Balance Transfer Offers With Bad Credit

A balance transfer credit card can help you improve your finances, but it comes with a lot of risk. On one hand, these cards usually give you a period of low-or-no interest on some debt. On the other hand, they have highly complex rates and fees that can be confusing and pricey.

On top of that, creditors often require you to have excellent credit scores to qualify. So even if you have “fair” credit — FICO credit scores up to roughly 670 — there’s a good chance you’ll be denied. If you are approved, the card is not likely to have the features you want.

What Is a Balance Transfer?

A balance transfer is the act of moving debt from one credit card to another. This can be done by using any credit card that allows you to make balance transfers, although some cards are better suited for it than others: namely, balance transfer credit cards.

Balance transfer credit cards often give you 0% promotional APR on the balances you transfer to the card. But the promotional offer is only for a limited time after you open the account, and you’ll have to pay a balance transfer fee of 3% or 5% of the amount you transfer.

These are some reasons you might consider applying for a balance transfer card:

• Move your debt to an account with a lower APR
• Take advantage of a promotional balance transfer offer
• Reduce your monthly debt payments

Challenges of Balance Transfers with Bad Credit

When your credit scores are low, your options for new credit cards are limited. These are some specific challenges you can expect to face when applying for a balance transfer credit card with bad credit:

• Approval is unlikely: There aren’t many balance transfer credit cards available for scores below 670. Applying might seem harmless, but it can reduce your credit scores even further by adding hard inquiries to your credit reports.
• Shorter intro period: Your promotional APR offer is likely to be short, meaning you’ll have less time to pay off the debt before facing high APR.
• Ultra-high APR: After the low-or-no APR period ends, there’s a good chance you’ll have higher interest rates than you do now. Currently, balance transfer credit cards that accept credit scores as low as 580 have shockingly-high APR ranges, between roughly 20% and 30%.
• Low limits: The worse your credit scores, the lower your limit on the card will be, and you might have an even lower balance transfer limit. Both issues can make it difficult to transfer a significant amount of debt.

Options for Balance Transfers with Bad Credit

There’s no doubt your options for a balance transfer credit card will be limited if your credit scores are low. One way to narrow your search is to use Experian’s balance transfer credit card search tool, and set the filter to “Poor” or “Fair” credit. Here are some other ways to find balance transfer credit cards for bad credit:

Credit Unions

You might find it easier to qualify for a credit union credit card than a bank-issued card. On top of that, credit unions could offer you significantly lower interest rates. Federal credit unions are required to cap their rates at 18%. The Consumer Financial Protection Bureau also reports that the interest rates from the 25 largest credit card issuers are 8-10 points higher than small and medium credit unions.

Secured Credit Cards

For some people, a secured credit card that allows balance transfers can be a good solution. You don’t need good credit scores to qualify for secured credit cards. Instead, you qualify by making a cash deposit. But your limit will match the deposit amount, so your limit on the card may be low.

Just know that, while the APR on these cards might be lower than your current card(s), it’s uncommon to get 0% APR offers. However, you might still find a secured credit card that gives you a window of time with a reduced rate on your balance transfers.

Subprime Credit Cards

You might be considering a subprime credit card, but we don’t recommend it. A subprime credit card is a card designed specifically for applicants with low credit scores, generally meaning FICO scores below 670.

These cards can be attractive since the majority of them come with rewards. But remember, rewards motivate you to spend more money.  Subprime cards also tend to have monthly or annual fees and low card limits. In late 2022, the average limit on subprime credit cards was $2,200.

Tips for Improving Approval Chances

If you can take the time to improve your credit scores, you’re more likely to get the credit cards you want. In addition to practicing good financial habits, like paying your debts each month, here are a few ways to maximize your scores:

• Accelerate debt payoff: The faster you pay off debt, the faster your scores will improve. A few ways to speed up the process are to ask your creditors if they’ll lower your interest rates. You can also use the debt avalanche method, which involves prioritizing the debt with the highest APR.
• Authorized user: Ask a loved one with good credit to add you to their credit card as an authorized user. When they do, their account information will contribute to your scores.
• Limit your applications: Look for credit cards that offer preapproval. With preapproval, you get a quote on your credit card terms without causing a hard inquiry into your credit scores.

Alternatives to Balance Transfers

If you’re not able to qualify for a balance transfer credit card, and you can’t find any other way to manage the debt, you might be a good candidate for a debt relief program. Here are a few to consider:

Debt Management Programs

Opening up a balance transfer credit card isn’t the only way to manage debt. For a more lasting solution —  and one that doesn’t require good credit scores — consider a Debt Management Plan (DMP)

DMPs are debt payoff plans offered by nonprofit credit counseling agencies. If you qualify for one of these plans, you can potentially have your credit card APR reduced to around 8%, consolidate multiple accounts into one monthly payment, and pay off your debt in 3-5 years.

Credit counseling agencies charge a set-up fee and a monthly account maintenance fee for these programs, and some charge much higher fees than others. But legitimate, NFCC-certified agencies offer fee waivers based on income.

Nonprofit Debt Settlement

Nonprofit debt settlement is a solution for people who are behind on their debt payments. When you go this route, you work with a nonprofit credit counseling agency that places you on a monthly payment plan for 36 months. At the end of the plan, a set amount of your debt is forgiven, up to 50%.

These payment plans do come with monthly fees and they can do some damage to your credit scores, but they’re one of only a few reliable solutions for people who are already behind on debt payments.

Peer-to-Peer Lending

As an alternative to credit cards, you might look for loans that accept bad credit, including from peer-to-peer lenders (P2P).

P2P loans are made possible by individual investors who pool their money to provide loan funds. During their short history (they’ve only been around since 2005), these loans have been available to “high-risk” borrowers, which includes people with bad credit. P2P loans sometimes have lower interest rates than bank loans, too.

Personal Loans

Another loan option to consider is a personal loan. These loans, which don’t require any collateral, have far lower APR than credit cards. That means you could save money by using a personal loan to pay off credit card debt. In early 2024, the average APR on a credit card was 21.59%, versus just 12.49% on a 24-month personal loan.

The main downside is that, like credit cards, your credit scores will impact your ability to qualify. One way to qualify for better personal loans, however, is to apply with a cosigner.

Another drawback is that, unlike credit cards, personal loans have set loan payoff dates. That means your monthly loan payments could be much higher than the payments on your cards.

Bankruptcy

If you’re simply unable to repay your debt, bankruptcy could be a last resort. Bankruptcy is a legal process that allows you to have some or all of your debt forgiven. While it can give you a financial fresh start, it comes with long-term consequences.

Chapter 7 bankruptcy (liquidation) stays on your credit reports for 10 years and Chapter 13 (reorganization) stays for seven years, and both types cause a severe loss of points that can take a few years or more to gain back. You also have to pay filing fees and attorneys fees.

From Challenges to Solutions

As you can see, having bad credit limits your options, but you still have a few solutions to choose from. Even if you’re declined for balance transfer credit cards, there are other ways to consolidate debt. You can also seek help from a nonprofit credit counseling agency in navigating your options. Before you make your choice, take the time to examine the true cost to your wallet and your credit scores.