Balance transfers with HSBC credit cards have their limits, but it might still be worth it for you. Read to find out the specifics of getting approved for and initiating your balance transfer.
Need to transfer growing credit card debt to a new balance transfer card that offers 0% interest on balance transfers, at least for a limited time? You might consider HSBC.
Here’s everything you need to know about transferring a balance to an HSBC credit card, including card options, restrictions, balance transfer fees, chances of approval and even potential pitfalls.
What you should know about HSBC balance transfers before applying
There are limits to balance transfers with HSBC credit cards, according to the company.
- The balance transfer fees are a bit high. Other credit card providers will charge 3% of the amount you transfer. HSBC charges 4% on most of its cards.
- You can’t transfer a balance from one HSBC card to another HSBC-branded credit card (that said, most issuers don’t allow internal balance transfers).
- Don’t delay. You need to complete your balance transfer within 60 days of opening your account if you want to qualify for the 0% interest offer.
- Keep making the payments on your existing credit card until your transfer with HSBC closes. If you don’t, you could face late fees from the issuer of your current card.
- You may not automatically qualify for a balance transfer. HSBC will look at your credit when determining if it will approve your request.
How to improve your chances of approval for a balance transfer
When looking at your request for a balance transfer, financial institutions, including HSBC, will look at your financial health, focusing on your three-digit FICO credit score. The better this score, the better your chances of getting an approval for your balance transfer.
“Pay close attention to your credit score,” said Aris Jerahian, former AVP of card services with Orange County’s Credit Union in Los Angeles. “When applying for any type of loan, including balance transfers, your credit history weighs heavily on issuers’ approval or rejection. Although you might get approved for a balance transfer, if your credit score is low, you will end up paying a higher rate or fees to balance the risk the issuer will take.
You can keep your score strong by paying all your bills on time and paying down your existing credit card debt. Jerahian recommends, too, that you never close an old credit card account, even if you aren’t using it.
“Credit bureaus look favorably on long-term relationships,” he said. “If you transfer your balance to a low-rate card, throw the old card away, but keep the account in place to maintain history.”
How to initiate a balance transfer on an HSBC credit card
If you already own an HSBC credit card:
- Go to the “My accounts” page and click on your credit card account.
- Click on the option to “View Details”.
- HSBC will then give you the option to “Accept and Proceed” to your credit card site.
- When the credit card window opens, click on “Services-Balance Transfers.” You can then review your balance transfer offers and select the one that works for you.
If you are applying for a new HSBC credit card:
- Go online and start a credit card application for one of the balance transfer cards that HSBC offers.
- During your application, HSBC will ask if you want to transfer a balance from one of your existing cards. Select that option to start the process.
- Provide the basic information about your existing card – your card number, the financial institution issuing it – and state how much of your existing balance you want to transfer.
How to make a balance transfer work
There’s one big mistake people make when relying on balance transfers to tame their credit card debt: They fail to pay off their transferred debt before the 0% offer expires.
Then? The interest rate on their new card rises, often to 20% or higher, and the leftover debt starts growing again each month.
Michael Foguth, founder of Foguth Financial Group in Brighton, Michigan, said it’s essential to have a plan for paying off your balance transfer.
He recommends dividing the total amount of debt you transferred by the number of months your 0% offer is in effect. The resulting figure is what you must pay each month to make sure you pay off your debt before the interest on it adjusts, Foguth said.
Becky House, director of education and communication for credit-counseling agency American Financial Solutions, said that many consumers use balance transfers to lower their monthly payments, not as a way to get out of debt. They are more interested in the lower interest rate than they are in paying off what they owe.
“Many people shift balances to a 0% credit card with no real idea what it is going to take to pay that debt off before the intro period is over,” House said.
Freddie Huynh, former VP of credit risk analytics with Freedom Financial Network, said that consumers will often transfer their debt several times without ever paying it off in full.
This is not a sound financial strategy, Huynh said. Remember, you’ll usually have to pay a fee every time you transfer your credit card debt. Those fees can add up. And if you’re not paying down that debt, you’re not really solving your spending issues.
“They are not confronting the real issue,” Huynh said. “Look at the reason behind your situation. If it’s living outside your means, balance transfers can give a false sense of progress on paying off debt. If you can’t control your spending, you might run up bills on both the old and the new card.”