You’ve done your homework and found the balance transfer card that meets your financial needs. You’ve scoped out an offer with a credit limit that lines up with how much debt you have, and you even know how much you need to repay each month in order to pay off your debt during the introductory no-interest period.
Your next step is to actually apply for the balance transfer credit card.
This comprehensive guide covers the important factors to consider in order to successfully apply for a balance transfer credit card. Learn about options that apply to your specific situation – your debt balance, the types of accounts you’re paying off, your current income and your credit history.
Scotiabank Value Visa Card
Scotiabank Value Visa Card
Purchase interest rate
Eligibility criteria, terms and conditions, fees and charges apply
Scotiabank Value Visa Card
Apply today and enjoy a 0.99% introductory interest rate on balance transfers for the first 6 months.
Purchase interest rate: 12.99%
Cash advance rate: 12.99%
Intro balance transfer rate: 0.99% for the first 6 months
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Steps to help you get your balance transfer approved
1. Check your credit score
Your credit history is one of the most important factors that credit card issuers use to decide whether or not your application is approved. While each credit card provider uses its own algorithm to assess whether you’re a risky borrower, certain clues in your credit report may help you predict how successful your application will be.
Credit defaults, late payments, court orders and bankruptcy are some of the red flags that could negatively affect the outcome of your balance transfer application. Sometimes there can be mistakes in your credit report too, which can and should be rectified by the credit reporting agencies.
With this in mind, it’s important that you request your free credit report and a copy of your credit score yearly to stay up to date. Making timely repayments, paying down your debt and other actions can help improve a bad credit score. Spend time repairing your current situation rather than applying for a credit card that you’re not eligible for and being rejected, which will damage your credit history even more.
2. Check your credit card balance
You’re going to need to know your existing credit card balance when you apply for a balance transfer. It’s important to get an exact idea of your card debt so that you can move the entire amount to your new balance transfer credit card if possible. Otherwise, you may be stuck with a balance and have difficulty closing off that account and making the payments on time.
Checking your balance online can be the easiest way to get this information, but your online balance may not reflect the total amount you need to pay in order to clear your account. Some account or interest fees may be pending and only added to your statement at the end of the month, which may not show up online until the next billing cycle. It’s safer to call your current credit card provider and ask them for the exact balance on your account.
3. Compare a range of balance transfer credit cards
This step may be the most important, as you won’t be able to find the right card for your financial needs if you don’t do your research and compare your options.
First, you’ll want to compare the balance transfer offer. Most balance transfer credit cards offer a promotional rate of low or 0% interest that typically lasts between 3 and 12 months.
Consider the amount of debt you have and make sure you can pay off the entire balance before the promotional offer ends. When the offer ends, a revert rate will apply – usually the standard interest rate for purchases or cash advances. Make sure that the length of the promotional period is long enough for you to pay off your debt in full, otherwise the remaining amount will continue to accrue interest. This can put you back into a cycle of debt.
Aside from comparing the introductory APR, you’ll also want to consider other features such as the annual fee, balance transfer fee and other interest rates to make sure that the cost of the card doesn’t outweigh the savings you’ll receive from your balance transfer.
One major issue stands in your way: your fear of rejection.
To make sure that you’re not applying for an offer that won’t work out, take a look at how credit card providers evaluate your application. By figuring out the criteria for a successful application, you can ensure that you receive the credit card you need and avoid damaging your credit score.
Once you’ve learned the factors that matter, you’ll have the tools to become a strong candidate and apply with confidence.
Five basic steps to improve your approval odds
Here’s how to make yourself a stronger balance transfer credit card applicant.
Make all minimum payments. Pay your minimum each month to get any outstanding loans out of default.
Pay down your debt principal. Use a big amount of money — like your tax return — to pick away at your principle debt and improve your credit utilization rate.
Refrain from closing old accounts. A credit bureau favours long relationships with credit card providers. Lengthen a relationship and improve your credit history by putting a card you no longer use in a drawer so that you’re not tempted to use it.
