Personal Loans VS Balance Transfers In Singapore

Making Sense of Balance Transfers in Singapore
TLDR Summary: What Exactly Is A Balance Transfer
- Balance transfers are short-term cash facilities with 0% interest, allowing for flexible repayments over a short period of time.
- Opting for a balance transfer is a viable solution when facing tight cash flow, provided you have confidence in forthcoming funds that can be used to clear the outstanding balance.
- When considering interest rates, balance transfers stand out with 0%, while personal loans come with rates ranging from 3.5% to 10.8% per annum. Moreover, the repayment periods and amounts vary between these two financial options.
Balance Transfer Singapore: How Does It Work?
A balance transfer works by transferring your outstanding credit card balances to a 0% interest account. Essentially, you borrow from the available credit limit of your existing credit line or credit card account.
The repayment period is usually much shorter than a personal loan, from 3 months to 18 months. You can choose to pay a minimum sum of 1% to 3% of the outstanding amount per month, but at the end of the repayment period, you must pay the remaining of what you owe.
For example, you owe $5,000 and put it on a 6-month balance transfer. Your minimum payment is 1%, which is $50. For 5 months, you pay $50. This means that on the 6th month, you must repay the remaining $4,750, or the 0% interest rate will revert to the original rate, which can be as high as 30% p.a.
It’s a good solution if your cash flow is tight but you know for sure that you will receive a large amount of cash (perhaps your bonus or a maturing endowment plan) that you can use to repay in the following months.
Things to Note Before Applying for Balance Transfer
Credit Limit
Minimum Repayment Sum per Month
Late Payment Fees
Interest-Free Periods & Processing Fees
Interest Rates after Interest-Free Periods
Credit Card Interest Rate
Bank Consolidation Loans
Best Balance Transfer Rates in Singapore (2025)
GXS FlexiLoan (Balance Transfer)
OCBC Balance Transfer
Citibank Balance Transfer
UOB Balance Transfer
Standard Chartered Balance Transfer
HSBC Balance Transfer
DBS Balance Transfer
Best Balance Transfer Deals in Singapore (2025)
Best For | Bank | Benefits |
---|---|---|
Best For6 Months Balance Transfer | BankStandard Chartered Funds Transfer | Benefits0% interest + 1.5% processing fee |
Best For12 Months Balance Transfer | BankGXS FlexiLoan (Balance Transfer) | Benefits0% interest + 3.85% processing fee |
Best For | BankUOB CashPlus Funds Transfer | Benefits0% interest + 4.69% processing fee |
Best ForFlexible Repayments | BankDBS Balance Transfer | BenefitsMinimum repayment of 2.5% of balance or $50, whichever is higher |
Best For | BankStandard Chartered Funds Transfer | BenefitsMinimum repayment of 1% of balance or $50, whichever is higher |
Best For | BankUOB CashPlus Funds Transfer | BenefitsMinimum repayment of 2.5% of balance, or whichever is higher |
Should You Get a Balance Transfer or a Personal Loan?
If you still cannot decide between a balance transfer or a personal loan, consider the below factors:
Loan amount: If you are borrowing a large loan amount, it is safer to take out a personal loan. You can repay in fixed amounts over a longer time frame of between one and five years. If the amount is small, you can do a balance transfer to enjoy 0% interest rates. If you choose a balance transfer, you must make sure that you will have the cash to repay within the loan tenure of 3 to 12 months.
Your cash flow in the near future: Balance transfers usually have a tenure of 3 months, 6 months or 12 months. While you are allowed to pay a small minimum sum monthly during this repayment period, you must clear your debt within the end of it. This means that you need to be sure that you will have the money to repay within 3 to 12 months. Otherwise, the interest rate jumps back up to 25% to 30%.
If you are considering a personal loan for steady repayment of debt, here are some recommendations.
Key Differences Between Balance Transfer and Personal Loan
Balance Transfer | Personal Loan | |
---|---|---|
Interest rate | Balance Transfer0% p.a. | Personal Loan 3.5% to 10.8% p.a. |
Processing fee | Balance Transfer1.5% to 5.5% | Personal Loan 1% to 2% |
Repayment period | Balance Transfer3 months to 18 months | Personal Loan 1 to 5 years |
Repayment amount | Balance TransferVaries, but minimum 1% to 3% of outstanding amount per month | Personal Loan Fixed amount per month throughout the term |
Early repayment penalty | Balance TransferNo | Personal Loan Yes |
Remember to Pay Full Amount During the Interest-Free Periods
Frequently Asked Questions
How do I do a balance transfer?
- If you have decided that a balance transfer is the best option for you, you simply need to apply through the bank's website. Sometimes banks run online exclusive promotions so do check before you apply. Generally, a balance transfer is done on an existing credit card account or credit line, so you would have to apply for an account if you don't already have one.
Will a balance transfer affect my credit score?
If you’re worried about your credit score and are thinking of holding off on your balance transfer request, we have some good news for you.
If you have taken out a balance transfer and abided by the terms and conditions, a balance transfer could even improve your credit score. This means that you paid the necessary minimum sum monthly on time and the full amount at the end of the repayment term, which signals to the banks and financial institutions that you are reliable and do not have a risk of defaulting.
However, if you have applied for multiple balance transfers and are in the midst of repaying them, there is a possibility that the credit bureau will note that your debt amounts are not paid in full. This may have a negative impact on your credit score.
Keep in mind that your credit score is also affected by your credit card utilisation ratio. If it is high, it may signal to creditors and banks that you are relying heavily on credit to manage your finances. Paying down debt, clearing it before any interest kicks in and not cancelling unused credit cards can help to lower your credit card utilisation ratio.
Is it smart to pay off one credit card with another?
- Yes, if you use a balance transfer credit card which has 0% for a short period of time and you are confident of repaying on time, it could be smarter to consolidate credit card debts into one account. It isn't smart to pay off one credit card with another without first comparing interest rates.