How to find the best balance transfer cards for fair credit
Fight fire with fire by using a balance transfer card to pay off high-interest credit cards.
Contributing Writer at Tally
November 11, 2020
Credit card debt can put stress on your finances and become a long-term problem. Fortunately, there are many ways to combat credit card debt and come out debt-free. One option is to use balance transfer credit cards.
Balance transfer credit cards offer lower interest rates for a fixed period, and you can use that lower rate to help you pay off your credit card debt faster. However, if you only have a fair credit score, it can be challenging to secure a balance transfer card.
We'll show you what to look for in balance transfer cards, the best balance transfer cards for fair credit and some of the pitfalls of using a balance transfer card. But first, let's take a closer look at what a balance transfer credit card is and how a fair FICO credit score can impact your options.
What is a balance transfer credit card?
Balance transfer cards are like any other credit card, but they have one distinction: You can transfer balances from other credit cards onto balance transfer cards and take advantage of their low introductory APR.
The intro APR is a low interest rate — generally 0% to 5% — for a fixed promotional period. The fixed promotional period varies between cards, but it’s often 12-18 months, though it can be as short as 4-6 months.
Once the promotional period ends, so does the intro APR. At this point, the interest rate increases to the balance transfer card’s standard percentage, meaning you'll pay regular APR from that day forward.
A balance transfer credit card can help you by letting you transfer high-interest credit card balances to it, saving you money on interest charges and potentially helping you pay off your debt quicker.
How your credit score affects your options
Your FICO credit score is based on your credit history. If you have a fair credit score, you likely have a few negative indicators on your credit report, like past late payments, a high credit utilization ratio or short credit history.
Negative marks on your credit report are red flags for credit card companies. They indicate there's a risk you won't repay your debt.
If you have a fair FICO credit score, some credit card companies may view you as too risky and deny your credit application. As a result, you may not get the best balance transfer credit card terms.
Balance transfer credit cards for fair credit may have less favorable terms, including a higher intro APR, annual fees, high balance transfer fees or shorter promotional periods. Despite these less favorable terms, they may still be a better option than paying the regular APR on your current credit cards.
What to look for in a balance transfer credit card
When searching for balance transfer cards for fair credit, there are several options. Here’s what to look for when choosing the best balance transfer credit card for you.
Lowest intro APR
The main benefit of a balance transfer credit card is its low intro APR offer, so you want to maximize this by finding the card with the lowest APR. With fair credit, you’ll likely have limited 0% APR options, but there may be offers in the 1% to 5% APR range.
Longest promotional period
A long APR promotional period is another factor in choosing the best balance transfer credit cards for fair credit. The longer the promotional period, the more time you have to pay off the balance.
The promotional period makes an even bigger difference if you qualify for a 0% APR balance transfer credit card. With the combination of no interest and a long promotional period, you can stretch your payments over the entire introductory period, reducing your monthly payment while incurring no interest.
Lowest balance transfer fee
Balance transfer cards offer you a lower interest rate, but they come at a cost. Most charge you a 3% to 5% balance transfer fee on the amount you transfer. So, if you transfer $1,000 from a high-interest credit card to a balance transfer card, you’d pay $30-$50, depending on the transfer fee.
When using a balance transfer credit card, the balance transfer fee is likely the highest fee you'll pay. The balance transfer fee will vary between credit card companies, so read the credit card terms carefully.
No annual fee
An annual fee can cut into your interest savings on a balance transfer credit card. Review the credit card terms to verify there's no annual fee. If all your options have an annual fee, pick the card with the lowest one.
Some credit card companies will defer the annual fee for a year. If you plan to use the balance transfer credit card for just a year, you can cancel it before the credit card company charges the annual fee.
Some balance transfer credit cards offer cash-back rewards you can use as account credits or toward gift cards, travel accommodations and more.