Stop using the credit cards you have. Bring your debt-to-limit ratio down as you make more payments. A low debt-to-limit ratio is better for your credit history, because it means you aren’t spending close to your allowable credit limit.
Track the accounts you already have. Write down the due dates, minimum payment requirements, interest rates and total amount owed. A credit bureau will favour those who make payments on time every month.
Recently applied and not sure about your application status?
Call your provider’s customer service line to find out if you’ve been approved or rejected – and ask why.
Will applying and getting denied for a balance transfer ruin your credit score?
Applying for a credit card typically involves a credit card provider inquiring into your credit score, otherwise known as “pulling your credit”, which could affect your credit score. However, neither applying nor getting rejected for a balance transfer will ruin your credit or make you ineligible for future cards.
What “pulling your credit” means
When you apply for a balance transfer card, the credit card provider will do what is referred to as a hard pull. This means that it contacts the two national credit bureaux, Equifax Canada and TransUnion Canada, to get your credit score. This action typically remains on your credit report for three years.
If you’re applying for one card, the impact of this inquiry on your credit history should not be significant – potentially lowering your score by only a few points. However, the more inquiries you make or the more applications you complete for different credit cards, the more points you will lose on your credit score.
Quick note: Your credit report may include soft pulls, which do not impact your credit score. Soft pulls refer to those situations where you check your own credit score or you are preapproved for a credit offer.
What an application denial does to your score
While multiple hard inquiries from credit card providers could negatively impact your credit score, getting denied for a credit card application should not. The denied account itself isn’t typically on your report, because the report is a record of opened or closed accounts.
However, if you repeatedly apply for more loans and credit cards, the inquiries on their own could hurt your credit score.
Can I use the same credit card provider to reduce my debt?
No. Let’s say you have the Scotia Momentum Card with a debt balance you can’t seem to reduce. You’re trying to get back on track and find an offer for a different Scotiabank credit card with a balance transfer promotion. It’s a different card, so you qualify for the deal – right?
Unfortunately, this isn’t how it works. You’ll need to apply with a different credit card provider to “move your debt”.
Credit card providers offer these deals because they’re competitors. They want to earn your business from a competing bank, not their own bank. To be considered for an offer, make sure you’re not applying to a company you already have an account with or one of its affiliates.
How do credit card providers make approval or denial decisions?
When you’re considering a new balance transfer credit card, you might scan the list of perks and then start reading about the eligibility requirements. Some of these will be easy to interpret, with clear numbers and simple bottom lines. As you move through the terms and conditions, however, things can get a little hazy.
Some of this is intentional: Credit card providers have their own special formulas for making decisions, and parts of that process are unique. Also, each applicant comes to a provider with different needs and credit histories. Due to these unique factors, a combination of “case evaluation” (which may work in your favour) and “set procedures” decides who qualifies, and who doesn’t.
You can gauge the strength of your application by looking closely at the following eligibility factors.
Your credit use, habits and history provide a record that allows credit card providers to see what you are like as a potential lender. Are you someone with a long credit history? Do you typically make payments on time, or do you have loans in default? To a provider, the answers indicate how you’ll behave as a future borrower.
As an example, let’s say you have an account balance but you pay it on time and have had a credit card for a few years. Does this mean you have good credit?
The process of building good credit is a little more complicated than that. Let’s check out the hard numbers.
What qualifies as good credit?
According to TransUnion Canada, 650 is the “magic middle number”, meaning anything above that is considered good to excellent credit, while anything below 650 typically means you may have some issues getting approved.
The higher your credit score and the better your repayment habits are, the more money a provider will be willing to loan you. Higher credit scores also tend to mean that your credit limit will be higher and your interest rate lower.
2. Amount and type of debt.
The balances you owe on other accounts is another hard number that credit card providers consider. In many cases, if you have a large balance it will be critical for you to have a good credit score in order to be eligible for the balance transfer. These factors will work together to prove to the provider that you will be able to pay off your debt balance each month.
