Balance Transfer Credit Cards

It’s difficult for us to give specific advice on what to do to get accepted. The credit card issuers underwriting criteria (how they view and rate potential new customers) changes all the time as their business tries to play the market effectively, and as their experts digest the payment behaviour of the best and worst existing customers and react accordingly.

Credit card companies are however looking at two things when assessing your application.

Firstly, they want to know that you’re credit worthy; they assess this by looking at your credit score, and also your credit history with the credit reference agencies. Can you and will you pay the money back within the Terms and Conditions and on time?

Secondly, these days they’re looking very much at your potential profitability. Will you make them money? This is a hard one to judge, and they base all this on statistics which you’re unlikely to be able to manipulate! Clearly if you’re a regular Rate Tart, they may take this into account when assessing your application.

That said, if you want to stand the best chance of being accepted we’d advise you to:-

• Ensure that your name is on the Voters Roll at the address your financial statement are sent to
• Close unused bank or credit card accounts (read our piece closing old credit card accounts first)
• Take a look at your credit history and the financial information held on file by the credit referencing agencies. You can get a FREE copy of your credit report. Check that the information held there is accurate, and up to date. If you discover anything untoward or unexpected that may negatively impact on a new credit card application, get it straightened out before you apply for your new balance transfer deal.

You can also take a look at our 5 Top Tips for Improving Your Credit Rating.

There has been some commentary in the press that rate tarting has spoilt the balance transfer market. When balance transfer offers were first around in the UK, there was no balance transfer fee (typically now 2.5% to 3.3% of the balance transferred, 4% on money transfers). Card issuers introduced balance transfer fees to discourage people from just moving balances around between 0% balance transfer credit cards and never actually settling their debts.

However the latest crop of the best balance transfer deals are very competitive despite the balance transfer fee. With 0% interest on balance transfers for 24 months, the best 0% balance transfer deals are definitely still financially worthwhile.

If you apply for a new balance transfer credit card online from our site, it’s likely you’ll be asked if you want to make a balance transfer as part of the online application process. If you’re provisionally accepted online, you’ll then need to give more detailed information on the balance transfer in writing when the credit card issuer’s paperwork arrives in the post.

It’s likely that if you apply today online from our site, you will be given a real-time provisional indication if you’ve been accepted for the card you’ve applied for, or asked to provide more information.

The credit card issuer will consider your balance transfer request as part of the application process. If you’re accepted provisionally online, the credit card issuer will then write to you with the formal paperwork and you will have to give specific details of the balance transfer required, including the account details of where the money should be paid to if the process goes ahead.

Once you send the completed paperwork back to the new card issuer, providing everything is in order, and your new credit card is issued, there’s normally a 10 day waiting period between the issue of the new card and when the balance transfer is settled to allow the credit card company to carry out further checks and to prevent fraud.

It used to be the case that making purchases on a balance transfer card blew the benefit of the 0% balance transfer offer. This was before Positive Payment Order on all credit cards was law, which has gone some way to improving things.
Our advice on whether its good financial sense to use the same card for purchases as balance transfers will vary depending on the deal offered by the card you’re considering.

As a ‘rule of thumb’ if the card you’re looking at has a 0% on purchases offer and it’s the same length of time as the 0% balance transfer deal its OK to spend on. If they’re not the same time period, its probably best not to.

Most card issuers rules state that if they’re offering 2 different best 0% offers simultaneously, its OK for them to apply your monthly payments to balances with the lowest interest rate first. Therefore, if you had taken advanatage of a balance transfer offer, and then you started to spend on the card, your monthly payments would start to pay off the 0% balance transfer amount before reducing the amounts you’d later spent!

This should ring alarm bells, and obviously goes against the spirit of Positive Payment Order, but is a fact of life as the rules currently stand.

As good question, and the answer to that will depend on whether you can be absolutely sure of clearing the balance transfer amount within the period of the 0% period.

If the answer is definitely ‘yes’, you should be better of with the longest and best 0% balance transfer offer.

If the answer is ‘no’ or ‘not sure’ you may be better off opting for the reduced interest rate offered by the low ‘Rate for Life’ credit cards. They’re always listed in our best balance transfer tables near the bottom of the list, or you can look at our Low Interest Credit Card tables.