It’s rare to find credit card companies that will offer cash-back rewards on balance transfers, but the cash-back option adds to the card’s overall value since you can use it in the future for these perks.
Where to look for balance transfer credit cards
Balance transfer credit cards are relatively easy to find. Credit card companies often send offers to existing cardholders and potential new customers. Here are some places you can find balance transfer card offers.
In your wallet
Sometimes you don't even need a new card to get a balance transfer offer. You may have one in your wallet already.
Check your existing cards for promotions by logging onto the credit card company’s website or mobile app and locating the offers page. Here, you can find options you're eligible for, including balance transfer cards.
In your mailbox
Credit card issuers often mail balance transfer offers to those who are likely to get approved. People with good credit see these offers often. But with fair credit, such offers might be few and far between. Even if they're rare, it's worth keeping an eye on your mailbox for balance transfer credit card offers.
On the internet
If you’re not getting any offers on your credit card company’s website or by mail, a quick online search for "balance transfer cards for fair credit" will turn up some options. While it’s convenient to compare multiple cards in a short period, be sure to read the fine print before agreeing to a balance transfer.
Potential pitfalls of a balance transfer credit card
Balance transfer credit cards can be beneficial, but there are some potential downsides to using them too. Beware of these potential pitfalls when looking for a balance transfer credit card.
Paying off the balance too quickly
If you pay a balance transfer credit card too quickly, that balance transfer fee you paid could end up costing more than the regular APR on your current credit card.
For example, if you have a $1,000 balance on a 19% APR credit card, you’d pay about $15 per month in interest. If you transfer that $1,000 to a 0% balance transfer card with a 12-month promotional period and a 5% balance transfer fee, you'll immediately incur a $50 balance transfer fee.
If you plan to pay off the 0% balance credit card in just three months, you’d still pay the $50 balance transfer fee. However, if you left that balance on the original credit card and paid it off in the same three months, you’d pay roughly $45.
Not paying enough per month
When you use a balance transfer credit card, your goal is to take advantage of its low or no interest rate. The lower interest rate will also likely reduce your minimum monthly payment, which may entice you to pay just the minimum.
Suppose you fall into the habit of making only the minimum monthly payment every billing cycle. Or maybe you didn't calculate how much you should pay every month to pay off the card before the intro period expires. This would leave you with a remaining balance at the end of the intro period that you’ll pay interest on moving forward.
Not reading the credit card terms
Any time you apply for a new credit card, read the terms, check for annual fees and understand the balance transfer fee before accepting the offer. Compare these fees to the amount of standard interest your existing credit card would charge you during the promotional APR period to determine if you’ll save money with the balance transfer credit card.
For example, say you have a $1,000 balance on a 19% APR credit card and plan to transfer it to a 12-month 0% APR balance transfer credit card with a 5% balance transfer and a $150 annual fee. The balance transfer and annual fees add up to $200, whereas you'd pay less than $190 in interest on your existing credit card over the same 12-month period. In this case, the 0% balance transfer card isn’t the most economical route.
Not enough available credit
When applying for a balance transfer credit card, the credit card issuer sets your credit limit based on your credit history and existing debt.
If you lack the available credit to pay off the entire balance on a high-interest credit card, you'll be stuck making payments on an interest-bearing card and the new balance transfer card.
Late payments can void intro APR
When a credit card company offers a special APR, it comes with specific terms. One of those terms may be forfeiting the intro APR if you make a late payment — even if you pay just one day after the due date.
Not only will you get hit with a late fee, but you'll also lose the benefits of lower interest.
If you miss two or more payments, the credit card issuer can go a step further and apply a penalty APR, which can be as high as 29.99%.
How to perform a balance transfer
There are two main ways to transfer balances from one card to another: online or through a mobile app and via check. Both are fairly simple processes.
Perform a balance transfer online or on the mobile app
Log into the balance transfer credit card's website or mobile app and find the balance transfer area. Within the balance transfer area, choose the offer you'd like (if multiple options exist).