The type of debt you have is another indicator of your ability to use credit responsibly. If you have a student loan or home equity line with low payments and low interest that you consistently pay on time, it offers a stronger case than having three store credit cards with maxed-out limits.
While carrying different types of debt won’t prevent you from being approved for a balance transfer, to providers it is another reflection of your spending habits.
3. Debt-to-income ratio
Your debt-to-income ratio compares two numbers side by side – the total amount you owe and the total amount you make. This results in a number that indicates to a credit card provider how significant your debt is. It also shows how capable you are of paying off your debt.
Debt / Income = Debt-to-income ratio
For example, it you owe payments of $1,100 every month and your monthly income is $4,000, you’d calculate your debt-to-income ratio like this:
$1,100 / $4,000 = 0.275
That 0.275 means that 27.5% — or almost a third of your income — goes toward your debts.
DEBT-TO-INCOME RATIO LEVELS
Under 15% = Good
15%–20% = Caution
Over 20% = Danger
A 27.5% debt-to-income ratio is typically in the debt-level danger zone.
A credit card provider will compare these two numbers to gauge your ability to repay the money you’ve borrowed, and whether you can handle borrowing more.
While your income is already covered in the debt-to-income ratio, it’s a significant factor on its own too. For instance, you may not have a large debt balance, but you could still have trouble paying your interest payments if your monthly income is not enough.
Again, this factor is an indicator to a credit card provider of how well you will manage to repay your debt with your new balance transfer credit card.
It’s entirely possible for you to lie on your application, but that doesn’t mean you won’t get caught. The number of accounts you have, the amount of debt you’re in or your monthly income may not be as desirable as you’d like, and throwing off the numbers might seem like a good way to overcome that. That’s almost certainly not the case though.
It’s more than likely your credit report will be checked and your income will be verified, which will give away any lies fairly quickly. Getting caught stretching the truth could be more than just embarrassing as the provider may blacklist you from future applications. In short: it’s probably better to get declined for your current situation than lie and wind up with even fewer options.
What to do when you get your balance transfer credit card
Once your application has been approved, you can expect your new credit card to arrive within 5–10 business days. You will need to activate your credit card, which can usually be done by calling the number on the card. This step will initiate the balance transfer process, which can take up to two weeks to be processed.
Use this time to tie up any loose ends with your old credit card. Check your old account for any other fees that may have popped up, pay them off and consider closing the account to avoid any future fees.
Now that you’re ready to get started on your balance transfer application, take your time and follow the steps we’ve outlined. Doing plenty of research and planning ahead will increase your chances of a successful application. Remember: when in doubt, always ask for help.
Yes. One of the advantages of balance transfers is the ability to consolidate multiple accounts into a single account. There may be limits on the amount you can transfer or requirements that prevent you from transferring balances between the same credit card provider, so read the fine print.
It depends. In some cases, you may not receive the low introductory rate. The reason is that transfer promotions usually have set rules defining when and how often transfers can occur. These rules are set in stone and cannot be changed. In the rare case that you pay off a transfer balance and years later find yourself in a similar situation, you might be able to qualify for another balance transfer with a different provider. You can also transfer balances to your new card after the intro period has ended, but you will pay a balance transfer fee. You may not get the introductory balance transfer rate; instead, you will be charged the purchase rate APR.
No. At the end of the day, the credit card provider decides if they want to lend you money or not. If you want more assurance after reading everything about the card, the credit card provider may be able to assess your eligibility before you actually apply.
Not necessarily. Processing the application can take between 3 -14 business days — and sometimes up to three weeks.
Adrienne Fuller is the head of publishing at Finder US. With a decade of experience creating guides in finance and education, she aims to deliver the accurate and transparent information she wishes she had when she made some of life's important financial decisions. For the past 3 years she has been the publisher of money transfers, helping readers save when they send money all over the globe. She has a BA from Colorado College and loves to hike with her two Catahoula dogs around her home in San Diego.
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