If you’re committed to building your credit and paying off debt, you have options.
Rebuilding your credit can seem daunting — but it doesn’t have to be. If you’re feeling trapped, you’re not alone. Many Americans with poor or no credit are looking for solutions to improve their financial health.
One solution is a balance transfer credit card that allows you to move your existing debt onto a new card with a low introductory interest rate. A card with low interest for six months gives you the opportunity to make payments on your debt without the balance accruing interest. It’s just about finding the right tool for your situation
Our pick for low credit balance transfers: UNITY Visa® Secured Credit Card
Borrow up to $10,000 and get your credit score back on track.
Compare balance transfer credit cards for poor credit
What’s in this guide?
Are there 0% balance transfer credit cards for poor credit?
Typically, no. Balance transfer offers for a 0% APR are usually made to attract customers with higher credit scores and balances who are considered lower risk and able to steadily pay off their balances.
If you have credit score between 300 and 579, it could be difficult to find a balance transfer card in general. You’ll do better with a credit score of 580 or higher.
You could find a solution with a balance transfer card — but it likely won’t be at a 0% rate. High balances and APRs mean paying the minimum monthly repayments won’t help, but a lower interest rate could help cut some time off paying off your debt.
How to compare balance transfer offers
Balance transfer cards temporarily lower your APR so you can make a dent in your debt. Here’s what you can look for when comparing balance transfer offers:
- Credit score. Most offers require a credit score of 580 or higher, so carefully read the eligibility before you apply.
- APR. Look for an offer that has a lower APR than the credit card or loan you’re paying.
- Transfer fees. Many cards come with transfer fees between 3% and 5% of the amount you transfer.
- Length of offer. Low APR offers are only for a certain amount of time, then the APR is reverted to a higher rate. Compare if that reverted rate is lower than what you pay already to make the transfer worth it.
Will I be approved for a balance transfer card with poor credit?
It’s difficult to be approved for a balance transfer card with poor credit because lenders typically require a credit score of 580 or higher. To build your credit, look into a secured credit card. With good spending habits and on-time payments, you could improve your credit enough to get a good deal on a balance transfer card.
How another card can affect your credit score
You can build credit with just one credit card if you make consistent purchases and on-time payments. Opening another credit card could improve your credit utilization ratio, which may have a positive effect on your score.
Your credit utilization ratio is 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 ratio is 50% — or $500 divided by $1,000. Lenders like to see a low credit utilization rate, and experts recommend keeping it at 30% or less.
A balance transfer can help with that. Here’s an example:
- You have a $1000 balance on your current card. This card has a $2,000 credit limit. Your credit utilization rate is 50%.
- But when you transfer that $1000 balance to another card with a $3,000 credit limit, your credit utilization rate is 25%.
With that 25% credit utilization rate, you’ll get a slight increase to your credit score.
What to watch out for
About 15% of your credit score is determined by the age of your credit. That means that a credit card you’ve had since college actually looks good on your credit. Opening a new card can lower the average age of your credit.
The lure of a new credit card can bring the urge to overspend. If you open a balance transfer card in the hopes to get out of debt, make sure you don’t make any new purchases and pay your bill on time.
What credit unions and banks get out of balance transfer cards
Balance transfer credit card offers are tools to attract new customers. The introductory offers can be attractive and helpful to manage debt.
But once the introductory period ends, interest rates revert to a much higher rate. Prioritize paying off your balance within the introductory period so you aren’t caught off guard when the intro rate ends.
Can a balance transfer help rebuild credit?
Most balance transfer cards have a 0% introductory APR for 6 to 21 months. During this time your debt won’t accrue new interest, 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 credit score less than 600 you may only qualify for certain cards. 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.
Compare secured cards and look for terms like “no credit check” or “no credit history required.” Also consider the fees, interest rates and eligibility for these cards.
Alternative options for low credit scores
Besides balance transfer credit cards, consider looking into debt consolidation, secured credit cards and prepaid cards. These alternatives can help you reduce your rates, stick to a budget and encourage you to cut back on expenses.
- Simplifies monthly payments to one lender and one bill.
- Could lower your interest rates and monthly payments.
- Potential to pay off debt quicker.
- Doesn’t eliminate any of your debt.
- Could harm your credit utilization ratio if you close your cards.
Prepaid debit card
- Only spend money you have and avoid debt.
- Use them anywhere credit cards are accepted including online, stores, ATM and paying bills.
- Easy to get — no preapproval needed.
- Won’t pay interest on purchases.
- Don’t report to credit bureaus, so using them won’t improve your credit.
- Fees for reloading and transactions.
Secured card pros and cons
- You set your spending limit by paying a deposit.
- Learn how to manage credit with a predetermined credit limit.
- Most cards report to credit bureaus and can help build your credit.
- The initial deposit can be expensive.
- Can come with fees and high interest rates.
How low credit can change your life
We understand that having bad credit can impact your life. If you have credit card debt, you’re not alone. According to the Federal Reserve, Americans had $1.02 trillion in outstanding revolving credit in June 2017.
Caught in a debt cycle?
When your interest rate is so high enough that your balance increases every month, even though you’re paying the minimum payment, you’re in a debt cycle. This can happen if you’ve opened balance transfer credit cards and weren’t able to pay it off before the revert rate takes effect.
When you feel like you can’t get in front of your debt and it’s dragging your credit score down, it’s hard to qualify for loans. And if you’re approved, you can pay significantly higher APRs. Typically, lenders have stricter terms for those with less-than-ideal credit.
If you feel like you’re stuck in a cycle of debt, check out our guide to finding help managing debt for free.
What to do when credit collectors harass you
When collectors repeatedly call your home, work — sometimes not stating who they are — that can be considered harassment. Certainly you don’t have to put up with callers who use profane language or raise their voices.
If this happens you can write a cease communication letter to the debt collection agency requesting communication in writing only. You can also contact the CFPB or the Federal Trade Commission (FTC) for further guidance and support.
If you’re looking for a better way to manage your debt, you have options. When your credit is low, focus on building your score so you can get a credit card or loan with low APRs. Once you can qualify for a balance transfer card you’ll save money while paying down your debt.