Credit cards for bad credit: balance transfer cards | finder.com

Digging yourself out of debt: Balance transfer options with bad credit

Bad credit interrupts life, but it doesn’t have to mean you are stuck. These deals are available toBalance transfer card terms explained people who have a poor credit history.

Rebuilding a poor credit history can seem daunting, but who says it has to be? If you are feeling trapped, you are not alone – there are thousands of Americans with bad or no credit history who are looking for solutions.

One solution is a balance transfer credit card, which allows you to move your existing debt onto a new card with a low introductory interest rate. If you can obtain a card with 0% interest for 6 months, that gives you time to pay down your balance without accruing interest. We’ll help you figure out how to decide if a balance transfer credit card is right for you.

Best balance transfer card deals for poor credit

Balance transfer cards can be very beneficial for those with less-than-ideal credit. They can reduce interest rates for a temporary period and reduce the time it takes to pay back the owed money. It is important to note, however, that the higher credit score you have, the better offers you will receive. It is usually considered poor credit if you have under a 619 credit score. Keeping that in mind, finding a balance transfer card that you qualify for can still lower your interest rate, and potentially save you thousands of dollars in interest charges.

Like all credit cards, balance transfer cards also come with risks you should be aware of. Many balance transfer cards have fees associated with the initial transfer of your debt to the card. The balance transfer fee varies by card, but is usually either a dollar amount, like $10, or a percentage, like 3% of the transaction amount (whichever is higher). Sometimes the fee is capped at an amount such as $75 or $200. Most balance transfer cards require at least fair credit, so if your score is well under 600, you may want to consider a secured credit card instead.

Comparison of Balance Transfer Credit Cards

Rates last updated February 25th, 2018
Name Product Product Description Intro APR for Balance Transfer APR for Purchases ( Purchase Rate ) Annual fee
UNITY Visa Secured Credit Card
Borrow up to $10000 and get your credit score back on track.
9.95% Intro APR for 6 months (with Whichever is greater: $10 or 3% balance transfer fee)
17.99% fixed
$39

Have we missed anything in the comparison table? Tell us

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Will I actually get approved for a balance transfer card with bad credit?

Lenders typically require you to have at least an average credit score to be approved for a balance transfer credit card. The better credit score you have, the higher likelihood that you will be approved for a card with great terms. If you have bad credit, many lenders will recommend building up your credit score with a secured credit card before applying for a balance transfer credit card. But all hope is not lost, because there are a variety of credit cards that will still accept those with bad credit.

Each provider and card will require different income and credit score requirements. Try to choose a card that advertises that it will accept poor or no credit history applicants. However, if your score isn’t up to the level you want it to be, don’t worry. Focus on improving your score other ways so you can eventually be approved for a balance transfer credit card.

What to expect for a credit limit

The credit limit that you qualify for will be based on your credit history, not the size of your debt. Take into account the balance transfer fee if you qualify for a $5,000 credit limit and want to use the full limit to transfer a balance but there is a balance transfer fee of 3%, you’ll use $150 worth of your limit on fees.

Will getting another card mean a lower credit score?

You can build good credit with just one credit card if you make consistent purchases, and pay your bill on time. However, opening another credit card could improve your credit utilization rate, which may have a positive effect on your score.

As the term implies, credit utilization rate just means how much of your available credit you’re using. So if you have a balance of $500 and a credit limit of $1,000, your credit utilization rate is 50% ($500 divided by $1,000).

Lenders like to see a low credit utilization rate; they want to see that you’re not anywhere close to maxing out your credit. So the lower your utilization rate is, the better it is for your credit score.

A balance transfer can help with that. Here’s an example:

  • You have a $500 balance on your current card. This card has a $1,000 credit limit. Right now, your credit utilization rate is 50%.
  • But when you transfer that $500 balance to another card with a $2,000 credit limit, now, your credit utilization rate is 25%.

With that 25% credit utilization rate, you’ll get a slight increase to your credit score.

With the pros comes the cons. When you open a new card, it lowers the average age of your credit accounts, and around 15% of your credit score depends on the credit age. Additionally, sometimes opening another credit card can increase the urge to overspend, thus plunging the cardholder further into debt. Keep on top of bills and due dates to avoid late fees. If you open multiple credit cards in a short period of time, it can lower your credit score. Do your research, choose wisely, and stick with a plan once you make your decision.

How is my credit score calculated?

Insider tip: What credit unions and banks get out of it

Balance transfer credit card offers are used as tools to attract you as a new customer. The introductory offers can be attractive and genuinely helpful from a debt management standpoint. But after the introductory period ends, interest rates will usually revert to a higher-than-average rate. Prioritize paying off your balance within the introductory period so you aren’t caught off guard when the intro rate ends.

