Balance Transfer Credit Cards: What to Do When Your Credit Limit is Too Low

Move just part of your balance or ask for a higher limit. Alternatively, try a personal loan.
Lindsay Konsko
By Lindsay Konsko 

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We’ve all been there: You recognize a problem with your finances, come up with a plan to deal with it, then hit a snag.

Many people trying to pay down credit card debt turn to a balance transfer card, only to find that the credit limit they receive on the 0% card is less than their outstanding debt.

So what should you do if you find yourself in this situation? Don’t worry, you have options – take a look at the details below to find out what they are.

Balance transfers are a good deal – if you can get one

If you’ve decided to pursue a balance transfer to pay down your credit card debt, you’ve made a smart choice. You could potentially save thousands on interest payments by moving your balance onto a card that’s offering a 0% promotion (but don't forget to factor the balance transfer fee into your calculations).

And these days, finding a credit card that offers 12, 15, or even 21 months interest-free isn’t as hard as it used to be. Thus, paying off your debt before the 0% period is up is much easier when interest isn’t taking a big bite out of every payment you make.

But for some folks, using this strategy to deal with debt doesn’t exactly go off without a hitch. For one thing, you generally need good or excellent credit to obtain a 0% card, so getting approved in the first place can represent a big hurdle. Then comes the next obstacle: qualifying for a high enough credit line on the 0% card to transfer your entire high-interest balance to it.

If you don’t get a high enough credit line, call your issuer

The whole point of doing a balance transfer is to refinance all of your high-interest debt, not just a portion of it. If you don’t immediately get approved for a high enough credit line on the 0% card to do so, it’s natural to be a little frustrated.

It might seem counterintuitive, but the first thing you should do is contact the issuer of the balance transfer card and ask for a higher limit. Most have a pretty straightforward system for determining your credit limit, with factors like your credit score, your income and your debt-to-income ratio influencing the decision. However, many are willing to be flexible, especially if what you need is within a few thousand dollars of what you were approved for.

Before you place the call, be ready to state and/or provide the following:

  • A clear, friendly way of asking for what you need (a higher credit line).

  • The credit line you were approved for on the card.

  • The additional credit you’d like to be approved for (be sure to give an exact dollar amount).

  • The reason you need a higher credit line (be very specific that you’re planning to do a balance transfer).

Set aside a little bit of time for this call; it’s likely that you’ll need to speak to more than one person before you get a final answer.

Another alternative to pursue if your issuer won’t budge

In many cases, contacting the issuer of your 0% card and simply asking for a higher credit line will do the trick. But if for some reason you really can’t get a big enough credit limit on the card to transfer your whole high-interest balance, there are other ways to bring down the rate on your debt.

Your best bet is to apply for a personal loan to refinance the remainder of your balance. Although you won’t have the simplicity of making just one monthly payment, there are other benefits to this strategy. For one thing, there are lots of different personal loan options on the market today – you could use a peer-to-peer lender, a traditional bank or a credit union. If you do your research and choose wisely, there’s a good chance you’ll get approved at a rate that’s much lower than what you’re paying on your card.

You’ll also be converting revolving debt (i.e., credit card debt) to installment debt (i.e., personal loan debt). This will bring down your credit utilization ratio, which will likely give your credit score a boost. Remember, you’ll still have a couple of hard inquiries on your credit report from applying for the 0% card and the personal loan – but in the long run, transforming credit card debt into personal loan debt will have a positive impact on your score.

The takeaway: If you don’t initially get approved for the whole credit line you need on a 0% card to refinance all of your high-interest debt, place a call to your issuer. Asking for a higher credit limit is often just the ticket. But if this still doesn’t work, apply for a personal loan to bring the interest rate on your remaining debt down. Then make it a priority to pay off both balances as fast as you can – the sooner you get to debt-free, the better!

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