5 Options for When a Balance Transfer Credit Limit Isn’t Enough
You took the initiative to pay down your high-interest card debt and applied for a 0% balance transfer credit card. Only, now you discover that the balance transfer limit on the card isn’t high enough to transfer all your debt. What do you do?
Unfortunately, when you apply for a balance transfer credit card there’s no guarantee you will be approved for a high enough credit limit to transfer your full balance. That’s when it’s time to get a little creative. Here are some of your options, along with pros and cons of each, so you can make the right decision based on your financial situation.
What to look for when applying for a balance transfer card
When comparing balance transfer cards, consider:
- How long the 0% introductory period is (generally anywhere from six to 21 months)
- If there is a balance transfer fee (usually between 3% and 5% of the amount transferred, which is added to your balance)
- How high of credit score do you need to qualify
- Card terms after the introductory period expires
First and foremost, you want to give yourself ample time to pay your balance. Some cards offer a year and a half of 0% interest. The one thing you won’t know until you are approved for a card is how big your credit limit will be. If you don’t qualify for the amount you need, you’ll have to come up with a Plan B.
Creating a balance transfer backup plan
If the credit limit you’re given is only a fraction of what you need, you still have options.
Option No. 1: Ask the card issuer for a higher credit limit
“You can always ask the issuer to reconsider the credit limit that they’ve assigned you and see if there’s any room to increase the ceiling,” says Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling (NFCC).
Having strong credit puts you in a better position to get an increase, but you should be prepared for a rejection. Nevertheless, it never hurts to ask. If you do make such an inquiry, ask whether the issuer will have to pull your credit (known as a hard pull) again to accommodate the request. If so, know that your credit score will take a small temporary hit. But it may be worth it when considering your overall debt payoff goal, and your score will rebound as your card balances decrease.
| Pros | Cons |
|---|---|
Costs nothing Higher credit can boost your chances of approval Higher credit limit can come through quickly | Not guaranteed Your credit score may take a hit |
→ Learn how to increase your credit limit
Option No. 2: See if your existing card issuer has a balance transfer offer
You may be able to transfer your balance over to a card you already own. (Keep in mind, you can’t transfer balances between cards from the same issuer.)
If you go with this option, you’ll have to deal with two balance transfer offers. As long as the APRs on both are substantially lower than what you’re currently paying, you’ll save money. When dealing with two balance transfers, your goal should be to pay off both totals before the promotional interest rates expire.
Another benefit of working with an existing issuer is that you may be able to avoid a hard pull on your credit report — just be sure to clarify this with your issuer before you transfer your balance. Plus, according to McClary, you could even get improvements on your existing card like a higher credit limit or a temporary reduction on your regular purchase APR.
| Pros | Cons |
|---|---|
You may not have to get a second balance transfer credit card Potentially avoid a hard inquiry on your credit | You may end up with two balances to pay off Juggling multiple payments may be challenging |
→ Did you know? Credit card issuers grant 76% of lower APR requests.
Option No. 3: Consider applying for another balance transfer card with a different issuer
If you strike out on a balance transfer deal with your existing card issuer, you can try your luck with another issuer. However, applying to multiple credit cards can trigger hard inquiries, which hurt your credit score and can affect your chances of getting approved for a new card.
That hit may be worth it if you’re not in the market for a big loan any time soon, such as a mortgage. Hard inquiries will only knock your score down by about 5 points each time, and the impact only lasts a year. Plus, with the added credit lines of a couple of new cards and your debt eliminated, your credit score should actually increase.
If you do end up being approved for two new balance transfer cards, you can split your existing debt between them. You might put more on the card with the longer introductory rate so you have extra time to tackle it. Or, you might do an even split so you’re not maxing out either card’s utilization. No matter which route you take, the more important goal is to complete both payoffs without incurring interest charges.
| Pros | Cons |
|---|---|
Your credit score can improve in the long term Extra time to take advantage of introductory rates | Applying to multiple credit cards will trigger hard inquiries, which can damage your credit score in the short term |
→ Learn how opening a new credit card affects your credit score.
