How to make a balance transfer with bad credit
A balance transfer credit card can help you consolidate debt, and many even come with a 0% introductory APR that can help you save money and pay off debt faster. Unfortunately, consumers with poor credit – that is, those with a credit score of 579 or less – cannot always qualify for the best 0% APR credit cards, which can complicate a bit of the task of getting the most out of a balance transfer.
Before proceeding with a bad credit balance transfer, you should be aware of the potential drawbacks, as well as the alternatives to consider. Let’s take a look at the balance transfer options for people with low credit, including some credit card recommendations.
Can You Get a Balance Transfer Card With Bad Credit?
You may qualify for a balance transfer card if your credit is low, but it’s important to set realistic expectations before you apply. You probably won’t receive an interest-free window, but you might have access to a lower APR than you are currently paying. Ultimately, a balance transfer can still help you save money on interest, albeit at a slower rate.
Either way, you really need to know where you are at before you go ahead and start comparing balance transfer card options. Before applying for a credit card with balance transfer, it’s important to check your credit score to see where it falls on the spectrum. FICO scores of 579 or less are considered poor, in which case you will have to search for a credit card for bad credit. But if your credit score is in the right range (580 to 679) or in the right range (670 to 739) or higher, you can check out the best 0 percent APR credit cards instead.
Best Balance Transfer Credit Cards For Bad Credit
Bad credit balance transfer credit cards can help save you money, but not all cards are created equal. Bankrate has compared all the major cards that offer balance transfers to consumers with imperfect credit, and here are the ones we consider to be the best:
Discover it® secure credit card
The Discover it® secure credit card allows you to transfer balances and pay an introductory APR of 10.99% for six months (followed by a variable APR of 22.99%). You won’t pay an annual fee, and you’ll even earn rewards on your purchases. Specifically, you’ll earn 2% cash back on up to $ 1,000 in combined gas station and restaurant spending each quarter and 1% on everything else. Discover will also match the cash back rewards you earn at the end of the first year.
A security deposit is required to receive the card (your deposit amount is equal to the line of credit you are approved for, up to $ 2,500), but it is refundable provided you close your account in good standing . Also note that you will pay a 3% introductory balance transfer fee and a fee of up to 5% for future balance transfers (see terms).
Capital One Secure Mastercard®
Another option to consider if you have low credit and want to transfer balances is the Capital One Secured Mastercard®. Remember that you will need to put a cash deposit as security to secure your line of credit. So you might be better off using that money to pay off your debt. Either way, this card is worth considering because you can see if you are prequalified online and without a full credit report investigation. There is no annual fee and you can start with a security deposit of just $ 49, $ 99, or $ 200.
Although the 26.99% variable APR applies to balance transfers, there is no balance transfer fee. This makes this card an option to consider for transfers if you have available credit and are currently paying higher interest rates than that.
Should you do a balance transfer with bad credit?
It may be possible to get approved for a balance transfer credit card if your credit score is bad, but that doesn’t necessarily mean the option is worth pursuing.
Chances are, you can only qualify for a secured credit card if your credit score is really bad. Because secured credit cards require a cash deposit as security, and your credit limit is usually at or near your deposit amount, secured credit cards aren’t exactly ideal for balance transfers. If you have the money to use as collateral for a secured credit card, then you’d better use it to pay off the debt you’re trying to consolidate instead.
Even though you can get approved for an unsecured bad credit credit card that offers balance transfer terms, that doesn’t mean going ahead is the best idea. Most bad credit credit cards don’t offer preferential interest rates on new purchases, let alone the ability to transfer debt to another card. Another downside is that you will probably also have to pay a balance transfer fee which will immediately increase your debt amount.
Unless you’re serious about paying off debt, transferring balances may not help you accomplish anything other than moving debt from one place to another. If you open new cards that give you more available credit and continue to spend normally, the balance transfer might even leave you with more debt to manage.
Alternatives to a balance transfer if you have bad credit
If you are not thrilled with the credit card options available to you, you have alternatives that are worth considering. These options might not be perfect either, but the ultimate goal should be to find a way to pay off debt faster so that you can move forward debt free.
Instead of trying to find a suitable bad credit balance transfer, consider the following options:
Debt Consolidation Loans
A personal loan can help you consolidate high interest rate debt with a fixed interest rate, a fixed monthly payment, and a fixed repayment period. Having a fixed payment each month can make your debt repayment plan easier, and bad credit personal loans often have much lower rates than credit cards.
Get a co-signer
If you cannot apply for a personal loan on your own, you may also consider applying with a co-signer. When you have a co-signer, family member or friend lend you their good credit to help you qualify. It should be noted that this option carries a risk, as the co-signers are jointly responsible for the repayment of the amount owed. If you don’t repay the loan, they will be forced to make payments or risk damaging their credit score.
Improve Your Credit Score
If you’re willing to wait awhile, it may be in your best interest to try and improve your credit score as quickly as possible before you apply for credit. Improving your credit score until it is within an acceptable range could help you qualify for better credit cards with lower rates and potentially even one of the best 0 percent credit cards. APR.
The bottom line
When it comes to bad credit balance transfers, just because you can benefit from them doesn’t mean you should apply. A balance transfer can be a useful tool for getting out of debt, but this move works best when you have a good credit rating and can qualify for a balance transfer card with higher rates and terms.