How to settle credit card debt using credit cards?

  • authorArvind B
  • 22-04-2022

Credit cardholders who own multiple credit cards earn a lot of benefits from their issuers. They repay their bills on time and enjoy offers, rewards, and cashback for their spending behavior. But this is not the same for the million card users in India. If so, banks will start going bankrupt.

Even if you are a cardholder stuck in a debt trap, it is possible to clear your debt using the Balance Transfer option on the credit cards.

By using the balance transfer option, you are transferring money from one credit card to the other credit card for which you hold the debt.

Ways to make a balance transfer:

  • You can either convert the repayable amount into an easy EMI option with a low-interest rate.
  • You can take 60 days (depending on the issuer) to repay the entire balance transfer amount interest-free.

To opt for a balance transfer:

  • You should be a multiple card user having at least one card for which you properly pay the bills.
  • Your credit card issuer should be offering the Balance Transfer option.

Consider you have met the above conditions. Why should you still settle your credit card debt using a balance transfer?

  • It saves you from a debt that is compounding at an insurmountable rate.
  • You can settle your debt in affordable EMIs with less than half the interest rate of holding the former credit card.
  • The repayment of money through EMIs is not only for the interest but also for the principal amount.
  • You are consolidating your debt into a single monthly payment.
  • You can save your credit score from decreasing.
  • You can settle multiple card debts provided you have the required credit limit.

Steps to carry out a balance transfer:

  • Calculate your credit card debt including the interest rates and penalty charges.
  • Pick any one card (which you are already using) that offers a low-interest rate for a balance transfer.
  • Assess if it is possible to make a balance transfer from the card you picked considering the credit limit.
  • Go to the card issuer portal/Phone banking and request a balance transfer.

How is balance transfer calculated?

Let’s assume that you have a debt of Rs 1,00,000 from bank X with a credit limit of Rs 2,00,000. You also use a credit card from bank Y for which you have no outstanding dues with the same credit limit. You have identified that bank Y lets you do a balance transfer to bank X for a 1.5% interest rate (varies according to the card issuer) for a six-month period.

You will be paying an interest amount of Rs 5,315 along with the principal which will be over in 6 months.

Points to remember when making a balance transfer:

  • Not all card issuers offer balance transfer.
  • Pick a card for which you have low or zero outstanding.
  • Calculate how much you save from this option and analyze if it’s feasible for you.
  • Make a balance transfer from a card that you do not use for your regular spends.
  • Balance transfer decreases your Credit Utilization Ratio.


Balance transfer is a tool that can save people from credit card debt, interest rates, and penalty charges imposed by the creditor. It gives you a chance to rebuild your credit line and smoothens your relationship with the banks. Use this feature as a short-time option and try not to get into debt again.