Option No. 4: Max out the balance transfer card; keep the rest where it is
Say you have $10,000 in debt. From a mathematical point of view, if you move even half of it onto a 0% APR card and pay it off within the no-interest period, you’re still in better shape, says Mike Sullivan, a personal financial consultant with Take Charge America, a national nonprofit credit counseling and debt management agency. “If you can’t transfer 100% of the balance, it doesn’t negate the value of the balance transfer,” he says.
As for credit score implications, Sullivan says not to worry much. While maxing out the credit line of a new account can cause your score to dip, your total available credit is also increasing, which can give you a boost.
For example: Say you had an original credit limit of $20,000 and a balance of $15,000, therefore utilizing 75% of your credit. If you open a balance transfer card with a credit limit of $10,000 and move that much of the original balance over, even though the new card is maxed, your total available credit has grown to $30,000. Therefore, you’ve lowered your overall credit utilization ratio to 50%.
| Pros | Cons |
|---|---|
Only one balance transfer card to keep track of Fewer hard inquiries necessary | Part of your balance is still accruing interest May take you longer to pay off your full balance |
→ Discover how the debt snowball method can help you pay off debt.
Option No. 5: Consider applying for a debt consolidation loan
If you decide not to use a balance transfer card, you may still be able to tackle your entire debt at a lower interest rate via a debt consolidation loan. Chances are you will be able to find a rate lower than the one on your current credit card (if you have a decent credit score).
While it’s not quite as attractive as a 0% balance transfer rate, having a fixed monthly payment and a debt-free finish line could make your goal more attainable. Plus, you are more likely to find a debt consolidation loan to cover your entire card balance, rather than having to resort to splitting the debt between a couple of cards.
The key is to shop around for the best possible terms and avoid falling back into bad habits once you have your loan. “The scenario I’ve seen far too often is that someone will consolidate their debt with the best of intentions. Fast forward a year, and they still have a consolidation loan, but they’ve run their credit card balances back up,” says McClary.
| Pros | Cons |
|---|---|
Simple monthly payments Could cover your entire balance, where a balance transfer credit card might not | Not available at 0% APR You may lose the incentive of paying it off quickly before interest kicks in like you would a 0% APR balance transfer |
→ Read more about debt consolidation loans
When you should consider a balance transfer card
According to LendingTree’s balance transfer credit card survey, nearly 4 in 10 people (39%) fail to pay off the full balance during the introductory period.
That’s why before you open a balance transfer card, you should figure out if you can pay your debt before the interest kicks back in, says Sullivan. “Ask yourself: Can I pay this balance off while I’m getting the introductory rate?”
To figure that out, divide your balance by the number of months in the introductory period offered by the card you’re looking at to see what your monthly payment should be to get to a zero balance within the promotional time frame.
If you transfer $10,000 to a card with a 0% APR for 21 months, you’ll pay $477 per month
If you transfer $7,000 to a card with a 0% APR for 21 months, you’ll pay $334 per month
If you think you can swing that amount, you’ll have a higher likelihood of success and save the most money.
See how much interest you can save
Balance transfer credit card options
If you’re looking for a second balance transfer credit card, one of these may be a good fit for you, due to their long introductory periods:
Citi Simplicity® Card
Citi® Diamond Preferred® Card
Wells Fargo Reflect® Card
Should I do a balance transfer?
Now that you know your options, it all comes down to two main balance transfer card considerations:
Consider the short-term benefits
- How much will you save by moving all or some of your current balance to a 0% interest card?
- Will you be disciplined enough to stay on track?
- Use the balance transfer calculator above to help you crunch the numbers.
Consider the long-term benefits
- Is your new card a product you can live with once your debt is paid off?
- Does it come with extra fees?
- Are there rewards that add to its overall value?
The Discover it® Cash Back and Citi Double Cash® Card are good examples of cards with both short- and long-term value. In addition to the balance transfer deal, they have robust cashback programs.
The bottom line: If you can pay off your debt — even a portion of it — at a lower interest rate, you’ll save money. But no matter which route you take, you must stick with your payoff game plan to end up in better shape than when you started.
The information related to the Wells Fargo Reflect® Card has been independently collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply.
The content above is not provided by any issuer. Any opinions expressed are those of LendingTree alone and have not been reviewed, approved, or otherwise endorsed by any issuer. The offers and/or promotions mentioned above may have changed, expired, or are no longer available. Check the issuer's website for more details.