Credit Card Balance transfer is a facility offered to cardholders which enables them to transfer the existing outstanding or debt of one credit card to another one . The customer gets the benefit of transferring her outstanding from a higher rate to a lower rate. This saves some interest on the amount due on the previous card.

Balance Transfer has been used widely by credit card issuers to get new customers. They also floated a number of offers, wherein the rates on the transferred amount were very low- just to get a new customer who is already active on his plastic.

When you opt for a Balance Transfer from Card A to Card B, the Card B bank issues a draft for the amount (that you are transferring) in name of Bank A. This clears (or reduces) the amount due on card A. On the other hand your card B outstanding increases by the same amount + processing fees (if any).

Balance transfer also affects your available credit limit. The limit reduces proportionately to the balance transfer amount.