Key points about: balance transfer cards for bad credit
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Balance transfer credit cards with low promo introductory APRs usually require good credit to qualify.
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If you don’t qualify for a balance transfer card, there are other ways to consolidate debt and reduce interest payments.
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Secured credit cards and debt consolidation may help reduce interest fees and help rebuild your credit score.
Mounting bills and debt can be tough to manage without a strategy to help you balance your finances. Budgeting and cutting back on leisure expenses could help you chip away at paying off debt faster. And financial tools like balance transfers can support your progress. But who qualifies for a balance transfer card? Let’s look at what a balance transfer is and what kind of credit score you need to qualify.
What’s a balance transfer?
A balance transfer allows you to shift part or all the outstanding amount (or credit card balance) from one credit card account to another. The new account is usually from a different card issuer and offers a lower interest rate. The right balance transfer credit card offer could help you avoid accumulating further interest and simplify debt repayment.
See if you’re pre-approved
With no harm to your credit score1
Some benefits of a balance transfer include:
- Consolidating debt across multiple accounts into a single credit card account for one simple monthly payment.
- Some cards offer a zero or low promotional APR, which could help you pay down debt faster.
- Any balance transfer to a card with a lower APR than your original card can help reduce your interest payments.
To set up a balance transfer, you often must pay a balance transfer fee of around 3% to 5% of the amount you’re transferring, depending on the card issuer. Try calculating the balance transfer fee and comparing it to the interest you would incur if you were to leave the debt on your current credit card account. If the fee is less than the interest, a balance transfer card could help you. Before you sign up for a balance transfer, it’s also a good idea to review the standard APR on the card that takes effect after the promotional period ends. A balance transfer may not be worth it if you’re stuck with high fees and an increased APR after the promo period.
Do you qualify for a balance transfer card?
Balance transfer credit cards with 0% promotional APRs are usually available to people with good or excellent credit scores. So, if you have a good or excellent credit score, you may have a better chance of qualifying for a balance transfer card. However, it’s not essential to have an excellent credit score to qualify. While someone with a poor credit score may not be eligible for a balance transfer card with a 0% introductory APR and high balance transfer limit, a balance transfer card with a low intro APR and low balance transfer limit might be an accessible option.
Eligibility criteria and features for balance transfer offers vary based on the card issuer and the specific card. For example, new customers can get a balance transfer offer from Discover that may help consolidate monthly credit card payments and save money on credit card interest.
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A balance transfer may not directly affect your credit, but it does have some secondary effects on your credit score. Before approving your credit card application, card issuers typically perform a hard credit inquiry which may impact your credit score. On the other hand, a new credit card can increase your total available credit limit, which may reduce your credit utilization (if you don't increase your spending). Lower credit utilization may improve your score.
Alternatives to balance transfer cards
If you don’t qualify for a balance transfer, you may still improve your credit score, consolidate debt, or reduce interest costs.
Secured credit card
A secured credit card requires you to provide a security deposit as collateral. Your credit limit is usually equal to your security deposit. A secured card could help boost your credit as long as you make timely payments and practice responsible spending habits. Then, over time you may qualify for a balance transfer card.
Did you know?
With the Discover it® Secured Card, you can get your deposit back after 6 consecutive on-time payments and maintaining good status on all your credit accounts.2 And, you can build your credit history3 while you earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically.4
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Debt consolidation
As the Consumer Financial Protection Bureau explains, debt consolidation is a way to combine credit card bills and loan payments into one monthly payment. You can consolidate debt using a personal loan or with a balance transfer. If you can secure a lower interest rate, you could reduce overall interest costs and simplify your bill pay. If you need help creating a repayment plan, consider seeking support from a non-profit credit counselor.
Transfer to a card with a lower APR
If you don’t want to take out a loan or open a new credit card, you could transfer your debt to an existing credit card account with a lower interest rate. Though you wouldn’t get the benefits of a 0% APR card, you could still reduce your interest payments over time.
Improving your credit score
Improving your credit score is a great way to begin to qualify for credit cards with more favorable features, like balance transfer cards or those with a 0% introductory APR.
A few steps that could help lead to a higher credit score include:
- Reduce credit utilization by paying down as much of your debt as possible.
- Paying your monthly bills in full and on time.
- Checking your credit report once a year for errors that may affect your credit score.
A balance transfer card can be a helpful tool to help reduce interest fees for those who qualify. If you’re not eligible for a balance transfer card, consider other options to help minimize interest payments, like a secured credit card or debt consolidation. Bad credit doesn’t have to be a permanent problem, and with the right strategies, you can improve your credit score, reduce debt, and get your finances on track.