Then, enter the information from the credit card you'd like to transfer from, including the name on the card, credit card number, billing address, expiration date and any other required details. Enter the amount you'd like to transfer. Read and accept any terms, then submit the request.
It could take a few days to a week for the transferred balance to show on the original credit card and the balance transfer card. Continue making payments on your old credit card until the balance transfer is complete.
Perform a balance transfer with a check
Some balance transfer options include checks that you can use for almost any purchase. You can also use these checks to pay off existing credit card debt.
Fill out the check, making it to the credit card company you wish to pay off, and mail it in with your monthly statement. It may take a few days to a week to process the check, but the transfer will show on the original credit card and your balance transfer credit card.
Always continue making monthly payments on your credit card until the balance transfer posts to the account.
Best balance transfer cards for fair credit
Finding the best balance transfer card for fair credit is a balancing act between finding a credit card company that will approve you and still offer favorable terms. When making your decision, consider the annual fee, balance transfer fee, promotional APR period and any cash-back rewards.
Most balance transfer credit cards require excellent credit, but we found one that offers a 0% balance transfer and may accept your fair credit.
Aspire Platinum Mastercard
The Aspire Platinum Mastercard accepts applicants with fair to good credit, so you may qualify for it. The downside is that it requires you to join the Aspire Federal Credit Union.
The terms of this platinum card are as follows:
Intro APR: 0%
Intro APR period: Six billing cycles
Balance transfer fee: 2% or $5 minimum
Annual fee: $0
Regular APR: 8.15-18% (variable APR)
Foreign transaction fee: 1%
Rewards program: None
Balance transfer credit card alternatives
Most of the best credit cards that offer 0% balance transfers require excellent credit, so you may have to resort to alternative debt payoff methods. Though you won’t get the savings of a 0% APR balance transfer credit card, you can still save money with these alternatives.
Debt consolidation loan
A debt consolidation loan is a personal loan that often has a lower interest rate than your credit cards. You can transfer your high-interest-rate credit cards to this loan, saving you on interest charges and reducing the number of monthly payments you have.
Though your fair credit may limit the number of debt consolidation options you have, some specialize in these types of credit situations.
Line of credit
A line of credit is similar to a debt consolidation loan in that it's a lower-interest loan you can use to pay off high-interest credit cards. However, unlike a debt consolidation loan, a line of credit like Tally is a revolving account you can use multiple times to pay off several accounts
Negotiate with the credit card company
You can also reduce your interest rates by calling the credit card company and negotiating a lower rate.
Call the number on the back of your credit card and let the representative know you're considering transferring your balance to a lower-interest-rate credit card. Ask if they can offer you a lower rate to keep your business. Chances are, they’ll work with you.
Use the debt avalanche or debt snowball method
The debt avalanche and debt snowball credit card repayment methods don't actively lower your interest rates. However, they can reduce the amount you pay in interest charges overall. You can do this by paying more than your minimum monthly payment on one credit card at a time until you're debt-free.
The key difference between these methods is that debt avalanche pays off your highest-interest-rate debt first, while the debt snowball prioritizes your lowest credit card balances.
Balance transfer credit cards help you save cash
One way to stabilize your personal finances is to keep your interest payments as low as possible — and balance transfer credit cards can play a significant role in this. They allow you to roll high-interest credit card debt to new credit cards with low or no interest, saving you money.
When searching for the best balance transfer credit cards for fair credit, you must:
Pay close attention to the intro APR, annual fee, balance transfer fee and promotional period length of any balance transfer card you’re considering
Watch your mailbox, search the internet or even check your existing credit cards for 0% APR balance transfer deals
Understand the pitfalls of a balance transfer card
Have several alternative debt-repayment plans if a balance transfer card isn't an option
With this knowledge in place, you’re ready to explore all the balance transfer credit card options for fair credit and choose the one that suits you best.