Can you get a balance transfer card with bad credit?
A balance transfer credit card is a great tool for consolidating debt. Many even come with a 0 percent introductory APR that can help you save money and pay down debt faster. You may be able to qualify for a balance transfer card if you have poor credit, but it’s important to set realistic expectations before applying for one.
Consumers with poor credit — a credit score of 579 or below — can’t always qualify for the best 0 percent APR credit cards. With this score, you probably won’t receive an interest-free window, but you might gain access to a lower APR than you’re currently paying. Ultimately, a balance transfer can still help you save money on interest if you don’t have great credit. You may just have to do so at a slower rate.
Before you transfer a balance, you should check your credit score and understand the potential downsides, as well as alternatives to consider. Let’s take a look at balance transfer options for people with poor credit, including some credit card recommendations.
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 poor, but that doesn’t necessarily mean it’s worth pursuing.
Even if you can get approved for an unsecured credit card for bad credit that offers balance transfer terms, it may not be your best option.
You may qualify for a secured credit card with poor credit, but these cards aren’t exactly ideal for balance transfers. Since secured credit cards require a cash deposit as collateral, your credit limit is typically equal or close to your deposit amount. If you have the cash to use as collateral for a secured credit card, then you would be better off using it to pay off the debt you’re trying to consolidate instead.
Pros and cons of a balance transfer card when you have bad credit
Most credit cards for bad credit don’t offer preferential interest rates on new purchases. Another downside is that you’ll likely also have to pay balance transfer fees that will add to your debt amount right away.
It’s also important to remember that you should have a solid repayment plan in place. Unless you’re serious about debt repayment, transferring balances may not help you accomplish anything other than moving debt from one place to another. If you are opening new cards that give you more available credit and you keep spending as usual, transferring balances could even leave you with more debt to deal with in the end.
On the other hand, if you do succeed in getting a card that offers a lower interest rate than you currently pay, it may position you better to pay down your debt, even after paying a balance transfer fee. That’s provided you are disciplined in your card use.
Alternatives to a balance transfer if you have bad credit
If you can’t find a balance transfer card that fits your needs or your balance transfer application is denied, there are some alternatives worth considering. These options may not be perfect, but they can aid in your ultimate goal of figuring out a way to pay off debt faster.
Instead of trying to find a balance transfer that accommodates bad credit, consider the following options:
Debt consolidation loans
A personal loan can help you consolidate high-interest debt with a fixed interest rate, a fixed monthly payment and a fixed repayment period. Having a set payment each month can make your debt repayment plan easier, and even though you will still pay interest, personal loans for bad credit often come with much lower rates than credit cards.
Get a co-signer
If you can’t qualify for a personal loan on your own, you can also consider applying with a co-signer. When you have a co-signer, a family member or friend lends you their good credit to help you qualify. There is risk involved with this option since co-signers are jointly responsible for repaying the amount owed. If you default on the loan, they will be on the hook for making payments or risk damaging their credit score.
Improve your credit score
If you’re willing to wait for a while, it may be in your best interest to try and improve your credit score as quickly as you can before applying for any type of credit. Improving your credit score until it’s in a better range could help you qualify for better credit cards with lower rates and potentially even one of the best 0 percent APR credit cards. However, you should still do what you can to chip away at your debt balance as much as possible in the meantime.
Best balance transfer credit cards for bad credit
Balance transfer credit cards for bad credit might help you save money. Before applying, check out Bankrate’s balance transfer calculator to see how much you can actually save with this option.
But each card has its pros and cons. Among all the top cards that offer balance transfers to consumers with imperfect credit, and here are the ones we consider the best:
Discover it Secured Credit Card
The Discover it® Secured Credit Card lets you transfer balances and pay a 0 percent intro APR of 10.99 percent for six months (followed by a variable APR of 27.24 percent). You won’t pay an annual fee, and you’ll even earn rewards on your purchases: 2 percent cash back on up to $1,000 in combined spending at gas stations and restaurants each quarter and 1 percent 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 (the amount of your deposit will be the credit line you’re approved for, up to $2,500), but it’s refundable provided you close your account in good standing. Also, you’ll pay a 3 percent introductory balance transfer fee and up to a 5 percent fee for future balance transfers (see terms).
Capital One Platinum Secured Credit Card
The Capital One Platinum Secured Credit Card is another option to consider if you have poor credit. Just remember that you’ll have to put down a cash deposit as collateral to secure your line of credit with this card, too. But it is worth considering since you can see if you’re prequalified online and without a hard inquiry on your credit report.
There’s no annual fee, and you can get started with a security deposit of just $49, $99 or $200. While the variable APR of 29.74 percent applies to balance transfers, there’s no balance transfer fee.
The bottom line
Qualifying for a balance transfer card with bad credit can be tough, but it’s not your only option. There’s a good chance you’ll only be eligible for a secured balance transfer credit card, which requires a cash deposit, so you may be better off simply putting that cash toward paying off your debt.
If it seems like that would barely make a dent, consider other ways to consolidate. Focus on managing your debt with on-time monthly payments and work on improving your credit so you can qualify for an unsecured balance transfer card with superior rates and terms.
