With numerous financial services available in Singapore, anyone can have a rewarding experience with careful and detail-oriented financial management practices.
Any Singaporean or foreigner who effectively manages their credit and financing will always have the best deals from virtually every Singaporean financial institution.
One excellent financial management tool is a balance transfer. It allows borrowers to keep their debt low while contending with high debt and interest rates.
You’ll learn more about balance transfers and the best balance transfer rates in Singapore in this short guide. Additionally, you’ll know the eligibility, requirements, and steps to apply for balance transfer services.
What Is a Balance Transfer?
A balance transfer works like debt consolidation because the latter allows another party to negotiate with your creditors to give you a lump-sum, low-interest rate loan to pay off all your debt.
A balance transfer usually has you use your creditor’s services to transfer a percentage of credit card debt to another, low-interest credit card. In this light, borrowers can pay off their existing card debt for a longer period with minimal increments.
Most banks and lending institutions that issue credit cards provide balance transfer services to eligible borrowers. Truthfully, they will prioritize borrowers with high credit and above the minimum income requirements.
How it Works
Many financial advisers compare credit card balance transfer services to personal loans and other short-term financing, and they’re correct to do so.
Credit card balance transfer services allow borrowers to transfer their existing high-interest rate credit card debt to a 0% balance transfer account.
Usually, banks will charge a one-time percentage fee for zero-interest accounts. Most balance transfer accounts offer a 6-12-month repayment period.
Balance transfers are exclusively available for credit cards only. If you have an outstanding personal loan with the same creditor, you cannot use balance transfers to lower your interest. Depending on your bank, any of their credit lines might be eligible for balance transfers.
Common Difficulties of Using Balance Transfers
A balance transfer affords you a long time to pay back your enormous credit card debt. It doesn’t mean you can stop paying it and expect to avoid penalties and higher interest.
Like credit cards, you can pay the minimum monthly due. However, some balance transfer services can compound your interest rates if you choose to go the minimum payment route, making it much more difficult to pay everything within your 6 or 12-month payment period.
Pros and Cons of Using Balance Transfers
- Pros
- Quickly Shift Debt To Low-Interest Loans/Cards
A high-interest rate is the fastest way many customers increase their debt.
A balance transfer to a low-interest loan or credit card can give you a breather, allowing you to reach a faster repayment break-even point and completely paying off your debt.
While it’ll cost you a one-time processing fee, it can be worth it for the reduced time you’ll need to pay.
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- Payment Consolidations
Many Singaporean banks allow you to consolidate other credit card debt to a single low-interest rate bank transfer account.
As we have mentioned earlier, balance transfers work like debt consolidation. Truthfully, the service is much more expensive if you look at the figures, but it’s undeniably similar in functionality.
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- Save Money on Interest
Credit cards often have annual percentage rates (APRs) that range from 10-20% or beyond.
With a 0% interest rate for 1-2 years, you can pay your principal balance first. In doing so, you can effectively deal with all accumulated and compound interest rates without worrying about these two increases in costs over time.
- Cons
- You’re Still Paying Debt Even If It Moved
Moving your existing debt from multiple credit cards sounds like a boon.
However, always remember: the service focuses on giving you a fighting chance to deal with principal payments. Even if your debt moved to a safer zone, it doesn’t mean you won’t have to worry about it anymore.
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- Mismanagement Can Lead You To Deeper and Bigger Debt
If you haven’t resolved the root cause of your high debt issue, you’re highly likely to mismanage your balance transfer rates.
A 0% APR balance transfer account is handy during its one year, interest-free phase. Once the actual APR kicks in, you will find yourself in deeper debt, failing to properly manage your balance transfers.
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- Huge Balance Transfer Fees
If you have an S $3,000 balance with a 30% APR, you’re dealing with S $900 yearly interest rates.
A 27% APR balance transfer with a 3% balance transfer fee for the first year has you pay S $810 in interest plus S $90 for the transfer fee. You’ll need to look for a lower APR, such as transfer services with 0% APR for 1-2 years, to help you break-even and pay off your remaining credit card balance.
Who Has the Best Balance Transfer Rates in Singapore?
Below is a list of top banks with the best balance transfer rates in the country. Keep this list handy if you intend to use their services in the future.
| 6-Month Balance Transfer |
12-Month Balance Transfer |
|
Standard Chartered |
0% yearly + 1.5% fee | 0% yearly + 4.5% fee |
Citibank |
0% yearly + 1.58% fee. For new customers only | 0.% yearly + 4.5% Feee |
UOB |
0% yearly + 2.5% fee | 0% p.a.+ 4.28% fee for online applications only. |
OCBC |
0% yearly + 2.5% fee | 4.98% yearly + 0% fee |
HSBC |
0% yearly + 2.5% fee | 0% yearly + 4.5% fee |
Major Differences Between Personal Loans and Balance Transfers
A personal loan gives you 12 months to pay back a sum with a fixed interest rate. A balance transfer is a financial service giving you 3-18 months to pay back your credit card’s principal and save on interest rates. Personal loans and balance transfers are two different financial services.
