You need a credit score of 700 or higher on the 850-point FICO credit scoring scale to have a good chance at being approved for a good balance transfer credit card. Most 0% balance transfer credit cards require at least “good credit” for approval. There are exceptions, though. If you’re a student, there is no minimum credit score needed for a balance transfer credit card. Some student credit cards offer great balance transfer deals and don’t require applicants to have any prior credit history. Other than that, however, the selection will be limited.
Credit card companies generally don’t want to take on a customer’s debt until they have proved themselves reliable to repay amounts owed. Good credit seems to be the proven threshold for major credit card companies. You’ll find cards with 0% balance transfer APR periods from all of the 10 biggest credit card companies right now. For example, the Chase Slate card requires “good” credit or better for approval and offers 0% for 15 months on balance transfers, with a $0 balance transfer fee. That makes the balance transfer free for 15 months, since there’s no annual fee either.
It’s much harder to get approved for a balance transfer card with below-average credit. People with limited or no credit history could be in luck, however, if they happen to be in school. Some student credit cards offer 0% APR periods on balance transfers, such as the Wells Fargo Cash Back College card (0% for 6 months) and the BankAmericard student card (0% for 21 months).
People with “fair” credit—640 to 699—who meet certain criteria, such as being in the military, could potentially qualify for a balance transfer deal as well. USAA offers several credit cards with 0% APR balance transfers to people with fair credit. But the cards are only open to applicants who are USAA members, meaning people who’ve been in the military or who have eligible military family members. For example, the Wounded Warriors USAA Rewards card only requires fair credit and USAA membership, and offers 0% for 12 months on balance transfers.
Aside from that, some credit unions also offer balance transfer credit cards for fair credit. Credit unions are membership-based nonprofit organizations, and usually have specific requirements for becoming a member. If you qualify for TDECU membership, the TDECU Classic Mastercard offers 0% for 12 months on balance transfers with a $0 balance transfer fee, which is a good deal. So, consider looking for credit unions in your area that offer balance transfer cards if you have below-average credit.
People with bad credit scores, or scores under 640, won’t have much luck finding a balance transfer credit card that will be of much help. Unsecured cards for bad credit do exist, but you’ll usually pay a steep price in fees for even having these cards, and they typically don’t allow balance transfers. If you have bad credit, you should start rebuilding your credit with a secured credit card. Use the card responsibly and steadily make on-time payments, and over time, you’ll have a score that will qualify you for a better credit card.
Recently been approved for a new credit card with a 0% interest balance transfer offer? This introductory rate often only lasts for a short, predetermined period. After that, the interest rate on balances will certainly go up.
So how to transfer a balance from one credit card to another? Here are 10 steps on how to transfer a credit card balance from an old card to a new one with a lower rate.
Key Takeaways
- Choose one or more cards with the highest rates and transfer those balances first, if the new credit limit permits.
- Read the small print and note the balance transfer fee.
- The terms will generally require completion of the balance transfer within a certain number of days, usually 60 days from account opening.
1. Choose the Balances to Transfer
How to transfer credit card balances to another card? First, a consumer should make a list of all credit cards, including the balances and interest rates charged on those unpaid balances. Choose one or more cards with the highest rates, and transfer those balances to save on interest.
The balance doesn’t have to be in the consumer's name to qualify for a transfer, so if someone's new spouse has a high-interest credit card balance and they have excellent credit, a 0% APR balance transfer offer can pay off an old balance and help a couple start over together with lower debts.
2. Calculate the Fee
Read the fine print and note the balance transfer fee. This expense will have to be paid upfront on the amount transferred. The fee is typically around 3% (or $30 for every $1,000) transferred but can run as high as 5%.
With the new, lower interest rate, will a cardholder still come out ahead after the balance transfer fee? Use a free, online balance transfer calculator to do the math.
3. Understand the Penalties
Transferring a balance at 0% still requires a minimum monthly payment on the balance to keep the promotional rate. A key question: What interest rate kicks in if a cardholder loses the 0% rate because of a missed payment? Will the penalty rate be worse than what the cardholder was paying before the transfer? A consumer has to make an honest assessment of their payment history before taking such a risk.
4. Know When the Promotion Ends
For how many months is the 0% rate valid (which can run for 6, 12, 15, 18, or even 21 months)? If planning to pay off a transferred balance during an introductory period, a cardholder should calculate whether they're likely to be able to pay it in full during that time. If not, what interest rate kicks in when the promotional period ends? If the rate is variable, how high can it go and how often can it change?
5. Watch the Time Limit to Transfer
If opening a new credit card account to take advantage of a 0% annual percentage rate on transfers, a cardholder should realize that the terms will require completion of the balance transfer within a certain number of days to receive the promotional rate, typically within 60 days after account opening. Complete the transfer the day after that window closes and the regular balance transfer rate takes effect.
6. Meet Transfer Requirements
A balance transfer cannot be done if the new account is with the same company that's owed the balance. Also, a past-due payment with the creditor that will receive the transferred balance, or if the cardholder has filed for bankruptcy, may block the transfer.
7. Decide How Much to Transfer
Check the credit limit on the new card; a balance transfer can't exceed the available credit line. Also, balance transfer fees count toward that limit. For example, if a cardholder has $10,000 in available credit, they won’t be able to transfer a $10,000 balance with a 3% balance transfer fee. They'd need $10,300 in available credit to complete the transaction.
8. Determine the Destination of Funds
Should the funds go directly to the high-interest credit card to pay off any remaining balance? In some circumstances, the cardholder can deposit the check into their bank account, but this is tricky. Make sure the credit card spells out that the funds deposited to a bank account will not be considered a cash advance. That could trigger high interest in the transaction.
Ask questions before transferring a credit card balance. What interest rate kicks in when the promotional period ends? If the rate is variable, how high can it go and how often can it change?
9. Follow Creditor Instructions
Each credit card company will have its own instructions for completing a balance transfer. Here are some options:
Balance transfer checks. The new card issuer (or issuer of the card the balance is being transferred to) supplies the cardholder with checks. The cardholder then makes the check out to the card company they want to pay. Some credit card companies will let the cardholder make the check out to themselves, but make sure this doesn't constitute a cash advance.
Online or phone transfers. The cardholder gives the account information to the credit card company to which they are transferring the balance and that company arranges the transfer of funds to pay off the account. For example, if you are paying off a $5,000 balance on a high-interest Bank of America Visa card and transferring that balance to a Citi MasterCard with a 0% APR balance transfer offer, you would provide Citi with the name, payment address, and account number for your Bank of America card, and indicate that you want $5,000 paid to that Visa account.
Direct deposit. The cardholder needs to have ready the bank account and routing number of the account into which they want to deposit the balance transfer funds.
10. Watch for the Transfer to Clear
Keep an eye on each old account with a balance that's being paid off to see when the transfer clears. In the meantime, don’t miss any payment deadlines on those accounts and avoid late fees.
Allow at least two to three days (and up to 10) for the new creditor to pay off the old creditor. Each creditor has its own time frame for completing a balance transfer. Keep an eye on the new account to see when the balance has transferred, and consider closing the old account to avoid the temptation to use it again and accrue more debt.
However, if you've had the old card for a long period, it might be best to leave it open and be diligent about not racking up additional debt. The reason has to do with your credit score, which is impacted by the length of your credit history. Closing the account could shorten your credit history and negatively impact your credit score.
The Bottom Line
Transferring high-interest debt to a 0% interest credit card can be a good way to save money and make it easier to pay off a balance. Following these steps, along with changing spending habits, can help a consumer end up more financially healthy than before the balance transfer.