How a balance transfer can help rebuild your credit

Most balance transfer cards have a 0% introductory APR for a period of around 6 to 21 months. Your debt won’t accrue new interest during this period, making it easier to get ahead and pay down your balances. Balance transfer cards report to credit bureaus, so you can strengthen your credit score as you pay off your debt. Each on-time payment will start building a positive history.

Choosing a credit card when your credit score is damaged

If you have a poor credit score for instance, under 619 you may only qualify for certain cards. Compare cards and look for terms like “no credit check” or “no credit history required.” If you can’t get approved for a balance transfer credit card, you can always sign up for a secured credit card and build a positive credit history.

The little things add up. The top factors you need to watch out for with bad credit are fees, higher interest rates, difficult loan approvals, and extra feees.

Balance transfer calculator

Your current credit cards:

Amount Owing

APR

Card 1

Card 2

Card 3

Card 4

Card 5

Card that you are transferring to:

Intro APR

Intro Term (months)

Ongoing APR

Balance Transfer Fee

Annual Fee

Your monthly repayment
$500

 
 
Critical
At this rate, you will not pay off your debt.
 
Recommended
At this rate you will pay off your debt during the card's intro period

At that rate you will not pay off your debt. You will need to make higher repayments.

Months that it will take you to pay off your debt:

With a balance transfer
12 months

Without a balance transfer
15 months

Money saved transferring debt to a balance transfer card:

Savings = $1,000

By moving forward with a balance transfer credit card and transferring the maximum amount, you could be saving $1,000 on fees and interest charges.
You will save an infinite amount of money as you will not pay off your debt on your current cards at that rate.
In this case, a balance transfer card is not the best option. You might want to consider a personal loan to help consolidate your debt. You can find out more here.
Disclaimer: Whilst every effort has been made to ensure the accuracy of this calculator, the results should be used as indication only. Certain assumptions have been made around the repayments made. This calculator is neither a quote nor a pre-qualification for a credit card

How low credit can change your life

We understand that having bad credit can impact your life. If you have credit card debt, you are not alone. In December 2015, Americans owed a total of $936 billion in credit card and revolving debt.

Caught in a debt cycle?

A debt cycle is when your interest rate is high enough that your balance increases every month, even though you’re paying the minimum payment. It may also mean that you have opened one or more balance transfer credit cards to help you in the past but weren’t able to pay down the debt during the intro period. Maybe you’ve also considered or have taken out a personal loan to try to consolidate some of your balances.

When you feel like you can’t get in front of your debt and it is dragging your credit score down, it can be hard to qualify for loans and even a rental lease. Additionally, those with a lower credit score who get approved for a loan can usually expect a higher interest rate. Typically, lenders will have stricter terms for those with less-than-ideal credit. Low credit can sometimes make it difficult to get an apartment too. However, just because bad credit can make things a little bit more difficult, it isn’t impossible.

What to o when credit collectors harass you

When we say “harrass,” we mean anything from repetitious phone calls (sometimes even without saying who’s calling), calling your workplace, or using profane language. If any of the above sound familiar, you can write a cease communication letter and request that they only communicate with you in writing. You can also contact your state’s attorney general, or sue the debt collector for violating the Fair Debt Collection Practices Act. Always keep a record of your communications with debt collectors.

More low credit options: prepaid debit or secured credit cards

Besides balance transfer credit cards, you can also look into both secured credit cards and prepaid cards. Both have their own pros and cons. These alternatives can help you reduce your rates and encourage you to cut back on expenses. Sticking to a budget on a prepaid card or secured card can also help you avoid having to borrow money from family or take out a loan.

Prepaid debit card pros and cons

Pro

  • Prepaid debit cards can be helpful in stopping excessive spending. Since you load up your card with the amount of money you choose before making any purchases, you don’t have to worry about going into additional debt with the card. You can use the prepaid card worldwide, and the approval process is usually quite simple. Prepaid cards are extremely easy to get for people with bad credit, and they can be used at ATMs, and for online and phone purchases.

Con

  • The biggest drawback is that prepaid cards do not report to credit bureaus, so they will not help you strengthen your credit. Additionally, watch out for reloading fees and other transaction fees.

Go to the debit card guide

Secured card pros and cons

Pro

  • One of the most prominent benefits is that it can help you build your credit history. Secured cards can teach new credit card holders how to establish credit and how use a credit card. Secured cards usually report to credit bureaus, which, if you pay on time, will help you build your credit.

Con

  • It is important to know that in order to get a secured credit card, you have to put down an initial deposit. This initial security deposit typically becomes your credit limit amount. Watch out for additional fees and potentially higher interest rates. Many people also feel like the initial security deposit is unfair.

See some of the top secured credit cards

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