However, they can help you resolve one thing: higher debt. Here’s a convenient table to help you learn about their major differences.
In summary, personal loans can be useful if you can resolve an enormous part or all of your credit card debt by using up to six months of your monthly salary. While you’ll pay a 4% maximum interest cap and S $60 or 10% loan processing fee, you won’t need to worry about both the principal and interest rate of your indebted credit card.
| Personal Loans | Balance Transfers | |
| Approval Process | 1 Hour | 1-3 weeks |
| Loan Amount | Six Months Your Monthly Salary | Usually 1-3% of your outstanding monthly balance. |
| Interest Rate | 4% Maximum Interest Cap | 0% interest rate on first year. Varies on the following years (for services beyond 12-months repayments) |
| Processing Fee | Up to S $60 or 10% of the loan only | Around 1-4.5% of your balance or higher |
| Repayment Period | 12 Months Subject to Money Lender’s Terms and Conditions | 3-18 months |
Balance Transfer Service Details to Learn About
- Processing Fee
We’ve compared both personal loans and balance transfers because they’re similar in helping you resolve credit card debt due to high-interest rates. Both loans have processing fees.
Licensed moneylenders have a predictable S $60 or 10% loan amount ceiling. On the other hand, banks usually stipulate 1.5-4.5% of your current balance or beyond as processing fees.
- Transfer Rate
This component is the cost of borrowing your loan. Like loans, balance transfers let you “borrow” enough money to pay your debt’s principal but are unique from other financial products because it has 0% interest.
For customers confusing APR and transfer rates, APR is the general cost of your debt, including transfer rates, processing fees, and other components.
- Repayment Period Length
The 3-18-month loan term functions similarly to any loan. The figure is the remaining amount of time you have until APR kicks in, potentially increasing debt remaining in your balance transfer accounts.
Who Are Eligible to Use Balance Transfers?
If you’re old enough to use credit cards, you can use balance transfer services. However, if you fail to comply with its other requirements, banks cannot accommodate your balance transfer service requests.
You’ll find this balance transfer eligibility to look similar to a bank or licensed money lender personal loan requirements. Keep this list handy when you’re applying for balance transfers in the future.
- Balance transfer applicants should be 21 years old and currently in Singapore
- Singaporeans and PRs must earn S $30,000 yearly income and above
- Foreigners in Singapore must earn S $42,000 and present their Singapore working or employment pass if the bank requests it
- You must be an active bank account or credit card owner of your chosen financial institution.
Keep in mind that some Singaporean banks will have Singaporean or PR-only exclusive balance transfer services. However, with numerous alternatives, foreigners can always find good balance transfer deals by shopping around online.
Compatibility of Personal Loans and Balance Transfers
- Personal Loans
These financial products will effectively work if you have credit card debt plus interest below six months of your existing financing. In doing so, personal loans are the quickest route to finalizing your credit card debt for good.
However, if it can only pay a small number of your credit cards, its 4% interest cap, and S $60/10% of the loan processing fee may increase your debt.
However, personal loans are much more accessible for any Singaporean borrower. If your credit card provider’s balance transfer products seem disagreeable, personal loans from licensed moneylenders are an excellent alternative.
The case is especially useful if other banks require you to open a bank account or own one credit card before you can use their balance transfer services.
A1 Credit Solutions offers some of the best personal loan rates in Singapore. Additionally, they guarantee same-day loan processing too.
- Balance Transfers
Transfers work well if you intend to pay back your financing within 6-12 months. Paying beyond this term is dangerous because of the high APR and additional interest rates.
Furthermore, balance transfers can be a headache because you’ll need to calculate the interest amount you’re left to pay after you’ve addressed your principal credit card debt.
On the other hand, if you have multiple credit card debt, balance transfers are an excellent consolidation option.
Compiling all payments into one low-interest rate debt can help you quickly pay back all your debt. However, keep in mind that your balance transfer service providing bank can reject card debt integration from different creditors.
A1 Credit Solutions Is An Excellent Provider of Short-Term Financing
If you’re looking for the best fast-loan services in Singapore, you will always receive your loan within hours of loan application if you work with us at A1 Credit Solutions. Visit us today to get a quote on the best financial products for all your needs.
