ends.
Adrienne Fuller is the head of publishing at Finder US. With a decade of experience creating guides in finance and education, she aims to deliver the accurate and transparent information she wishes she had when she made some of life's important financial decisions. For the past 3 years she has been the publisher of money transfers, helping readers save when they send money all over the globe. She has a BA from Colorado College and loves to hike with her two Catahoula dogs around her home in San Diego.
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