How Transfer Credit Cards Help

Category: Finance, Credit.

Many people apply for credit cards hoping to get a very high credit limit.

This can be frustrating for people who want to consolidate their debt or who want to be able to use only one card for all of their purchases. What they often find is that the credit limit that they qualify for is considerably lower than what they had anticipated. One way that many smart consumers get around this problem is by applying for transfer credit cards. There are many factors that come into play in determining the credit limit that is going to be offered to you by a lender. What Determines Your Credit Limit. One important one is your credit history.

However, if you apply for a balance transfer credit card, you reduce the risk because you aren t so much getting more credit as you are moving your debt to a new lender. If you have a poor credit history with a lot of outstanding balances, you are going to appear to be a risky to the lender and this can reduce the amount of money that they re willing to lend you. In addition to your credit history, factors that impact your credit limit include the rates and fees associated with the card, the amount of money that you request, the number of applications that you have filed recently and the amount of income that you currently own. As just described, lenders consider you to be somewhat less of a risky when you are applying for transfer credit cards than when you are applying for a general credit card. How Transfer Credit Cards Help. This is because you re taking the debt that you already owe and giving it to them, so they know that you re not going to be running up yet another series of bills on the card that they give you. That s because you re saying from the get- go that you re going to give them this certain dollar amount of business.

Additionally, a lender is going to look more favorably on a balance transfer credit card application than on a general credit card application. They want your business so they re going to be more lenient on some of the terms if you re willing to look at transfer credit cards. When you go ahead and apply for a balance transfer credit card, you re asking them to give you a new card and to move the debt from your old card to it. What to Do With Your Higher Limit. But what do you do once that s complete? This is much easier to do if you have a zero percent balance transfer option because it lets you put your money towards the debt instead of the interest rate. If the new balance transfer credit card has a limit that you like, you ll want to work on paying off that transfer debt.

The faster that you pay off the new card, the more money that you re going to be able to access on the higher interest rate. If you still aren t happy with your credit limit, there are some things that you can do other than to use transfer credit cards to increase the amount that you can get. Additional Ways to Increase Your Credit Limit. One is to be a good borrower. Another is to establish a good relationship with one particular lender. The strong your credit history, the higher your limits will be. For example, make sure to make all payments on time to the new balance transfer credit card.

Then in a few months, you can ask for a higher credit limit and it might be awarded to you because you have a positive history with the lender.