Nice try, but hard for us to give a specific answer on!

The credit card market is literally changing every day, and so lenders criteria’s and what they’ll offer you changes like the weather.

As a general guideline, those credit cards that are tougher to get accepted for will tend to offer a slightly higher credit limit. Those that accept people more easily will tend to offer a slightly lower initial credit limit.

In the current competitive balance transfer market it’s thought that MBNA are tougher for new applicants to get accepted for, but may ultimately give you a higher limit. Barclaycard maybe easier to get accepted for, but may offer you a lower initial credit or balance transfer limit.

If you apply for a new card, and you’re accepted but with a lower credit limit than you’d like, there’s nothing to stop you appealing to the card issuer. It maybe that if you supply more information, or answer some queries they were unsure on in the application process, they would offer you a higher limit.

Not normally. Although the balance transfer fee can look as if it spoils an otherwise perfect opportunity, if you take into account the money you’ll save in interest on your balance transfer, it’s not such a bad deal.

If you really can’t stomach the balance transfer fee, take a look at the Barclaycard Simplicity Credit Card. Low rate for life and no balance transfer fee!

The financial motivation for looking at a new 0% balance transfer deal is to reduce the overall cost of your interest payments, this may or may not reduce the cost of your monthly minimum payments depending on the minimum repayment profile of the new credit card you’re looking at.

If you’re doing this to be better off, and you can afford your existing monthly payments for your existing outstanding balances, if you keep paying the same monthly amount to your new balance transfer card, this should reduce your overall debt much more quickly.

Remember to get the maximum of your 0% balance transfer offer, you need to clear the outstanding balance you transfer before the 0% period is up. Or be switched on enough to move any outstanding balances to a new balance transfer deal before the 0% period is up.

Allow up top 2 months to do this if necessary, and make sure you don’t forget the critical date!

A lot of consumers who apply for balance transfer deals and new credit cards are currently disappointed by the credit limits they get offered.

Average credit limits have reduced over the last 4 years because of the credit crunch, and because lenders want to limit their exposure to risk.

Banks and credit card companies are also under political and press scrutiny over responsible lending, so it’s common for people to not be offered as high a credit limit as they’d like or would have been say 7 or 8 years ago.

This means you may have to apply to apply for more than one 0% balance transfer credit card to accommodate your existing interest bearing balances. If you need to do that, you should consider closing old credit card accounts that you’ve transferred balances from.

Before you close old accounts, read our advice on closing old credit card accounts.

This is because in assessing you for another credit card, lenders will look at your overall available credit position against your circumstances. If you have credit cards that have zero or low balances, it won’t help your chances of getting accepted for a new balance transfer deal.

Credit card companies are obsessed with making customers profitable like never before.

Many banks and credit card houses have introduced ‘risk based pricing’ which means when they assess your application they may look at you and say they’re happy to have you as a customer, but they will only have you on a slightly less favourable interest rate. This is quite common, and will be just because there’s something in your credit score or credit history that isn’t as good as they’d like.

It’s also possible that they could offer you a completely different credit card or package for the same reason.

If you apply for a new credit card, and you’re accepted by the card issuer, but offered a lower credit limit than you want or requested, you can appeal to the credit card company reiterating the credit limit you desire.

It maybe that if you offer them more in depth information, or can offer more detailed proof of income levels or secondary earnings, they could offer you a higher limit.

There are many different factors that credit card companies take into account when considering applications for new cards. It could be that you do indeed have an unblemished credit history, but there may just not be enough history of your managing credit in your credit file for the lender to feel comfortable making their decisions on.

It could be that from the lenders perspective, you already have as much credit as they would want to offer you with your other outgoings or financial commitments.

It could be that there’s something in your credit score which isn’t compatible with the lending profile the card issuer has set for the particular credit card you’re looking at. Most credit card companies won’t offer you credit if you aren’t registered on the Voters Roll.

Although it’s not a good idea to repeatedly apply for new credit cards, or successive loans if you’ve been turned down recently, each lender does have a different viewpoint and credit scoring system.

If you’ve been turned down, and you’ve checked there are no ‘nasties’ on your credit file, it could be worth applying to another credit card company to see if they look at your case differently!