Can you transfer a balance from someone else's credit card?
Can you transfer someone else's balance to your credit card?
Yes - you can move somebody else's credit card balance onto your card. This gives them the money they need to pay off their credit card.
It can be useful if you have a better credit record than your partner, family member or friend, as you might be able to get a much cheaper card than they would.
If you let them transfer the balance to your existing credit card, this could come with expensive fees and then interest until you pay off what they owe.
But a 0% balance transfer card could save you money. You could repay the balance without paying any interest for a period of several months to more than three years.
Once the transfer has been made, the debt will be in your name, leaving you responsible for repaying it.
You could choose to pay off the balance for them or ask them to pay you back.
If the person whose debt you are taking on misses a payment or stops repaying altogether, you will be chased by your credit card company, not them. It will also be up to you to run the account and manage the paperwork.
If you are lending them the money to clear their credit card debts, agree how much they need to pay to you each month before you set up the transfer. Keep a written record of the agreement and keep track of the payments made on paper or in a spreadsheet.
Only make the transfer if:
You are happy to pay off the debt for your partner, family member or friend
You can trust them to make the payments
If your family member, partner or friend does not make the repayments, you will be left with:
Having to pay off the balance yourself
Paying any interest if it is not cleared during the 0% period
Charges for missed payments
Your credit history will also be affected by any missed payments, which could mean you are refused loans, credit cards or mortgages in the future. Here is how your credit record works and what affects it.
Taking on someone else's debt can affect how much you could borrow yourself, even if you keep up with the repayments. Having an outstanding balance in your name will show up on your credit record.
This can make it more expensive to borrow and harder to get accepted when you apply because lenders will need to consider if you can afford to borrow more.
This depends on your credit limit, which is the maximum amount your provider will let you borrow at once.
You can usually only use a percentage (often 90 or 95%) of your credit limit towards a balance transfer. For example, if you had a credit limit of Ј3,000 and could use 90% of it, you could move up to Ј2,700 onto your card.
The main cost of a balance transfer is its transfer fee, charged as a percentage of the amount you want to transfer.
For example, if you moved Ј1,000 onto your credit card with a 3% fee, this would cost Ј30.
If you are able to pay off the balance before the interest free period ends, you can avoid paying any interest at all.
Annual fees and charges for things like missing repayments or going over your credit limit can also be applied to your card. Read this guide to credit card charges and interest so you can avoid them.
You will need a credit card that accepts balance transfers and a high enough credit limit. Even if your existing credit card will allow this, it is worth looking for a cheaper deal elsewhere.
Read our tips on picking the right deal and use our comparison to find a credit card with a long enough interest free period that offers the lowest transfer fee.
You can arrange the transfer through your credit card provider. The process is exactly the same as transferring a balance from your own card.
Make sure you know your friend, family member or partner's card number and the amount you need to move across. Once they have the information they need, your provider will be able to make the transfer within a few days.
You can only use a balance transfer credit card to move a balance from another credit card.
You can choose to move anyone's balance to your card, but you should only do it if you trust the person - preferably a partner, family member or very close friend.
You cannot set up a balance transfer on someone else's card. However, the other person could set up the transfer for you.
Whoever will be making the card's repayments, stick to these rules to avoid paying any fees:
Do not miss any minimum payments
Look out for any charges on the card
Make sure you pay off the balance before the 0% period ends - this guide explains how to work out how much to repay each month
Any fees you are charged on the card could cancel out the savings you made with the balance transfer. Here is how to manage your credit card to keep your costs down.
The easiest way to make sure you do not miss any repayments is by setting up a direct debit.
Written by Dan, Financial Content Writer
Updated on 1st March 2017
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Balance Transfer From Personal Loan to Credit Card
Should you balance transfer a personal loan to a credit card? The temptation can be very strong, especially if you are getting zero-interest offers in the mail or in your monthly billing statements.
Moving obligations from one account type to another does not reduce what you owe. However, it can slow the rate at which your debt accumulates – at least in the short run.
