A balance transfer cards could be useful if you’re overwhelmed by high interest rates or need to consolidate debt. However, you usually need a good credit score. Card issuers only want to take on your debt if they’re certain you can repay it.
Your credit score is one of the ways credit card companies determine how likely you are to repay your debt. If you have a fair credit score between 580 and 669, you could qualify for a balance transfer card, yet, you’ll likely pay more in fees.
What’s in this guide?
Fair credit explained
If you’re new to credit or working to get your credit back on track, you may find your score is in the fair range or between 580 and 669. You can still be approved for a credit card — but with a high APR and low spending limit. If your score is creeping up to the “good” range, work on building your score before making a big transfer. You could get better interest rates on loans, credit cards and even insurance rates in some states. Credit cards award good credit with offers of cash back, rewards and low interest rates. Credit bureaus consider the following when determining your credit score:
- The age of credit history — or how long you’ve had credit.
- How many credit applications you’ve recently submitted.
- Your payment history, including late and on-time payments, collection actions and judgments against you.
- Your credit utilization ratio, which is calculated by dividing your balance on existing credit cards by your available credit limits.
- How many installment loans, auto loans, credit cards, mortgages and other types of credit you have.
What to expect from balance transfer cards if you have fair credit
If you have fair credit, you won’t qualify for the best balance transfer card and could see high APRs and transfer fees. Consider the following when applying for a card:
- Don’t get fooled by the ongoing APRs. If you see APR terms advertised as “13.24% to 23.24%, based on your creditworthiness” realize that lower rates are reserved for those with good or excellent credit. If you have fair credit, expect to pay an APR closer to 23.24%.With APRs averaging around 16%, 23.24% is high. Try to pay off your transferred balance fully before your 0%-APR promotion
- There’s more at play than just your credit score. Credit card companies consider factors like your income and outstanding debt along with your credit score.
- Your credit limit may be lower than you expect. Credit card companies are in the business of making money, and their profits depends on customers’ ability to repay debt. They do this by setting credit limits to manage their risk. If you’re looking to transfer a large balance, your limit may be lower than you need.
Who is a balance transfer card good for?
If you’re considering a balance transfer card, you could be looking for financial fresh start. These cards can help you get your finances in order. Consider a balance transfer card if you’re looking:
- To save money. A low interest rate keeps more cash in your pocket, slashing unnecessary interest on purchases made long ago.
- To gets out of debt faster. Low interest allows you to pay down your debt more quickly, applying more of your monthly payment toward your principal balance.
- To simplify your finances.Transferring the balances of multiple debts can consolidate many monthly payments into just one bill.
How to compare cards
When you’re comparing cards you want to consider the following to make the balance transfer worth it:
- Introductory period. Most balance transfer cards offer a low or 0% APR for 6 to 24 months. Once it’s over, you’ll pay the a higher revert rate. Make sure you can pay off your balance before the introductory period is up to avoid paying too much in fees.
- Reports to credit bureaus. If you have fair credit, look for a balance transfer card that reports to the credit bureaus — Equifax, Experian and TransUnion. If you make regular on-time payments, you could reap rewards that come with a higher score.
- Fees. Consider what you’ll pay in fees. Some charge a high balance transfer fee between 2% and 4%, or high annual fees.
Compare balance transfer cards for fair credit
Your options for balance transfer cards can be limited if you have fair credit. Fortunately, you still have a few good choices. Here’s a list of the best cards on the market.
Applying for a balance transfer card
To apply for a balance transfer card, you typically have to be at least 18 years old, or 19 in some states. While you’re applying, have the following information on hand:
- Your name, residential status, and residential address.
- Your Social Security number.
- Your email address, phone number, and date of birth.
- Financial information like your annual salary and wages.
How to make the most out of a balance transfer card that requires fair credit
- Pay your balance. Make sure to pay off your balance before the introductory period is up to avoid a high revert rate. If you don’t you could end up paying a higher APR.
- Low APR. If you don’t qualify for a 0% APR period, make sure the APR, annual fees and transfer fees are lower than what you’re already paying.
- Don’t use the credit card. It may be tempting to use your credit card for new purchases, but if your goal is to pay down debt, put your balance transfer card away and focus on paying the balance.
- Make more than the minimum payment. It’s likely you won’t be able to pay off your balance before the end of the the 0% transfer offer only making minimum payments. Divide your balance by the number of months you’re offer is good for.
If you’re on the path to cleaning up your finances, getting a balance transfer card is a good place to start. Avoiding APRs — even for as little as six months — can save you hundreds of dollars to put towards debt. Consider your credit and financial situation before you decide on a balance transfer credit card.