If you’re dealing with high credit card debt and struggling to repay your balance, a balance transfer credit card could provide some much-needed relief. However, many balance transfer cards have relatively steep credit requirements -- typically you need a FICO credit score of at least 670 to qualify. But what if you have a lower credit score?
While there are a handful of niche balance transfer card options for fair or bad credit, in most cases, it’s more affordable to turn to a debt consolidation loan or credit card payoff strategy.
Here’s what you should know about balance transfers if you have fair or low credit, and how these offers stack up to alternatives.
What is a balance transfer?
A balance transfer involves moving the balance of one credit card to another, ideally to a credit card that has a lower interest rate. You can then work to pay it down without stressing about expensive interest charges.
Most (but not all) balance transfers require a balance transfer fee to complete, which is tacked on to the total balance. The industry standard balance transfer fee is 3%, but it could be as high as 5%. However, paying a balance transfer fee is usually worth it when you compare the cost to paying numerous interest charges.
Who should consider a balance transfer?
In theory, a balance transfer can help anyone with credit card debt repay their balance interest-free for a period of time. But the best balance transfer offers are typically reserved for those with good credit, which means if you have a lower credit score, you’re less likely to find a good balance transfer option. In this case, you might consider an alternative solution to pay down your debt.
Better solutions to pay down debt if you have fair or bad credit
If you’re struggling to repay credit card debt and can’t qualify for a balance transfer card, you could consider a debt consolidation loan, personal loan or a debt payoff strategy.
Debt consolidation loan
A debt consolidation loan is a type of personal loan that’s usually easier to qualify for than a credit card and typically offers a fixed interest rate that’s lower than most credit card APRs. This type of loan lets you consolidate your debts into one monthly payment, making it a little easier to manage. You also may qualify for a longer repayment period -- up to seven years in some cases -- to give you more breathing room to pay down your debt. And since payments are fixed, you won’t have to worry about your monthly payments increasing over the span of your term (as long as you pay your loan on time each month).
Personal loan
If you can’t qualify for a debt-consolidation loan, a personal loan is another option to consider. Personal loans may have even lower credit score requirements and also often have lower interest rates than credit cards. You’ll receive a lump sum that can be used to pay off your credit cards, and then focus on paying down the personal loan amount in fixed payments each month.
Debt payoff strategies
Depending on the size of your debt, it may not make sense to take out another credit account. Instead, you can focus on paying down your debt by creating a repayment strategy. Two popular methods include the debt snowball and the debt avalanche method.
The debt snowball method has you focus on the debts with the lowest balance first, while still paying your minimum amount due on all accounts, and then moving on to your next highest balance once the first is paid off. It’s better suited for people who prefer to see results faster, with smaller wins growing their confidence to tackle larger debts.
However, the debt avalanche method will likely save you more money. It requires paying the minimum on all debts and tackling the debt with the highest interest rate first. Once that’s paid off, you’ll go after the next highest and so on. It requires more patience, but you’ll typically pay less in interest overall.
Tips for building your credit so you can qualify for a balance transfer card
If you’d like to qualify for a balance transfer credit card in the future -- just in case -- you’ll want to work on your credit.
Your credit is how lenders determine how trustworthy you are as a lender, and it also affects the kind of terms you get for credit products. With higher credit, you’ll typically get approved for better credit cards and other credit products, typically with lower interest rates. Here are some tips to help you build up your credit score once your debt is repaid.
- Make all of your payments on time and in full. The simplest way to build credit is to make all of your monthly loan and credit payments on time. Your payment history contributes the most to your credit score, so building a long list of positive payments will go a long way toward building your credit.
- Keep your credit debt low. Your debt-to-credit ratio, or credit utilization, also has an impact on your scores. Typically, keeping your credit utilization below 30% will have the best effect on your credit.
- Don’t apply for too many credit products. Each time you apply for a new credit product, it’ll likely result in a hard credit check. Hard credit checks will usually lower your credit score temporarily by a few points.
- Become an authorized user. If someone you know -- who you have a good relationship with -- is responsible with credit, you could ask about being added as an authorized user on their account. Any positive credit they have will then affect your credit as well.
Building credit doesn’t happen overnight. It’ll likely take about six months before you begin to see results, but in some cases, it could take even longer.
Credit score ranges
Here are the credit score ranges for the two most popular credit scoring models, FICO and VantageScore.
| FICO | VantageScore |
| Poor: 300 to 579 | Very Poor: 300 to 499 |
| Fair: 580 to 669 | Poor: 500 to 600 |
| Good: 670 to 739 | Fair: 601 to 660 |
| Very Good: 740 to 799 | Good: 661 to 780 |
| Exceptional: 800 to 850 | Excellent: 781 to 850 |
How to apply for a balance transfer credit card once your credit score is higher
Once you’ve improved your credit scores and are ready to apply for a credit card, consider taking a look at our picks for the best balance transfer cards. Follow these steps once you’ve found a credit card that matches your needs.
- Fill out the credit card application with the required personal and financial information. Take your time and answer as truthfully as you can. Any discrepancies could result in a pending application status or denial.
- Once you’ve received your card, initiate any balance transfers as soon as possible. Some cards have limited windows to qualify for introductory offers or fees.
- Pay down the balance within the given time frame. If you don’t, your balance will begin to accrue interest at the standard rate.
Make sure you’re still making any required payments on the card you’ve transferred the balance from. Balance transfers aren’t instant, and you don’t want to miss any credit card payments.
The bottom line
A balance transfer offer can help you mitigate existing credit card debt -- but balance transfer credit cards often have high credit requirements. While there are a handful of balance transfer cards for fair or bad credit, be sure to also explore alternative debt repayment options. Look into a debt-consolidation loan or debt payoff strategy, then focus on building up your credit score.
FAQs
While you could, there are very few options worth considering. They mostly include student cards or niche credit union cards that have membership requirements.
The industry standard balance transfer fee is 3%, but it could be as much as 5% for certain cards. Some cards do not have balance transfer fees in exchange for shorter promotional periods, but you’ll generally need good to excellent credit to qualify.
In most cases, the cost of a balance transfer fee will pale in comparison to what you would pay in interest if you didn’t transfer a balance. There are balance transfer cards without fees, but more often than not they offer shorter promotional periods compared to balance transfer cards with a transfer fee. However, do the math to see how much you could save and how much you would pay in fees for your specific situation before you open a card or transfer a balance.
Initiating a balance transfer won’t affect your credit, but paying down a high credit card balance could lead to a better credit score.
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