How to make a balance transfer with bad credit

Bank of America content was last updated on April 1, 2022.

Balance transfer offers can make paying off credit card debt less costly if you can lock in a lower annual percentage over a long period of time.

There’s just one little catch: The best balance transfer cards are often for people with good or excellent credit. This does not mean that you cannot transfer the balance if you have bad credit. But you may have to work a little to find the right version of the card. These tips can help you find the best balance transfer options if your credit is less than ideal.

Can you get approved for a bad credit balance transfer?

Credit card companies carefully review credit scores to approve a balance transfer. There may be minimum score thresholds that must be met in order to qualify for a transfer offer.

The bar can be raised even higher during times of economic uncertainty. For example, in response to the coronavirus pandemic, many banks have become more cautious about issuing new loans.

These types of underwriting measures help credit card companies manage the risk of lending. But you won’t be automatically excluded from the balance transfer list if your score puts you in “fair” or “bad” credit territory.

“Getting a balance transfer with bad credit is difficult, but possible,” says Leslie H. Thain, consumer credit attorney and founder of Tayne Law Group. “However, it will be incredibly difficult to qualify for the most competitive zero-interest options.”

If you are interested in a balance transfer card for bad credit, it is important to understand that you may not be approved for typical promotional terms.

For example, instead of 0 percent per annum, you can still pay interest on balance transfers. The time period for repaying promotional rate balances may be shorter compared to balance transfer offers for good or excellent credit history. You should also be prepared for fewer cards to choose from.

“If you have bad credit, you will most likely not get approved for an unsecured credit card,” says Jared Weitz, CEO of United Capital Source.

This means you should focus on secure cards instead, which usually require a cash deposit.

Should you get a balance transfer card with bad credit?

Balance transfer offers can potentially save you money. But it is important to understand how much you can benefit from one if you have bad credit.

First, consider checking your credit report and credit scores with a free credit monitoring service. This can give you an idea of ​​which balance transfer offers you are most likely to qualify for. And as a guide, bad credit tends to be under 580, according to myFICO.

Then calculate the potential savings in percentage terms. This includes comparing balance transfer cards for bad credit history to see how the APR stacks up and how long you have to use that rate before the regular APR kicks in.

Even the lowest balance transfer card rates, if you have bad credit, can still be around 10 percent. And again, you may only have six months versus 12, 15, or 18 months to pay off the balance at this rate. If you are unable to pay off your balance within this time period, you may be charged a higher rate than before the transfer.

Next, consider the balance transfer fee. These fees can range from 3 to 5 percent of the transfer amount, leaving you with more debt to pay off.

“Balance transfer may not be the best way to deal with bad credit debt because you have to pay a balance transfer fee and still pay interest on your debt,” Thane says.

Using secure credit cards to complete a balance transfer can add another challenge.

To transfer your balance to a secured credit card, you will need to offer a cash deposit to open an account. Both Weitz and Thane agree that if you have money to deposit, it might make sense to use it to pay down debt and refuse to transfer the balance.

There can also be some sort of trade-off if you’re transferring debt from an unsecured card to a secured one, says Tyler Martin, a certified public accountant at the Martin CPA Group. If you make a large deposit to open a secured credit card for balance transfer and then default on the account, you won’t get that money back.

And even if you can find a bad credit balance transfer card with a favorable rate, your new credit limit may be too low to transfer the entire balance. In this case, you can request a higher credit limit, but you may need to look for a second card to cover the remaining amount you want to transfer.

Best Balance Transfer Cards for Bad Credit

If you’ve weighed the pros and cons and decided that transferring your balance is still a good option for debt management, it’s worth choosing the right card. This means that you need to consider whether the card is secured or unsecured, the annual percentage for transferring the equity balance, the regular annual percentage and the commission for transferring the balance.

To make your search easier, here are some of the best balance transfer cards for bad credit.

