If you want to clear your credit card debt, you can transfer your balance to a new credit card and pay it off with a low or 0% introductory rate. Use this guide to find out more.
How does a balance transfer work?
A balance transfer involves moving your debt from one or multiple credit cards to a different card with a new provider. Usually, the new credit card will offer an introductory low or 0% interest rate on balance transfers that could help you save hundreds or thousands of baht in interest. You’re also likely to pay off your debt faster than you would if the standard rate applied to the debt. The introductory period can last from 12 to 24 months, after which time any remaining balance will collect a higher revert rate.
How can I compare credit card balance transfer offers?
There are lots of balance transfer credit card deals available in Thailand, but some will offer you greater savings than others. To help you find a balance transfer card that suits your needs, here are the key features to compare:
- Balance transfer rate. Most balance transfer credit cards in Thailand offer 0% interest for a promotional period, but others will offer a low rate. Generally the lower the interest rate, the more you’ll save, but you can use a balance transfer comparison table to compare cards by the potential interest savings.
- Length of introductory offer. The offers vary between cards, but 0% p.a. balance transfers can generally range from 6 months to 24 months. You can also find other low rate balance transfers that last for up to 36 months. You should choose a balance transfer that gives you enough time to pay the balance in full before the higher revert rate kicks in. You can do this by dividing your debt by the number of months in the introductory period. This will show you how much you’d have to pay each statement period to clear the debt before the offer ends. If you don’t think you can pay it all in this time, you might want to look for a card with a longer balance transfer offer.
- Balance transfer revert rate. At the end of the promotional period, the low or 0% balance transfer interest rate will revert to a higher, standard rate. This is usually the standard cash advance or purchase rate. Although you should aim to pay off your debt before the revert rate applies, you should pay attention to this rate to avoid any nasty surprises when the introductory offer ends.
- Balance transfer fee. While not all credit cards charge a balance transfer fee, they have become more common in Thailand. This fee typically ranges from 1% to 3% of the total balance transfer amount and is charged when your debt is transferred to the new card. This might not sound like a lot, but it can eat into the potential savings you’d get from the transfer. You can learn more about this fee and compare credit cards that don’t charge a balance transfer fee in this guide.
- Eligible debts you can transfer. You can usually transfer one or multiple debts from Thai-issued store cards or credit card accounts from a different issuer. Some cards also allow you to transfer debts from personal loans and lines of credit. See our guide to the banks you can and can’t transfer between for more information.
- Balance transfer limits. Some cards impose balance transfer limits, meaning you can only transfer up to a percentage of your approved credit limit. Depending on the card, this can range from 70% to 100% of your credit limit. If you try to transfer more than the limit, the remaining amount will stay in your old account to collect interest. You can see finder’s guide to balance transfer limits for more information.
- Annual fee. You’ll usually pay an annual fee on a balance transfer card, although some cards waive this cost. When this fee is charged, it is treated as a purchase and attracts the same interest rate as other purchases made with the card. If you pay the annual fee straight away you can avoid interest charges, which will help you make the most of the 0% p.a. balance transfer period. You can compare balance transfer cards with no annual fees on finder to avoid this cost altogether.
Mistakes to avoid with balance transfers
Watch out for these traps to make the most of a 0% balance transfer credit card offer.
MISTAKE: Thinking 0% interest means no payments
Even if you’re paying 0% p.a. on your balance transfer debt, you still have to make at least the minimum payment for each statement period. This is usually stated as “10% of outstanding balance or THB500, whichever is greater”, although the percentage and baht amounts can vary between cards. You can check the minimum payment requirements by looking at review page for individual cards or by looking at the key facts sheet that credit card providers must share with you before you apply.
MISTAKE: Only making the minimum repayment each month
Although you’re required to pay a minimum amount each month, it could take years to pay off your entire debt if you only pay this amount. Instead, it’s wise to make bigger payments and clear the entire debt before the 0% introductory period ends. How much you’ll have to pay each statement period will depend on the size of your debt and the length of the promotional period. Budget as much as you can towards paying off your credit card debt while the promotional rate applies. If you can’t repay the entire debt in time, it’s possible to apply for another balance transfer.
MISTAKE: Making new purchases with your card
If you use your card to make purchases, it will collect the standard purchase interest rate and could make it harder to pay off your debt. Credit card issuers are also required to allocate repayments to the debt that is charged the highest rate of interest on your account. So, if your balance transfer has a 0% interest rate and your purchases collect 18% p.a., your repayments will go towards the purchases first rather than your balance transfer. Even if your card has an introductory 0% rate on new purchases, you should concentrate on repaying your debt rather than making more purchases.
MISTAKE: Keeping your old card open
When you get a balance transfer, it’s your responsibility to contact your current credit card provider and close the old account. If you don’t, you could end up paying account costs for a card you’re not using. Before you close the card, make sure the balance is completely transferred or paid in full and move any regular payments (such as direct debits) to another account.
If a balance transfer can help me save money, what’s in it for the bank?
Credit card issuers make money when you pay interest, so why would they charge 0% when they could charge 18% or more? Here’s why:
- The interest rate will eventually revert to a higher rate. As mentioned above, if you don’t pay off your entire debt during the promotional period, you’ll end up collecting interest at the standard rate for your card. This is usually the purchase rate or cash advance rate, which usually hovers up to 18%. Once that happens, your new credit card issuer can potentially make hundreds or even thousands of baht from you through interest charges.
- Persuading you to switch is tough. People are reluctant to switch banks and it’s often expensive for banks to acquire new customers. Offering a discounted interest rate is a way for banks to attract potential customers.
- You’ll still have to pay interest on new purchases. While you’ll enjoy 0% interest on your balance transfer debt, the standard variable interest rate for purchases will usually apply to any new purchases you make while you’re paying off that debt.
Balance transfer credit cards can help you save on interest costs and get your debt under control. As there are so many different balance transfer cards on the market, there is no one best option that works for everyone. Instead, look at the size of your debt, what you can afford to pay each month and the card’s features to find the right balance transfer card for you.