5 Things to Do if Your Balance Transfer Limit Is Too Low
Two steps forward, one step back. Does that describe your experience with paying off credit cards? You make your minimum monthly payment, the balance goes down, then interest is assessed a few days later. The balance creeps back up again.
That’s a best-case scenario. If you’re over your credit card limit, there’s an additional fee. If you’re late, there’s a charge for that also. It’s a vicious cycle but one that you don’t have to get stuck in. Becoming debt-free shouldn’t be this difficult.
You can’t lower the principal without debt restructuring, but you can lower the interest rate on your balances by doing balance transfers to other credit cards with better rates. Unfortunately, there’s usually a limit to how much you can transfer. If yours is too low, here are some things you can try.
Option #1: Transfer as much as you can
If you can’t transfer your entire balance, at least transfer as much of your high-interest balance as you can. Many credit card companies offer a 0% introductory interest rate for 12 to 18 months. Transfer the maximum, pay it off, then transfer again if allowed.
There is typically a balance transfer fee of 3-5%, so be prepared for that. You’ll also max out the new credit card when you make the transfer, so there may be a temporary hit on your credit score in addition to the points you might lose for opening a new account.
Option #2: Apply for a second balance transfer card
Depending on your credit score and history, you may be able to get approved for more than one balance transfer card. This will further impact your credit score, but it will help you pay off your balances in a timelier fashion, without the burden of high-interest payments.
Option #3: Ask for a lower APR on your existing card
Believe it or not, some credit card companies will lower your APR if you call and ask them for debt relief. There are usually conditions attached to doing this, such as freezing all spending on the card until the balance is paid off. If you’re deeply in debt, this could be an option worth pursuing.
Option #4: Check your other cards for balance transfer options
Sometimes, we mistakenly search for new solutions when a decent option has been under our nose the whole time. Check all your existing credit cards. You may already have balance transfer options available—not with 0% APR, but possibly for a lower interest rate than you’re currently paying.
Option #5: Apply for a debt consolidation loan
This might very well be your best option to get out of debt quickly. Apply for a low-interest debt consolidation loan and pay off all your credit cards in one fell swoop. This can be done online or at your local bank or credit union. Shop around for the best terms and conditions.
It’s important to understand that moving balances around can have an impact on your credit score. New accounts and overall credit utilization are both factors in calculating your score, so expect it to go down temporarily when you take any of these suggestions.