Personal Finance Term
Balance Transfer
Moving an outstanding credit card balance to another card or facility that charges a lower, often promotional, interest rate for a set period. It is mainly used to pay down expensive credit card debt faster.
With a balance transfer, you shift what you owe on a high-interest card to a new card or plan offering a reduced or zero promotional rate for a fixed window, such as several months. Because more of each payment then goes toward the principal instead of interest, you can clear the debt more cheaply if you are disciplined. Malaysian banks commonly offer balance transfer promotions, sometimes with a one-time fee on the transferred amount.
The catch is the fine print: the low rate is temporary, and once the promotional period ends the remaining balance usually reverts to the standard high rate. Some plans also charge an upfront fee, and missing a payment can void the promo. A balance transfer works best as part of a clear plan to pay off the balance within the low-rate window, not as a way to free up the old card and keep spending, which can leave you deeper in debt than before.