Credit Building > How can balance transfer cards help if you have bad credit?

How can balance transfer cards help if you have bad credit?

Wollit Team4 minute read · Updated 30th June 2024

If you have bad credit, finding a balance transfer card that suits your needs and is also affordable can be quite hard.

However, there are some options available that cater to people with a poor credit history. Let’s have a look.

How can a balance transfer card help me if I have bad credit?

A balance transfer card lets you transfer debt from one credit card to another, and usually gives you a period of time during which you can pay off the debt at an interest rate of 0%.

This stops credit card interest from ballooning, can help you save money on interest, and helps you pay off your debt faster.

If you have a poor credit history, a balance transfer credit card can be very useful to pay off some debt and make sure that you don’t miss any credit card payments, which would hurt your credit score even more.

Paying off your debt can also improve your credit score, not only because your credit utilisation goes down but mainly because now you’ll have a history of timely debt repayments.

However, balance transfer cards that are available for people with a poor credit history do have some drawbacks:

• Shorter 0% periods. Cards for those with poor credit often have shorter 0% periods, usually 3 to 12 months compared to up to 3 years for cards available to people with good credit scores.
• Higher fees. Cards for those with bad credit often come with much higher fees.
• Higher interest rates. After the promotional period ends, the interest rates on these cards are also much higher than for regular balance transfer credit cards.

In other words, you’ll need a clear plan to pay off your debt before the promotional period ends. Otherwise, instead of helping you, a balance transfer credit card can further add to your debt, and you can quickly find yourself in a debt spiral.

Which are the best balance transfer cards for bad credit?

Some of the best balance transfer cards for those with bad credit in the UK include:

• Virgin Money: Offers a 16-month 0% period with a 29.9% representative APR after that. You need a history of managing credit, even with past defaults or CCJs, and a yearly minimum personal income of £15,000.
• Fluid: Offers a 0% period of 9 months with a 34.9% representative APR afterwards. You need a minimum yearly personal income of £10,000 and two active lines of credit.
• Capital One: Offers a 0% period of 18 months with a 34.9% APR after it ends. You need a minimum yearly personal income of £10,000 and two active lines of credit.

While these cards have shorter 0% periods and higher fees compared to cards for those with good credit, they can still be pretty good for getting a breather from interest charges and paying off credit card debt.

You’ll need to make sure that you can pay it off before the promotional period ends, though. That 0% is only temporary.

What do I need to look out for when choosing a balance transfer credit card for bad credit?

The main factor, of course, is your eligibility. Not every card accepts bad credit applicants, and even the ones that do tend to have different criteria. Make sure to use the eligibility checker first to avoid having too many credit checks in a short amount of time. The last thing you need is your credit score being damaged even more by credit card applications.

Next you need to ask yourself if you can pay off the credit card debt before the promotional period ends. This is crucial if you want to avoid making a bad problem worse.

Finally, is the credit limit sufficient to cover your existing debt? How much debt can you transfer?

All of these things are important factors to consider when choosing a balance transfer credit card. The main goal, as mentioned above, is to pay off your debt before the 0% interest period ends.

How do I apply for a balance transfer credit card and what do I do with it once I have it?

To apply for a balance transfer card with bad credit, follow these steps:

1. Check eligibility: Use a credit card eligibility checker, which uses only a “soft credit check”, to see which cards you are likely to be accepted for. This will help you avoid multiple applications and limit the impact to your credit score.
2. Select a card that meets your needs. The most important factor will be the length of the 0% interest period, followed by the credit limit. APR also matters but you should budget to pay off your debt before you’re hit by new interest charges.
3. Apply. Be prepared to provide financial information and the amount you want to transfer.
4. Wait for approval. The credit card provider will also run a hard credit check.
5. Once you have your credit card, follow the instructions provided by your credit card provider to start the balance transfer process. Keep in mind that most balance transfer cards that accept bad credit applicants charge a balance transfer fee, usually between 2% to 4%.

What else can I do to improve my credit score?

A balance transfer credit card can be a great tool to make sure that your credit score doesn't become worse than it is already. This is because it provides a much needed breathing space for paying off debt without accruing additional interest.

However, if you want to improve your credit score you will need to plan ahead and look for a better tool than a credit card.

A credit card also works by requiring you to make purchases with it and then paying off those purchases on time. This is how a credit card can help you build credit.

The challenge is that there is always the risk of making purchases that you cannot afford to pay back on time, which means that you will then have a missed payment on your credit report, which lowers your credit score. You’ll also have high interest charges to pay.

A credit card is also risky because if you use too much your credit limit then it actually lowers your credit score instead of improving it. You don't even need to go over the credit limit for this to happen. Experience recommends you keep this credit utilisation ratio under 25%. Considering that most credit cards for poor credit have a credit limit of only a few hundred pounds you can see how it's very easy to go over it.

A better alternative is a specialised credit-building app like Wollit.

With Wollit, you only need to pay a fixed, affordable monthly subscription. Wollit then reports this subscription as a loan repayment to the credit reference agencies.

This directly builds your credit history and improves your credit score – while keeping you safe from high APR charges, maxed-out credit limits, or the risk of more debt.

More importantly, as your credit score increases, you’ll eventually become eligible for credit cards with higher credit limits, lower APRs, and higher 0% interest periods.

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