Need a balance transfer? Check your wallet first

By Michael Lloyd

If you're seeking a balance transfer, you may not need to look further than your back pocket. Sometimes, lenders will offer new balance transfer deals on dormant cards, or those with a very low balance. Though these offers aren't usually as attractive as those offered to new applicants, taking one could prevent you from having to apply for new credit and suffering a ding in your score. balance-transfer-existing-card

Generally, it's wise not to keep too many credit card accounts open. Too many open accounts can tempt you to overspend or lead you to lazy budgeting habits if you're in the mindset of "I have plenty of credit to cover everything anyway." And lenders are aware of that temptation, so they view applicants with several accounts as a risk.

However, we all get behind on our to-do lists, and sometimes, those old cards just hang around for a while before you remember to close them. Or perhaps you aren't aware that they could do potential harm, so you never thought to close them.

Whatever the case, if you're considering applying for a new balance transfer card, it's worth checking your old cards for new deals first.

Be prepared to hunt
"While lenders publish details of balance transfer offers for brand new customers, they don't for existing cardholders," MoneyComms.co.uk director Andrew Hagger explains. "The only way you'll find out about these deals is if your lender contacts you with an offer, [or if you contact it to ask]."

You may have to call the issuer and explain you're looking to transfer a balance and ask if there are any new deals available. However, it may be
as easy as checking your mail (paper and electronic) more thoroughly, as issuers often send notifications when they have a new deal for you. For instance, Barclaycard and MBNA regularly reach out to existing
cardholders with balance transfer deals via post and email. Finally, try logging in to your credit card account online. If any offers are available, they'll typically be displayed prominently once you log in.

The deal may not be as appealing as a new customer deal
"You'll typically find that balance transfers offered to existing customers will be shorter than those available to new applicants, as once they've actually got you on board, card issuers aren't as willing to spend so much on persuading you to borrow," Hagger says. "I typically find that [offers to existing customers] tend to last for around 20 months, which is well below the best deals [for new customers], which can now be up to 37 months, while balance transfer fees seem to be pretty average, around 2.75%."

However, you may still be able to get a better deal than what you've currently got. For instance, some card issuers offer transfer deals on accounts already carrying a balance. If you have more than one of these, you may be able to use them to shift money around creatively to avoid paying interest.

If you have two cards from different issuers carrying balances that are both about to come to the end of their interest-free period, you may be able to do a shuffle. First, transfer all balances to the card with either the longer interest-free period, or the one with the lower APR after the period is over. Then, ask for a new deal on the now-empty card. If you get it, you can then transfer the total balance to that card, and start a long interest-free period again.

balance-transfer-swap

If you don't qualify for a deal on an old card right now, check back with existing lenders in a few months, as lending criteria can change.

"I think in line with the whole industry, these deals appear to have really picked up as the economy has improved, and if things continue to get better, they'll likely become more prevalent," Hagger says.

Beware potential pitfalls
Before taking advantage of any balance transfer deals from old card issuers, make sure you understand the fees involved and know how long the offer will last. For instance, if your old issuer offers a six-month 0% interest deal on the balance transfer, but a 5% transfer fee, applying for a new card may be a better option (even if it means a small dip in your credit score), especially as some cards are offering fee-free, 0% interest balance transfer deals for up to 20 months.

Additionally, you shouldn't rely on new deals from old cards, or view this as an excuse to not close unused cards. Yes, it's wise to keep your oldest card open to prove your credit history, and you should have enough credit to keep your utilisation ratio to 30% or less. But keeping too many cards could lead to unnecessary fees; for instance, if you're paying an annual fee on a card you never use. It could also increase your risk of fraud if you aren't carefully monitoring each account.

Finally, don't be disappointed if your current issuer denies you a new offer.

"Call centre workers should be able to see a marker on your account that will show any offer that might be available to you, based on how you've managed your account," Hagger says. "I don't think  there are any hard and fast rules for anyone who rings up. It's more on a case by case basis, judged on the way you've managed your account."

See related: Keep only the cards you need; Many applicants denied best balance transfer deals

Published: 15 October 2015