Unable to do a balance transfer because of bad credit? Discover what you can do next to get your finances on track and apply for a balance transfer credit card
Balance transfer credit cards can be a great way to consolidate your debt and take control of your finances. However, you'll need to have good credit and a steady income to apply and receive approval. If you have bad credit and are unable to apply for a balance transfer, we've summarised four easy steps you can follow to improve your credit file and start consolidating your debts.
How does a balance transfer credit card work?
Balance transfer credit cards are used to move a debt that's collecting a high level of interest to a card with a low or 0% promotional interest rate. This low promotional rate will then revert to the standard interest or cash advance rate when the introductory offer ends. Before you go looking for a balance transfer credit card, take into account the amount you wish to transfer, your ability to repay and how you else you intend to use the card. Not all balance transfer credit cards work in the same way, so it's important to compare your options to find the one that'll offer you the most value.
Understanding balance transfer credit cards and bad credit
Most people decide to transfer their outstanding debts to such cards in order to enjoy reduced interest rates. However, credit card providers often don't approve balance transfer credit card applications from people who suffer from tainted credit files. Not all hope is lost though. There are other ways people with bad credit can work to consolidate their debts and improve their credit file.
Credit information can stay on your consumer credit account for up to (but not limited to) 5-7 years depending on the severity of a credit infringement. However, even if one payment has been received for overdue debts, the mark may remain on your credit report. Former overdue debts and late payments can have a negative impact on your ability to gain credit, which stresses the importance of keeping your payments and finances in order and paying your bills on time. Your chances of approval can be increased by repaying your outstanding debts and improving your credit file.
Repairing your credit file
If you're looking to apply for a credit card or balance transfer in the future, make sure you've spent the time repaying your debts and repairing your credit file before applying. Rejected applications can have a negative impact on your credit file, so you'll only want to apply for a balance transfer credit card when you meet the eligibility requirements and are likely to receive approval.
Four things you can do if you're unable to get a balance transfer
Get your finances and debt in order
The first step to consolidating your debt is understanding exactly how much you owe. Whether you use a pen, paper and calculator or an app such as the Pocketbook app, begin listing each debt you owe and include the interest it attracts to give you a full overview of how much you owe. You can then reorder the list and place priority on high-interest debts first. Now it's time to look at all of your expenses and start eliminating the ones you don't need. Examples of expenses to cut back on include magazine subscriptions, expensive internet plans, cable TV and gym memberships. Once you have an idea of how much you owe and how much you need to repay, you can start looking at your debt consolidation options.
Once you have an idea of how much you owe and how much you need to repay, you can start looking at your debt consolidation options. Learn how to use the Pocketbook app to take control of your money and expenses.
Compare and enquire about debt consolidation loans
If you're unable to apply for a balance transfer, a personal loan is probably your next best option. Most leading banks in Australia offer debt consolidation loans and these can help you combine your debts under the single account. You can then repay your entire debt with a single loan, meaning you'll only have to worry about a single payment each month. A debt consolidation loan can be a worthwhile way to repair bad credit because unlike a credit card, you won't have the temptation to spend.
A payday loan is another option for applicants with bad credit. The requirements payday loan are generally quite lenient and are less strict than credit cards. However, though the funds are generally quicker to access it should be noted that there are heavy fees involved and you need to pay it back in a much shorter period. Before applying, consider the fees and the period in which you'll need to repay your balance to calculate whether you can afford the loan.
Consider a credit repair service
While there is no guarantee that a credit repair service can completely fix your file, it still may help the overall status of your file. If you’ve filed for bankruptcy or something similar, these tend to stay on your file for a period of up to 5-7 years. Credit repair services can help you repair your credit file to get your finances back on track.
Balance transfer credit card comparison
Rates last updated July 26th, 2017.
- Citi Rewards Platinum Credit Card
Balance transfer offer has been extended until 31 July 2017.
June 30th, 2017
- Woolworths Everyday Platinum Credit Card
$100 eGift Card plus BT & annual fee offers have been extended until 30 September 2017.
July 1st, 2017
- American Express Explorer® Credit Card
Bonus points offer changed from 50,000 to 100,000, which is valid until 2 October 2017.
July 4th, 2017
Frequently asked questions from our users
I don't know the interest rate of my existing credit card. How do I find this out?
Go through your credit card statement. Alternatively, you can get in touch with your credit card provider and get the required information.
What is the minimum and maximum I can transfer to a balance transfer credit card?
Different banks have different minimum limits and you can expect to transfer as little as $500. When it comes to the maximum amount you can transfer, you normally cannot transfer more than the credit limit of the card.
Does the balance transfer feature attract a fee
Credit cards come with their share of fees and charges. When you undertake a balance transfer, the credit card provider tends to charge you a fee that is a fixed percentage of the amount you transfer.