A low credit score can make it really tough to get approved for new credit cards or loans. And, high interest rates on credit cards and loans can make it take forever to pay off a credit card. This makes it tough for people with low credit scores to pay off their debt sooner. But what if you have heard about these special offers where you can transfer a balance from a high-interest card to a lower interest card? This is a great way to save on the sky-high interest fees of a credit card so could this work for you? We’ll show you the ropes if you’re asking yourself “Can I get a balance transfer card with bad credit?”
What is a Balance Transfer Card?
Balance transfer cards let you move debt from one credit card over to a new card. The key benefit is getting a 0% intro APR on transfers for a set period, often over a year. This pause on interest gives you more time to pay down the balance. Over time, this means you can save hundreds in interest. These offers are given to consumers who the creditors believe will pay off their credit over time.
Here is the bad news: with bad credit or a low credit score under 600, you typically can’t qualify for the best balance transfer cards that have $0 fees and long 0% payment periods. But there are still some options for a balance transfer if your credit is less than ideal.
Watch Out: Balance Transfer Offers With A Catch
Now, credit card companies are in the business to make money, and so they have found ways to market balance transfer cards to those with low credit scores. But there is usually a catch to these cards. For one, the balance transfer card might let you transfer your balances from several cards to one new card, but the interest rate will be higher. That’s no advantage to you– it just means you will pay more over time.
Another credit card aimed at consumers with low credit scores offers a promo interest rate on transfers. So at first this sounds like a good offer. But digging deeper, you’ll see that the promotional period is shorter than typical balance transfer offers, at 6 months. After that, the rate skyrockets to over 28% APR. That’s not going to help you pay off debt or save on interest fees.
Will You Get Approved for Balance Transfers With Bad Credit?
Each lender has different standards for approval based on your credit score, income, and other factors. Those with scores in the “fair” range (around 580-669) may get approved for cards meant for subprime borrowers. But it’s tough for consumers with a credit score below 580.
Before applying, check your latest credit score to figure out whether it is worth it for you to apply. Also note that balance transfer limits likely will be low with poor credit – often only a few hundred dollars. This may not help much if your debt is in the thousands. Make sure potential savings outweigh fees.
What Is The Cost For Bad Credit Consumers To Use Balance Transfer Offers?
Two key costs come with balance transfer cards for bad credit:
– Balance Transfer Fee – This is usually 3% to 5% of the transfer amount
– High APR After 0% Ends – The APR can be over 25%, and sometimes over 30%
So, if you accept a balance transfer card under these conditions, it is critical to pay off the full balance before high deferred interest kicks in. With bad credit, limits tend to be low. So avoid charging more while paying the transfer. Added debt makes balances tough to erase before rates spike.
Improve Your Credit First
A balance transfer card can provide temporary interest savings. But the big-picture goal is really to raise your credit scores so better financing options are available to you.
Here are smarter long-term strategies than risky and expensive balance transfers if you aim to pay off debts while your credit is bad:
– Enroll in a debt management program to secure lower interest rates from creditors
– Work with a debt counselor, or with a program like Cambio to help you get back on track.
– Explore a debt consolidation loan with fixed payments
– Look at credit builder loans to build better credit.
– Negotiate with your current creditors to get a lower interest rate. Cambio can help with this if you’re unsure how.
– Build credit through secured cards to qualify for better cards down the road
– Contact a non-profit credit counselor to get debt repayment advice
Better Credit Opens Doors to Balance Transfer Offers
The bottom line? Balance transfers with poor credit require caution. A more lasting solution is to work on options to pay off debt that don’t involve risky schemes that result in higher interest rates. You can use several strategies to lift your scores over time. First pay off your debt using one or a few of the options listed above.
Next, pay off secured credit cards to boost your score. After consistently working on your debt, then you can access transfers with longer 0% periods and lower interest and fees. Be patient, focus on credit health, and better options will soon be yours.
