If you're struggling to manage multiple high-interest credit card debts or trying to improve your credit score, finding a balance transfer credit card with bad credit may seem impossible. However, don't lose hope – it is possible to find the right card for your needs, even with a less-than-stellar credit history. In this Flik Eco guide, we will break down the ins and outs of balance transfer credit cards for those with bad credit and offer advice on how to successfully transfer your balance, rebuild your credit, and achieve your financial goals!
Credit Cards For Balance Transfers With Bad Credit Table of Contents
Understanding Balance Transfers and How They Work
Why Is It Harder to Find Balance Transfer Cards With Bad Credit?
Understanding Balance Transfers and How They Work
A balance transfer credit card allows you to move your existing high-interest credit card debt to a new card, usually with a lower interest rate. As a result, you can save money on interest payments and pay off your debt faster. Here's how it typically works:
- You apply for a balance transfer credit card with a lower interest rate.
- Upon approval, you transfer your existing credit card balance to the new card.
- You pay off the transferred balance on the new card, often with a lower interest rate or even a 0% introductory offer.
Keep in mind that balance transfers usually come with fees, which are typically a percentage of the transferred amount (often 3%-5%). Make sure you consider these fees when calculating your potential savings.
Why Is It Harder to Find Balance Transfer Cards With Bad Credit?
Credit card issuers view your credit score as an indication of your risk level. A lower credit score typically means that the person is riskier to lend to, as they may have missed payments or gone into debt in the past. As a result, credit card companies are hesitant to offer balance transfer cards to individuals with poor credit because they see them as a higher risk.
However, not all hope is lost – there are still options available for those with bad credit. You just need to know where to look.
Tips for Finding Balance Transfer Cards for Bad Credit
- Search for secured credit cards: Secured credit cards require a deposit that acts as collateral. This can make it easier to get approved and may come with a lower interest rate than other cards aimed at people with bad credit.
- Work with a cosigner: Find someone with better credit who is willing to co-sign your application. This will give you access to better rates and terms, but keep in mind your cosigner will be responsible for your debt if you fail to pay.
- Research credit unions: Credit unions often offer more personalized customer service and approval processes. They may be more willing to provide balance transfer cards to members with bad credit.
- Consider a personal loan: If a balance transfer card isn't an option, explore personal loans. They often have lower interest rates than credit cards, and you can use them to consolidate your debt.
Credit Cards For Balance Transfers With Bad Credit Example:
Imagine you have $5,000 in credit card debt and your current card has an interest rate of 20%. After careful research, you find a secured balance transfer credit card with 3% balance transfer fee and an introductory 0% APR for the first 12 months. Here's how the transfer would work:
- You apply and get approved for the secured balance transfer card.
- You transfer the $5,000 balance from your current card, plus the 3% balance transfer fee ($150), for a total of $5,150.
- With the 0% introductory APR, you use the 12-month period to pay off the $5,150 without incurring any interest, as long as you make your payments on time.
This way, you save a significant amount on interest and even start rebuilding your credit score while paying off your debt faster.
In conclusion, finding a balance transfer credit card with bad credit may be challenging, but it's not impossible. By doing thorough research, you can find the best card to help you save money on interest, pay off your debt faster, and rebuild your credit score. If you found this guide helpful, feel free to share it with friends and explore other Flik Eco personal finance articles to stay on top of your financial goals.