Paying off any installment loan with a balance transfer to a revolving credit card comes with hidden issues. You could face higher monthly payments, less accountability, and could hurt your credit score.
Moving away from auto and student loans has additional considerations.
Paying off a personal loan using a credit card balance transfer means that you convert your installment obligations into revolving debt. This can be good or bad for your financial health provided you can handle larger monthly payments, and added freedom. You should understand the possible implications to your credit score, in addition to looking at whether you will actually save money using the low-interest introductory rate.
Do you qualify for debt relief? Banks offer introductory balance transfer teaser rates for a reason. They know that most people, who move balances from one bank to another, resume accumulating interest after the introductory period expires. If you owe more than $10,000 on a personal loan, a settlement program could help you reduce what you owe.
When you balance transfer from a personal loan to a credit card you could be increasing your monthly payment. Personal loans are installment contracts. Installment contracts have fixed monthly disbursements and fixed terms ranging from 12 months to 5 years. The promotional APR on a balance transfer lasts from 12 to 18 months.
Be very careful to make certain that you can handle an increase in monthly payments. Otherwise, you risk hurting your borrowing credentials or missing out on the possible interest savings. You may increase what you owe every month under these two scenarios.
- You do not reduce the personal loan principal to zero – you must continue making the same monthly installment payments until the principal reaches zero, and make larger minimum payments on the credit card account. A 30-day late mark or worse will stain your consumer report and credit score for 7 years.
- The remaining installment term exceeds the introductory period – for example, if you have 24 remaining monthly payments on the personal loan, and the balance transfer has a 12-month period, you will have to double your monthly outlay to maximize the interest savings.
When you balance transfer from a personal loan to a credit card you are losing the accountability of the installment contract, and gaining the flexibility of a revolving account. People struggling with debt often benefit more from accountability than from flexibility.
- An installment contract holds you accountable to retire your obligation according to a set schedule. You systemically make monthly payments designed to retire the principal in 12-months, 3-years, or 5-years. The amount owed steadily declines until it reaches zero.
- A revolving account gives you the flexibility to vary your monthly payment. You can cover the balance in full every month, or make only the minimum payment. The borrower determines how long he or she will take to retire the obligation.
The banks know from years of experience that most borrowers who are given the extra flexibility of a revolving account wind up taking on more debt in the end. They lose money initially on the low-interest teaser rates but make it up in the end. This is why they send out the offers.
When you pay off a personal loan with a credit card balance transfer, you affect your credit score. The most frequently used risk equations calculate two utilization ratios, which will change because of this transaction.
- Total utilization ratio – will remain the same or drop. This percentage includes both installment and revolving accounts. It remains the same if you accept a balance transfer offer from an existing credit card account. It could drop slightly if you respond to an offer associated with a new account, as your credit limit also increases.
- Revolving utilization ratio – will increase in most cases. This percentage considers only your credit card obligations relative to the account limits. Higher ratios hurt credit scores. The equations weight the revolving ratio more heavily because of the flexibility inherent in the product.
Finally, we can discuss the possible interest savings associated with transferring a balance from a personal loan to a credit card. Remember that most people lose this game. The banks set the rules and stack the deck in their favor. Only the truly prepared come out ahead.
Here are some questions you should ask yourself and answer before moving ahead.
- Estimate of the transaction fee (ranges from 0% to 5%)
- Difference between existing APR and other possible rates
- Teaser APR – the accumulation rate (if any) during the promotional period.
- Late payment APR – you lose the promotional rate if you are one day late on any payment.
- Standard APR – the accumulation rate on any remaining balance after the promotional period ends
- Increase in interest charges on purchases – you wipe out the grace period on purchases
Personal loans are not the only obligation borrowers look to pay off using a credit card balance transfer. Many borrowers also think about using a zero-interest rate offer to retire what they owe on an automobile, or on their college education.
Auto loans and student loans each have unique features that extend your analysis. The concepts already explored above still apply.
Using a credit card balance transfer on an auto loan takes you from the realm of secured to unsecured financing. With secured financing, the bank holds the title (collateral) on your car until you retire the note in full. Secured financing is safer for the lender, as they can repossess the collateral (your mode of transportation) to offset any losses without suing in court first.
