Balance Transfer Limit: How Much Can I Transfer with a Balance Transfer Card?
Posted July 14th, 2010 and last modified February 21st, 2012
0% balance transfer credit cards allow you to manage your debts with one card. However, the amount of credit you are given is your balance transfer limit.
When looking for a balance transfer credit card, one of the first questions you are going to ask is, how much can I transfer with a balance transfer card?
The amount of credit charges that you will be able to transfer to a 0% balance transfer credit card will be determined by that card’s credit limit. The credit limit determines how much you can charge to the card.
This means that you will be able to transfer an amount of charges equal to the credit limit on the transfer card. You will not be able to transfer charges over the credit limit. Most cards will let you transfer up to the credit limit but there are some cards that may let you transfer only up to a percentage of the credit limit usually 95%.
One thing to keep in mind is that the amount of charges you transfer to a credit card can affect what you can charge on that card. If you transfer an amount equal to 30% of the credit limit on card you will reduce the charging power of that card by 30% until those charges are paid off.
This means that you can transfer all of your balance from one credit card to another provided that the new credit card has a high enough credit limit. You can also transfer balances from more than one credit card provided that the credit limit is high enough.
Transferring all of your credit card balances to one card can help you reduce expenses by eliminating the duplication of interest rates and monthly charges. It can also make it easier to pay off credit cards because you will only have payment each month.
95% allows a little breathing space so that you can make the odd purchase, if necessary, and still not exceed your limit. You should also check to see if there is any cap on how much you can transfer, regardless of your credit limit. If you are looking at a 0% offer for six months, however, most people will not be dealing with any huge amount lest it becomes impossible to clear the debt in time.
You can normally make transfers from more than one credit card, and from store cards. So long as the total amount is within your allowed limit. If your credit limit is too low to transfer the full amount you had in mind, it is normally still viable to shift as much as you are allowed – always taking into account the annual fee. $4,000 at 0% and $1,000 at 15% is still better than the whole $5,000 at 15%.
If you suspect that your credit rating may be an issue, you should check it out before making an application. Every credit card application, whether successful or not, is added onto your credit history. Too many failed applications can look like a desperate bid to escape financial difficulties, rather than a genuine and understandable attempt to ease interest payments for a few months.
What will my credit limit be?
Your credit limit on the new card will be affected by several factors including your credit history, income level, and other factors which are part of the credit card application process. Generally if your credit history includes negative information such as unpaid bills or late payments your credit limit will be lower.
This means that cleaning up your credit history can improve your potential credit rating. Paying your credit card bill on time every month can help you develop a good credit card history.
Your income can also affect your credit limit. Credit card companies may give higher credit limits to those with higher incomes, and lower credit limits to those with lower incomes.
The level of your credit limit will be dictated by your own personal circumstances – mainly your income and expenditure and employment situation – and crucially by your credit rating. Balance transfer cards are not made available to people with poor credit scores, because credit card providers are wary that this might be a last-ditch attempt to clear a crippling debt. No credit card company wants to be the one that is left with an unpaid debt because the customer declares themselves bankrupt.
So, how much can I transfer with a balance transfer card?
Your new balance transfer credit card might be a great way to lower your interest costs on your outstanding debt. However, will you be able to transfer your entire balance to your new credit card? Or will you only be able to transfer some of your balance to the new card and be stuck with a partial amount still owing on the old card as well?
If you really want to benefit from a balance transfer low interest rate offer, it’s important to consider whether you’ll be able to roll over all of your balance, or just a portion of it. After all, if you are aiming at reducing debt and lowering those high interest rates, it’s going to be better for you to consolidate as much of your outstanding debt as possible to a card with a much lower interest rate.
This means that there maybe no easy answer to how much can I transfer with a balance transfer card? It is entirely possible that you won’t learn how much you can transfer until you actually get the new credit card, and make the transfers.
The real key to how much you can transfer lies not with the credit limit you are allocated, but rather with some careful calculations on your part. You need to be realistic about the amount you want to transfer. You must make sure that the balance transfer rate you choose allows for a long enough period that you can fully repay your debt in time. 0% is not the only offer available. There are deals for longer than six months at a slightly higher rate of interest, or life-of-the-loan transfers at around 5% to 9%.
What are the factors for my credit limit?
This is dictated by several factors, some of which are set in stone, and others that will come down to personal circumstances.
Those set in stone are put there by the credit card provider. The first limit is the credit limit you are allowed on your new credit card. Although you can always take steps to improve this over time, at the moment you make your application this is outside your control. It has to do with your credit rating and the state of your current finances and employment. The worse your credit rating, the smaller credit limit you will get. In fact, it won’t take too much of a fall from credit grace to rule out applying for a balance transfer credit card.
If you are approved and you are offered $10,000, then, normally, you will be allowed to transfer up to 95% of that amount; that’s $9,500. This restriction is imposed to prevent the very first purchase you make on the card from busting your limit (although you shouldn’t be making any purchases at all on a balance transfer credit card within the offer period). Exceeding your credit limit will usually trigger a charge on your account, and may even invalidate your 0% offer.
It’s possible there could also be a cap on how much you can transfer, regardless of your credit limit. Once you know how much leeway you have, you can go ahead and organise which credit card account(s) you want the debt(s) to be transferred from. You can make transfers from more than one credit card, and from store cards, provided that the total amount remains no more than 95% of your credit limit. Don’t be too disheartened if your credit limit does not allow for the size of transfer you envisaged making. Even with the annual fee taken into account, you should still be far better off transferring a lesser amount. You must be careful, though, not to rush in without doing your sums. A minimum balance transfer is always specified – usually $500 – and an annual fee of $60 on that is quite a price to pay for six months at zero percent, considering a 20% rate of interest on this amount over six months would actually cost just $50 in interest.
The second limit on your balance transfer amount is your personal situation. If the size of your debt is such that it cannot be paid off in six months, then you may have to self-limit the amount you transfer, or plump for a longer term at a slightly higher rate of interest. Therefore you should weigh up carefully if 0% is the best option for you, however attractive it looks.
Maximum balance transfer amounts
Before you submit your application for a balance transfer credit card, always make sure that you’ll have sufficient credit limit to cover the balance amount you want to transfer over. This means ensuring you choose a balance transfer card that is able to accommodate the amount you want to transfer.
For example, St.George Bank will only allow you to transfer up to 95% of the approved credit limit. So if you currently owe $5,000 and you’ve applied for a St.George Vertigo credit card with a $5,000 limit, you’ll only be able to transfer $4,750 over to the new card. This could leave you with a partial balance of $250 still left on the old card you thought you were paying off.
To avoid this happening, apply for an amount slightly higher than you really need to cover the imposed balance transfer limit set on that credit card.
So if you know you owe $10,000 on a high interest credit card, you may need to apply for a credit limit with your new balance transfer credit card of around $10,550. This way, your outstanding debt of $10,000 will only be 95% of your new credit limit, so you’ll be able to transfer it all across.
Minimum balance transfer amounts
On the other end of the scale, banks also set minimum balance transfer amounts. This means in order to benefit from the low interest rates, you’ll need to transfer at least the minimum amount required into the new credit card.
For example, St.George Vertigo credit cards require a minimum balance transfer amount of $500. If you only wanted to transfer $400, you might want to look for a different credit card provider.
However, Westpac’s Earth Platinum Credit Card only requires a $200 minimum balance transfer amount, while the Coles Group Source MasterCard has a minimum balance limit of just $100.
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