Discover Secure Credit Card

• Balance Transfer Offer: 10.99 percent of the initial annual interest rate for six months from the date of the first transfer (variable annual interest rate of 23.74 percent thereafter).
• Balance Transfer FeeA: An initial fee of 3 percent of the amount of each transfer with the initial balance transfer offer described above at 10.99 percent per annum. After that, 5 percent of the amount of each transfer.

You can open a Discover it® Secure Credit Card with a $200 to $2,500 deposit. Your deposit serves as your credit limit. In addition to transferring the balance, you can also use this card to receive rewards for purchases. You’ll receive a 2% cash back at gas stations and restaurants (up to $1,000 on combined purchases each quarter and 1% thereafter) and an unlimited 1% cash back on all other purchases.

Capital One Platinum Secured Credit Card

• Balance Transfer OfferA: 26.99% variable annual interest rate applies to all balance transfers.
• Balance Transfer FeeA: $0 balance transfer fee per year and $0 per year.

The Capital One Platinum Secured Credit Card requires a minimum deposit of $49 to $200, depending on your credit. But you can get a credit limit up to $1,000. This card does not have a rewards program and the annual balance transfer rate is on the higher side. But you don’t have to pay the balance transfer fee.

BankAmericard Secure Credit Card

• Balance Transfer Offer: 13.24 percent to 23.24 percent variable annual interest rate applies to all balance transfers.
• Balance Transfer FeeA: Either $10 or 3 percent of the balance transfer amount, whichever is greater.

A BankAmericard®* Secure Credit Card may be a good option if you need a higher balance transfer limit. The minimum deposit for the card is $200 and the maximum is $5,000. The deposit is returned. There is no bonus program, but you can use this card to build a positive credit history without paying an annual fee.

Balance transfer card alternatives

Balance transfer offers are not the only way to manage debt. If you have bad credit and can’t find a balance transfer card with attractive terms, here are a few options to consider instead:

Take a personal loan

Weitz says balance transfer cards are only really recommended if the amount is small and you can pay it off within three to six months. He offers a debt consolidation loan as a way to rationalize and pay off debt.

Debt consolidation personal loans give you a lump sum of money to pay off your credit cards. You will then make one payment on the loan in the future.

Ideally, you will receive a loan at a lower annual interest rate than you are currently paying without having to offer a deposit or collateral. Comparing personal loans for bad credit online can help you find the best loan deals.

Using your spouse’s loan

If you are married, ask your spouse to transfer the balance to one of his cards. They may qualify for better balance transfer terms if they have a good or excellent credit score.

Credit card companies may allow balance transfers between spouses. But keep in mind that shifting the debt to the spouse’s card places legal liability on him.

Earn extra money to pay off your debt

Try to find creative ways to make extra money and pay off your high-interest debt faster.

For example, you can start by selling things around the house that you no longer need. From there, you can move on to other types of side quests, including ones you can complete online or offline.

Even something like downloading a money back app can help you reduce your debt. Apps like Rakuten and Ibotta give you money back when you shop, which you can apply to credit card balances.

Work on improving your credit history

If you can’t find a great balance transfer deal because of your credit, a credit score upgrade can open up more opportunities. The best ways to improve credit are proven methods such as:

• Paying bills on time
• Keeping your credit card balance low compared to your credit limits
• Keeping old credit accounts open
• Using a combination of different types of credit
• Limiting the frequency of applying for a new loan

It may take some time to see results on your credit score. But it might be worth upgrading your account so you can qualify for better balance transfer deals.

bottom line

If you have bad credit due to past mistakes, transferring the balance can give you a fresh start. But it’s important to keep your credit history in perspective.

“If someone hasn’t changed their money habits, they usually make the problem worse,” says Martin.

So, don’t just focus on getting a better deal on your debt. Also, look at what led to bad credit problems to begin with. Addressing these issues with a debt restructuring can help you avoid repeating past credit mistakes, Martin says.

*All BankAmericard Secured Credit Card information has been independently collected by CreditCards.com. The Issuer has not provided the content and is not responsible for its accuracy.