Balance transfer without a new credit card

The biggest lure of a new credit card for those who already have one is the balance transfer you get with it, but did you know that you can also get balance transfer deals on cards you already have?
If you're unable to get a new card or would rather not add another card to your collection, this is the option for you.

Card issuers make their profit by charging interest on the balance you have on your credit card, so it makes sense that they'd want you to move your balance from other credit cards to the one you have with them. To get you to move your balance, they're willing to offer you a reduced interest or even 0% interest for a period of time.

credit cards

How to get it

Often the card issuer will write to you informing you of an available offer, but you can also take the initiative; call and tell them you're considering transferring balance from another card and ask whether they have any balance transfer offers. If you have been a good customer, i.e. always paying on time and having a good credit score, you will most likely get a positive response; either a 0% interest offer or a very low interest rate.

You should carefully evaluate the offer you get because what seems like a good deal may turn out to be the costlier option down the line; a 6 months deal is good if you have a relatively small amount to transfer and you can pay off a significant portion of it in that time.

It will turn out to be a bad deal if you can’t pay down a substantial amount of what you transferred before the offer period expires and the post-offer interest rate is higher than what you were paying on your old card. But of course you could do the same thing with the other card issuer and move some of the debt back under a new offer.

Also keep in mind that there's a one-off balance transfer fee that is charged on your account, this is normally a percentage of the amount you're transferring (e.g. 3%).

Advantages

  • 1. Save on interest without applying for a new card

    The main attraction of a balance transfer is that you will save money during the period of time that the card issuer is willing to waive or reduce interest charges. Doing it on your existing card has the added bonus that you don't have to go through the application process again and risk dropping your credit score.
    You can also use the saved money increase your repayments and thereby reduce the time it takes to pay off your debt.

  • 2. You get to consolidate

    For people with busy lives, it can be hard to remember the various dates on which to make a payment on each of your credit cards and missing payments can damage your credit history. Moving your debt to fewer cards helps in the sense that you'll have fewer dates to keep track of and fewer payments to make.

Disadvantages

  • 1. New cards offer better deals

    In most cases new customers get better deals than those wishing to transfer balance onto existing cards, this is probably because card issuers realise a bigger incentive is needed to get customers to switch. If you can qualify for one, a new card might be the better option for balance transfer.
  • 2. Can affect your credit score

    When you get a balance transfer offer, your credit limit doesn’t automatically go up; therefore any debt you transfer must fall within your existing credit limit. If you already have a substantial balance on the card (e.g. 50% of your credit limit), the new balance that you transfer can push your utilisation rate to a level that negatively affects your credit score; Utilisation rate means your balance as a percentage of credit limit, according to Experian a 30% or less Utilisation rate is recommended.

  • 3. Gets ahead of the queue

    In an ideal world, one would prefer to pay off the debt that costs the most first, but transferring balance onto a card with existing debt has a disadvantage in that most credit card issuers will put the new debt ahead of the old debt; so while you're paying off the new debt which has little or no interest charges, the old debt remains in the background costing you full interest charges.

  • 4. Not available if you have bad credit

    As an incentive intended to keep or lure the best customers, you are more likely to get a balance transfer offer if you have a good credit score, credit cards for people with bad credit don't come with such offers despite the fact that these customers pay more in the long run.