Denied for balance transfer - What are the reasons and how to recover from it?
One of the most effective ways to consolidate your credit card debts is the balance transfer method. Transferring your high-interest credit card balances into a 0% annual percentage rate (APR) credit card may save you money, and help you to pay off your debt faster. The introductory 0% periods usually range between 12 and 21 months. However, the process may include a 3% transfer charge (normally) and additional charges if you use that card for more shopping.
Getting approved for a balance transfer card isn’t always an easy job, however. You might be denied for your balance transfer, and it could happen due to several reasons.
Why are you denied for balance transfer?
Just because you have applied for a balance transfer card, it doesn’t mean that you’ll be approved for it easily. There might be various reasons for which the credit card company may say ‘no’ to your balance transfer request. The prime reasons might be:
a) Poor credit history
If you have decided to get a balance transfer card and take advantage of a promotional balance transfer offer, then you must apply to a credit card company along with your financial details. The credit card provider company will review your credit report and credit score before approving your application. So, if you have a poor credit history or items listed such as frequent late payments or collection accounts, it may give a bad sign about your creditworthiness. If the credit card company believes that you’re not creditworthy, those creditors won’t open a new balance transfer credit card account and allow you to transfer credit.
b) Lack of available credit for transfer
In several cases, your balance transfer might be rejected due to the lower credit limit of that card. You should check the available credit on a balance transfer card before you apply for it. Always keep in mind about how much you are willing to transfer, and then search for an appropriate balance transfer card with the required credit limit.
c) Transfer with an ineligible card
The biggest mistake people tend to make is they think they can perform balance transfers by using any credit card. Normally, you can’t transfer your balance from Card 1 to Card 2 if both cards are from the same credit card company. You have to use another credit card issued by another provider to make the transfer request.
d) Excessive transfer requests
If you have a history of transferring credit card balances too frequently, then you might be rejected for balance transfer. If you’ve applied for multiple new cards within a short period, this may give a sign to the credit card companies that you have zero affordability to pay off credit debts and can’t manage your finances. So, practically they won’t approve your application for a new account to enable you to transfer the balances
e) Balance transfer request exceeds the credit line
Some creditors might process a partial balance transfer up to a certain credit line. This means you may have the balance split between two accounts. You may make a partial balance transfer if the transfer card's available credit limit is less than the balance amount you wish to transfer.
For example: If you have a normal credit card A with a balance of $1000, and if your balance transfer credit card B has a $700 credit limit, you may transfer $700 from your credit card A into credit card B.
How to recover from a balance transfer rejection
If you’re getting rejected for balance transfer, do not worry. You may try another credit card company and apply again. But if you are getting rejected, again and again, it may damage your credit score as creditors will review your credit report before approving you, which will lead to additional hard inquiries.
Here are a few helpful tips to consider if you are denied for balance transfer:
a. Understand why you were denied
You must know the actual reasons for being declined again and again. It will help you to fix those issues for the next time. Ask the issuer why you are getting denied for balance transfer, and submit more information to help your application. Once you can fix the actual causes of denial, you may easily apply and get approved for a balance transfer.
b. Review credit report and score
If your application is getting rejected due to poor credit score, then you should review your credit score regularly and take the needed steps to improve it asap. You should also review your credit report for errors or inaccurate entries that could harm your credit profile. If you can identify any error, you can dispute it with the major credit bureaus. The credit bureaus will check your credit profile, all the entries, and investigate the matter. If something needs to be corrected, they will do it and as a result, your credit score may get a boost.
c. Resubmit with a lower transfer amount
If you are already approved for a balance transfer credit card but denied for balance transfer due to the higher balance amount, you may lower the amount you’re requesting for transfer. A transfer request under your credit limit will be easily accepted by the credit card company. So, if you are getting rejected due to your balance amount, try again with a lower amount and resubmit your request.
d. Research cards before applying
Before you apply for a balance transfer credit card, you must research and get information about all the available benefits of that card. This way you may decide which credit card might be the best for you and avoid balance transfer rejection. You should look out for these things first:
- Review the balance transfer fees and APR terms
- The timeframe to make a balance transfer request after opening
- The transfer limit of the credit card
- The credit limit on the credit card
e. Practice good credit habit
Managing your finances properly can have a significant effect on your credit. By making on-time bill payments, keeping low credit balances, using a good mix of credit, and keeping minimum credit applications may help you to build a good credit profile. Be patient with your efforts as it might take time to get positive results.
Having a balance transfer application rejected might be depressing. But you should keep trying to get approved for a balance transfer the next time around.