Transferring a balance from someone else's credit card

Balance transfers, which is the process of moving debt from one credit card to another, can be an effective way to manage your own debt. But what if you're looking to assist someone else with their credit card debt? Can you transfer a balance from someone else's card onto yours?

In the UK, it's possible with some providers, but the process can be complex and fraught with potential pitfalls. In this article, we will dive into the details to help you understand how to approach this, along with the implications to consider.

When you transfer a balance from someone else's credit card to yours, you're effectively taking on that person's debt. This means that you now legally become the debtor. You're now personally responsible for paying off the transferred amount, and there’s no going back. Inevitably, this means that the original cardholder is no longer legally obligated to pay the debt.

Beyond the legal responsibilities, there are now financial responsibilities. If you fail to make payments on the transferred balance, the credit card issuer can take action against you. This could include late payment fees, higher interest rates, and potential legal action.

Transferring a balance from someone else's credit card to your own is a process that requires a few key steps. You first have to ask, can I balance transfer to someone else’s card? The answer depends on the provider. Some UK providers allow it, some do not.

The general process is as follows:

Consent:

Make sure you have the other person's full agreement before initiating the process. It's best to have this in writing for clarity and future reference, but a verbal agreement may also work.

Research Providers:

Not all providers allow this type of balance transfer, so you'll need to find one that does. When looking, consider the interest rates, fees, and terms and conditions. Be wary of introductory offers that are deceivingly limited or costly after the initial introductory period is over.

Apply for the Transfer:

Once you have selected a provider, you will need to apply for the transfer. You'll need to provide details of the other person's card, including the account number and the amount you wish to transfer. Because it’s not a highly common service, you will often need to speak over the phone to an official helpline to put through the request.

Await Approval:

After applying, the credit card provider will review the application. This could include checking your credit score and ensuring you have the capacity to repay the debt. Be prepared to wait days, or potentially weeks.

Remember that balance transfers usually come with fees, often a percentage of the transferred amount, so ensure you're aware of these costs upfront. Also, keep in mind that the credit limit on your card needs to be high enough to accommodate the transferred balance.

While balance transfers can be a useful tool for managing debt, they're not the only way to help someone else clear their financial liabilities. Here are some other methods to consider:

Joint Account

Opening a joint account means you share responsibility for making payments. This can provide more control over how the debt is paid off, but also exposes you to similar risks as a balance transfer.

Loan

A personal loan could be used to pay off the credit card debt. The interest rates may be lower than those on credit cards, but eligibility will depend on credit scores. Alternatively, you can provide a private loan to that person money directly with a favourable interest rate. Be sure to put the loan agreement in writing, but also consider that it may still remain legally unenforceable.

Financial Counselling

If you give a man a fish, he will eat for a day… Sometimes, the best help you can offer is guidance. Recommend a certified financial counsellor who can provide expert advice tailored to the person's specific situation.

Charities, Debt Relief and Bankruptcy

For those on a low income and with few assets, or in need of a last resort option of bankruptcy, there are some alternatives to help them with. There are many debt respite and relief schemes in the UK, along with pointing the person to charities such as StepChange for advice.

Transferring a balance from someone else's credit card to your own can have several impacts on your credit score. Each time you apply for new credit and initiate a hard credit check, it leaves a mark on your credit file, which can temporarily lower your credit score.

Furthermore, if the transferred balance significantly increases your credit utilisation ratio (the proportion of available credit you're using), your credit score could decrease.

It’s also worth considering the positives — if you make all repayments on time, this can improve your credit history over time, which could positively influence your credit score.

While there are potential benefits to balance transfers, it's essential to carefully consider the following:

Legal and Financial Responsibility:

Consider there is potentially no going back on the legal transfer of financial responsibility.

Interest Rates:

Many cards offer low or 0% introductory rates for balance transfers, but these will eventually increase. Be sure you can afford the repayments when this happens.

Fees:

Balance transfer fees can add a substantial amount to your debt. Always factor in these fees when considering a balance transfer.

Repayment Plan:

Ensure you have a solid plan to repay the debt. Remember, once you transfer the balance, you are legally obligated to repay it.

Your Credit Score:

As mentioned, this move can impact your credit score. Understand the implications and be comfortable with the potential risk.

Impact on Relationship:

Taking on someone else's debt is a significant commitment. It can lead to complications in your relationship with the person, particularly if you struggle to pay off the debt.

In conclusion, aiding someone else in managing their debt is a significant responsibility that requires thoughtful consideration and planning. When possible, consult with a financial adviser and assess the broad implications of such agreements.