Published in: Credit Cards | March 15, 2020

Why Was My Balance Transfer Denied?

By:  Kailey Hagen

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It could be one of many reasons.

A balance transfer card is one of the best ways to pay down credit card debt because it offers a 0% introductory APR that temporarily stops your balance from growing any further. This helps you actually make progress toward paying down your debt before you have to worry about interest again. 

But just because you want a balance transfer doesn't mean you can actually get one. The card issuer might deny your application for the card altogether, or it could give you the credit card and still deny your request for a balance transfer. Here's a look at a few reasons this might happen.

A man sitting on his couch holding a credit card and cell phone.

Image source: Getty Images

You have poor credit

Poor credit makes any card issuer wary because it's possible that you may not be able to keep up with your payments and then the issuer could lose a lot of money. Most balance transfer cards require good or excellent credit in order to get approved, so if you have a credit score below 670, you may have a hard time getting a balance transfer credit card in the first place.

You might have to work on improving your credit and paying down your debt on your existing credit cards before you can apply for a balance transfer card. Do your best to pay all of your bills on time every month, because payment history is the most important factor in your credit score calculation. Try to cut back on discretionary spending, too, and put all your extra cash toward your credit card debt. As you pay this down, you'll reduce your credit utilization ratio -- the ratio between the amount of credit you use every month and the amount available to you -- and this will also help raise your credit score.

The Ascent's picks of the best balance transfer credit cards

The Ascent's picks of the best balance transfer credit cards

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You've applied for a lot of credit cards

Applying for a lot of credit cards within a short time frame also looks bad to card issuers because it suggests that you need more credit in order to sustain your lifestyle. You might be spreading yourself too thin, and that could make you more likely to default on your debt. Card issuers don't want to take the risk that you'll transfer a large balance to their card and then fail to pay it back, so they'll probably just deny your credit card application.

Choose your balance transfer credit card carefully and limit yourself to one application every six months at most. Don't apply for a credit card unless you feel fairly confident that you will be approved. Every time you apply for a new card, the card issuer will conduct another hard inquiry on your credit report, which will drop your score by a few points. Limiting how often you apply for new credit will help keep your score high.

You're trying to transfer a balance to another card with the same issuer

The whole idea of a balance transfer is that your new card issuer pays your old card issuer your remaining balance. Then you make payments to your new card issuer instead. But this doesn't work if the new balance transfer card you're looking at is with the same issuer as your old credit card. The company already has your debt, so it has no incentive to let you transfer that balance to a new credit card and offer you a 0% introductory APR on top of that. 

If you want to transfer a balance, you must choose a different card issuer than the one you have the outstanding balance with. Otherwise, you might get approved for the balance transfer card, but your balance transfer request will get denied.

You're trying to transfer more than you're allowed to

It goes without saying that you cannot transfer a balance that's larger than your credit limit, but some card issuers impose even lower limits on balance transfers. They might permit you to transfer a balance that's only 95% of your credit limit, instead of the whole thing. This could limit a balance transfer card's usefulness. 

Read the terms of the credit card and contact the card issuer with any questions you have before you apply so you understand what you're getting into. If you cannot transfer your full balance over to the new card, you might be able to transfer part of the balance. Then you can still temporarily stop the growth of part of your balance so you can pay it off more quickly.

Balance transfer cards are useful tools, but you have to do your research first to make sure it's the right choice for you. Don't apply for one unless you're confident that the issuer will accept your application and that you will be able to successfully complete the balance transfer. If you have any questions, contact the card issuer to ask before you apply for the card.

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