Do you have outstanding dues on your credit card and you want to pay it on installments but your bank is charging too much markup? Or do you want to just transfer your dues from one credit card to another and pay with its bill? Well, for these purposes banks have Balance Transfer Facility (BTF) on credit cards.
Using BTF facility you can transfer your outstanding balance from one credit card(s) onto other credit card. You can either pay in full or in equal monthly installments. Here we will tell you about what are the charges for using BTF and how you can calculate them before using that facility.
When you transfer your dues from one card to other, the bank charges you with BTF processing fee & mark up until you pay those dues in full. The BTF processing fee is fixed while the bank applies service charges on daily basis with Annual service charges on the total amount until the you make the full payment.
For example you have outstanding dues of Rs. 10,000 on your Silk Bank Credit card & you want to transfer it to Bank Alfalah credit card. Currently the BTF processing fee for Alfalah Cards is Rs. 600/- or 2.5% of transaction amount, whichever is higher. In this case it will be Rs. 600 as 2.5% of your transferring amount (Rs 10,000) is Rs. 250, which is less than Rs. 600.
Secondly, the Annual Service Charges for BFT by Bank Alfalah is 24%, so you can calculate the daily markup by multiplying 24% with Rs. 10,000 & dividing by 365 days. This is done as follows:
Service charges for one day: 24% x 10,000 / 365 = Rs. 6.58
Service charges for 10 days: 24% x 10,000 x 10 / 365 = Rs. 65.8 (or simply multiply 6.58 with number of days)
So the charges will be Rs. 600 and Rs. 6.58 per day until you make full payment.
Some banks also provide easy monthly installments of 3 to 24 months with annual service charges. The detail these installment options by various banks is explained HERE.
Every bank has different BTF processing fee & Annual Service charges for BTF, to know more about BTF charges by various banks, CLICK HERE.
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