Balance Transfer Credit Cards: How Do They Work? (Malaysia 2025 Guide)
A balance transfer credit card allows you to move outstanding debt from one or multiple credit cards to a new card with a lower interest rate (sometimes 0% for a promotional period). This strategy helps you pay off debt faster and save on high interest charges.
In this guide, we’ll explain how balance transfer credit cards work in Malaysia, their benefits, drawbacks, and how to choose the best one for your needs.
1. What is a Balance Transfer Credit Card?
A balance transfer is a feature offered by many Malaysian banks where you can transfer your existing credit card debt to another credit card with a lower interest rate—sometimes as low as 0% for 6 to 12 months.
🔹 Example:
- You owe RM10,000 on your current credit card at 18% interest per year.
- You apply for a balance transfer credit card offering 0% interest for 12 months.
- Instead of paying RM1,800 in interest, you only pay a one-time processing fee (if any) and the principal amount.
- This helps you pay off the debt faster and save on interest.
2. Key Benefits of Balance Transfer Credit Cards
✅ Save on Interest Costs
- Instead of paying high interest (15%-18%), you get 0% or low interest for a set period.
✅ Pay Off Debt Faster
- Since your payments go directly to reducing the principal, you clear debt quicker.
✅ Consolidate Multiple Debts into One
- If you have multiple credit cards, you can combine them into one payment, making it easier to manage.
✅ Lower Monthly Repayments
- Some plans offer fixed monthly repayments, making it easier to budget.
3. Things to Consider Before Applying
🔸 Processing Fees
- Some banks charge a one-time fee (e.g., 1%-5% of the transferred amount).
🔸 Promotional Period
- The 0% interest rate is temporary, usually between 6 to 36 months.
🔸 High Interest After Promotion
- If you don’t pay off the balance within the promotional period, the remaining amount will be subject to standard credit card interest rates (15%-18%).
🔸 Eligibility & Approval
- You need to have a good credit score and meet the bank’s income requirements to qualify.
4. How to Use a Balance Transfer Effectively
Step 1: Compare Balance Transfer Offers
Look at interest rates, promotional periods, fees, and repayment terms from different banks.
Step 2: Apply for the Balance Transfer
Once approved, your new bank will settle your old credit card debt and transfer the balance to your new card.
Step 3: Make Regular Payments
Stick to a strict repayment plan and pay off the full balance before the promotional period ends to avoid high interest.
Step 4: Avoid New Debt
Don’t use your old credit card for new purchases, or you may fall back into debt.
5. Best Balance Transfer Credit Cards in Malaysia (2025)
| Bank | Balance Transfer Offer | Processing Fee | Promo Period |
|---|---|---|---|
| Maybank | 0% for 12 months | 3% | 12 months |
| CIMB | 0% for 6 months | 2% | 6 months |
| HSBC | 0% for 12 months | 4% | 12 months |
| RHB | 4.99% for 36 months | RM100 | 36 months |
| Public Bank | 0% for 6 months | 2.5% | 6 months |
Note: Offers may change. Always check with the bank for the latest terms and conditions.
6. Who Should Use a Balance Transfer?
✅ You have high-interest credit card debt and want to pay it off faster.
✅ You can afford to clear the debt within the promotional period.
✅ You are disciplined and won’t take on new debt.
✅ You qualify for the transfer (good credit score & stable income).
🚨 Avoid a balance transfer if:
❌ You tend to overspend and rack up more debt.
❌ You cannot commit to repaying within the promotional period.
❌ The processing fees outweigh the savings.
7. Final Tips for Success
✔️ Read the terms & conditions carefully before applying.
✔️ Make your payments on time to avoid penalties.
✔️ Avoid making new purchases on your old credit card.
✔️ Choose a plan that fits your repayment ability to avoid high interest later.
Conclusion
A balance transfer credit card is an excellent tool to help you save money on interest and clear debt faster—but only if used wisely. Compare offers, understand the fees, and commit to paying off the debt within the promotional period.