Therefore, weigh these two considerations when converting to an unsecured revolving account.
- APR is often lower for secured auto loans – your interest savings are therefore smaller, making a balance transfer less appealing.
- Credit card companies have fewer legal rights because the debt is unsecured – they can still sue you in court if you default, but it is more difficult for them to take away your car.
If you are concerned about losing your car to repo man, a credit card balance transfer can protect your vehicle from repossession.
Using a credit card balance transfer to pay down a government student loan means that you lose eligibility for special programs. Please note this does not apply to private student loans. Credit card companies operate under a far more rigorous set of repayment requirements. You will lose access to these options.
- Consolidation – allows you to combine several education loans into one
- Deferment and forbearance – allow you to temporary postpone or reduce the amount you owe every month.
- Forgiveness, cancellation, and discharge – means you no longer have to make payments.
balance transfer student loan to credit card
Three months ago, I did a credit union credit card balance transfer at 0% to pay down three student PLUS loans. In the payments, the account number and sequence number for the three loans were given. The student loan lender returned two of the payments because they want just the account number, not account number plus loan sequence number. The third payment was not returned and not credited to the account either. I notified the credit union of my dispute through their online message system two months ago. The credit union says the payment went through and that they contacted the student loan provider to investigate. The student loan provider states it can take 60 business days to answer such an inquiry. However, calling them myself, they state that there is no money to return because they never received any and they would have attached it to our account since the account number is at the beginning and that I should look to the credit union and not them.
Do rules regarding credit card purchases apply to balance transfers? How can I dispute this charge to protect myself here? The credit union refused to provide a provisional credit and said the student loan provider must return the money before they will do anything. How can I track where the money has gone? I just asked the credit union to provide copies of any cancelled checks, hopefully it was not electronic.
Balance transfer tips for saving on credit card interest
Why, when and how to make a credit card balance transfer.
If your credit cards carry high interest rate balances, the monthly charges may be costing you some serious money. If that’s the case, transferring debt from one or more high-interest cards to a single card with a lower rate could make a lot of sense. It could effectively reduce the amount you owe and simplify your life with one statement and one payment due each month. While most banks charge a fee for balance transfers, in the long run the savings on interest from the lower rate card could be worth it. It’s important to understand the process, so here are some balance transfer tips.
Most new cards offer an introductory APR (annual percentage rate) for 12 months or more from the date the card is opened, and in some cases the introductory APR exists for purchases as well. Promotional APRs on existing credit cards are sometimes offered throughout the year and can range between 13 and 20 months. When evaluating balance transfer offers for new or existing cards, always look for those that offer the longest duration, since this will give you more time to save on interest and help you pay down the balance faster.
In general, balance transfers have one interest rate, and other transactions—like purchases and cash advances—have their own interest rates. This is important to know, because when you pay more than the minimum amount, issuers are required to apply that extra amount you paid to the debt with the highest interest rate (whether that be your balance transfer, purchases or access checks). Always check the interest charge calculation section of your statements.
This is the standard rate on your account that will be applied to any unpaid portion of the balance transfer amount after your promotional rate expires. It’s important to be prepared and aware that your minimum payment and interest charges may increase based on the higher go-to rate.
Balance transfer fees are often 2–5 percent of the transferred amount up front, or a minimum of $10 (this fee is added to your total balance transfer). On a $5,000 balance transfer, that could mean a fee between $100 and $250. Include the fee in your calculations to figure out if you’ll save money over the long run. Remember, the savings from the lower interest rate will often be greater than the transfer fee.
Processing a balance transfer can take two weeks or more if requested as part of a new credit card application. Processing time on an existing credit card may take up to five days. Don’t fall behind on your payments to the old card. And, once the debt is moved to the lower rate card, be careful not to incur more debt on the old card.
The higher your credit score, the better your chances of receiving low promotional rate balance transfer offers. Improving your credit score starts with an understanding of what makes up your score and the agencies that create your credit report.
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