How to apply for a balance transfer and improve your chances of approval in six easy steps.
Getting your balance transfer approved could be just what you need to gain control of your debt, with a range of cards offering a promotional 0% interest rate for up to 24 months. While applying for a balance transfer credit card isn’t a difficult process, there is slightly more to it than simply filling out a form. Since every declined application has a negative impact on your credit score, it’s wise to prepare beforehand to increase your chances of approval. Use this guide to find out everything you need to know to increase your chances of approval when applying for a balance transfer.
Steps to help you get your balance transfer approved
1. Check your credit score
Your credit score is crucial when it comes to credit applications, because your credit history weighs heavily in the card provider’s decision to approve or decline your application. While each card company uses their own algorithm to decide if you’re a low-risk borrower, there are certain clues in your credit report that can help you predict whether your application is going to be favourably considered.
Credit defaults, late payments, court writs and bankruptcy number among the black marks on a credit report that could negatively impact your balance transfer application. Sometimes there can be mistakes in your report too, which can and should be rectified by the credit reporting agencies. It’s therefore important that you request your free credit report and a copy of your credit score yearly to stay on top of it. If you discover that you have a bad credit report or score, you can then spend some time improving your credit score (by making timely repayments and paying off your debts), rather than being rejected and damaging your credit history even further.
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2. Check your credit card balance
You are going to need to know your existing credit card balance when you apply for a balance transfer. It’s important to get the most updated figure of your card debt so that you can balance transfer the whole amount. Otherwise, you may be stuck with a balance and have difficulty closing off that account.
Checking your balance online is usually the easiest thing to do, but be aware that your online balance may not be updated in real-time, and may not reflect the total amount you need to pay in order to clear the account. Also, some account or interest fees may be pending and only added to your statement at the end of the month, which wouldn’t show up in your online statement until much later. It would be safer to call your current card provider and ask them for the actual figure to balance transfer.
3. Compare a range of cards
This step is possibly the most important one of all, as you won’t be able to find the right card for you if you don’t weigh up your options. First of all, you’ll want to compare the balance transfer offer. Most balance transfer credit cards offer a promotional rate of 0%, but can be in place between 3 and 24 months. Consider the size of your debt and make sure you can pay off the entire balance before the promotional offer ends. When the offer has ended, a revert rate (which is usually the standard interest rate for purchases or cash advances) will apply. So you’ll want to make sure that the length of the promotional period is long enough for you to pay off your debt in full, otherwise the remaining amount will continue to accrue interest.
You’ll also want to consider other features such as the annual fee, balance transfer fee and other interest rates to make sure that the cost of the card doesn’t outweigh the savings you’ll earn from your balance transfer.
Compare balance transfer credit cards
4. Confirm that your new card can support your debt
- The available credit limit
Most credit cards allow cardholders to transfer a percentage of the approved credit limit. For example, St.George applicants can transfer up to 95% of the credit limit, while Latitude Financial Services customers allow cardholders to transfer the entire credit limit amount. To see whether the card is fit for your balance transfer, calculate the total debt you’ll have to transfer (this is where your confirmed payout amount comes in handy), the credit limit of the new card and how much of that limit you’re allowed to transfer.
If you don’t calculate these figures beforehand, you may find that you’re unable to transfer your entire balance. Not only does this mean that a chunk of your debt will continue to accrue interest, you’ll also be unable to close your old account. Consider these restrictions before applying to find a card that can support your balance.
- Accounts under different names
There are some restrictions in place around transferring to or from joint accounts or from accounts under different names. Most providers won’t allow cardholders to transfer balances from an account unless the primary cardholder’s name is the same for both cards. So even if you’re an additional cardholder, the balance may still need to be transferred under the name of the primary account holder. If you’re unsure, contact the bank you’re interested in to confirm these details.
You can’t transfer joint accounts to single accounts or vice versa. Instead, if you have a joint account, you’ll only be able to transfer your balance to another joint account. If your credit history isn’t great, having a joint balance transfer can help improve your chances of approval if your partner has a solid credit score.
You can compare which banks allow joint cardholders and couples to conduct a balance transfer with our guide.
5. Make sure you can transfer between providers
Credit card providers usually don’t accept balance transfers from other providers that they are associated with. This means you can’t balance transfer debts between banks in the same institutional group. Less obviously, sometimes even though the two credit card brands and card issuers seem unrelated, they may be funded by the same larger bank. An example of this is Citibank which funds several smaller banks including Suncorp, IMB and Virgin Money. Make sure you check which banks you can transfer your balance to and from to avoid default rejection.
6. Check the other balance transfer requirements
Be sure to do thorough research, read the fine print and sieve out all the necessary requirements in this process. Some other important limitations that could impede your application include:
- Card provider only accepting debts from credit cards or store cards. Some credit cards only allow you to balance transfer debts from other cards. If you have a personal loan, for example, you will have to consider cards that specifically accept this type of debt.
- Balance transfer limits. Credit card providers generally allow you to balance transfer debt amounts between 70% and 100% of your new approved credit limit. This might be a tricky thing to navigate since you won’t know how much your new credit limit will be until the application is approved, but bearing this in mind can help you eliminate certain card options or request a specific credit limit amount. So say you want to transfer a debt of $3,000 to a card that allows balance transfers worth 70% of your credit limit. If you requested a limit of $5,000 on your application, that debt would be worth 60% of the new limit, which would increase the chances of the balance transfer being approved.
- Balance transfer fees. As mentioned earlier, some cards charge a balance transfer fee worth 1-3% of the debt amount you are transferring. Make sure you factor in this cost before applying.
7. Complete your application
The process of applying for a credit card these days is greatly simplified by the Internet and usually takes around 10-15 minutes. Here are the typical things to note in your application:
- Age. You must be at least 18 years of age to apply for a credit card.
- Minimum income. Some credit cards list a minimum income amount. Make sure you meet this criteria before you apply.
- Credit rating. Most balance transfer credit cards require a good or excellent credit rating.
You’ll also need to provide the following documentation and details for your application to be processed.
- Personal information. This includes your full name, date of birth, address, email address, phone number and driver’s licence number.
- Employment details. This includes your current position, employer’s name and address, and duration of employment. You may also have to provide recent payslips.
- Financial details. You will be required to provide information on any assets, including shares and properties, as well as debts and liabilities such as mortgages, rental payments, car loans and regular expenses.
- Balance transfer details. You will need to provide details of the debt you wish to transfer, including your account name and number, your existing financial institution and their BSB number.
Some online applications can be approved in under a minute. You may also get a conditional approval pending submission of more details or documents. The card provider will generally contact you if they need more information, but if you have already waited a while, you may also want to check on the status of your credit card application.
What to do when you get your balance transfer credit card
Once your application is approved, you can expect your new card to arrive within 5-10 business days. After that, it’s only a matter of activating your new card, which you can do online, over the phone or in person at a branch office. This step will initiate the balance transfer process, which can take up to two weeks to be processed.
Meanwhile, it’s time to tie up any loose ends with your old credit card. Check your old account for any other fees that may have popped up, pay them off and close the account to avoid any future administrative or annual fees.
Now that you’re ready to get started on this balance transfer application, take your time and follow the steps we’ve outlined. Doing your research well and planning ahead will increase your chances of a successful application. Remember: when in doubt, always ask for help. Good luck!Back to top