Can You Transfer Credit Card Debt to Someone Else?
If you're struggling with credit card debt and someone is willing to help you out, you might ask:
"Can I transfer my credit card balance to someone else (such as a spouse, family member, or friend)?"
There are some valid reasons for this financial move.
For instance, you might have high-interest credit card and your spouse has good credit to qualify for a great balance transfer credit card -- helping the financial situation together.
So can you do it? And more importantly, should you?
Learn about all the factors to consider before making the decision to transfer credit card balances to another person.
Can You Transfer Credit Card Debt to Others?
Probably, though it depends on the card.
Some credit cards – American Express, for one – will not allow balance transfers from a credit card that isn’t in your name.
Most credit card issuers, however, don’t have rules about transferring a balance from somebody else’s credit card.
You’ll want to read through the fine print in the terms and conditions, where it discusses balance transfers, and you can always call customer service if you’re unsure.
Should you do it?
That’s a harder question, and of course, you’re the only one who can answer that.
Still, if you’re a married couple, and you don’t separate your money, and you’re not going to be angry at the other if things don’t go well if you do a balance transfer from one card to another, then the answer is probably – yes.
But, again, everybody’s situation is different, and you know your situation far better than we do.
(In other words, if you do this and things don’t work out, please don’t write us a strongly worded email, blaming us. We did say “probably” you should do this. That can mean, “Maybe you shouldn’t.”)
If you’re talking about doing a balance transfer from an adult child’s credit card to your own, or your parents, or a sibling, or perhaps a best friend… well, the answer isn’t so clear cut.
You really need to think about what you’re doing – and consider the consequences if things don’t work out as you hope.
Consequences for the Recipient of the Debt
There are quite a few issues you’ll want to mull over.
Paying off the debt is now your responsibility.
If you transfer somebody else’s debt to your own credit card, the money is now on your card. That means it is your financial responsibility to pay it back.
Yeah, yeah, your kid, your parent, your sibling, your best friend, your best friend’s son – or whomever you’re doing this for – has assured you that you will never spend a dime on this debt. They will pay you back.
The fact is, though, if things go south, and they can’t pay off the debt, in the eyes of the credit card and the law, their debt is now your debt.
Your credit score may be negatively affected.
You’ve worked hard to keep your credit score high, and your credit history unblemished, and now you’re doing this balance transfer.
Will it hurt your credit score? Absolutely, it might.
It really depends on your available credit limit, and how much of it is about to be filled with this new debt.
Let’s say that you have a credit limit of $5,000, and you transfer $4,000 of somebody else’s debt onto your credit card. You’ll almost certainly see your credit score go down because you’re upsetting the credit utilization ratio, also known as a credit utilization rate. Lenders, you see, like it when people use no more than 30% of their available credit.
So if you have a credit limit of $100 – just to go with an easy to understand number -- you don’t want to go into debt over $30, because your credit utilization ratio or rate would be over 30%. If you do go over, your credit score may start to drop. In the lender’s eyes, if you borrow more than $30, and especially if you borrow $100, you’ve gone from somebody who responsibly uses credit to somebody who might eventually have a financial problem.
Even if you pay the $100 back within a month, they see you as somebody who borrows right up to their available limit. That may be a sign that you’re struggling with money and won’t be able to pay it back later.
It may not be fair, but that’s how a lender thinks.
So if you put somebody else’s $4,000 on your credit card with an available limit of $5,000, even if you pay it back quickly, you will probably see a drop, although it may not be much, if it’s rapidly repaid.
You could wind up in a heap of financial trouble.
As you can imagine, if the person can’t pay you back, or they can’t in a timely manner, you will be stuck paying it off.
You can’t call your credit card company and say to a customer service rep, “Look, my friend can’t pay me back this $4,000 right away, and so I’m going to just wait a few months until he gets his act together, and then I’ll pay down this debt. Promise.”
Well, you can say that, but you can expect to see your account promptly closed if you do.
We don’t need to spell it out for you. Your imagination can probably fill in the blanks fine.
If you do a balance transfer of somebody else’s credit card debt onto your card, and it doesn’t work out as well as you both hope, you could see your credit score go down, and with it, your credit history.
You could theoretically lose your credit card account, if you can’t make the payments, or if you do manage to pay off the debt yourself, you might keep your credit score healthy but see your finances wrecked in other ways.
Maybe you have to pay less toward retirement for a while, or you don’t go on a vacation for a year and so on.
In other words, you want to think about this very carefully.
But it doesn’t mean that you shouldn’t do this. There are some pros and a few more cons that you’ll want to weigh.
Your credit score and credit history might improve.
Hey, it can happen, and no need to assume doom and gloom.
Maybe you have a credit limit of $15,000 a month.
Anyway, suddenly that $4,000 doesn’t seem too terrible to a lender.
You put it on your card with a credit limit of $15,000, and because $4,000 is less than 30 percent of $15,000, and you pay it off in relatively short order, you may see your credit score rise.
Perhaps it dips for awhile because lenders don’t like to see revolving credit, but your cousin or whomever pays it off, and lenders love that, and in the long run, yes, perhaps your credit score climbs, and you have an even better credit history than you did.
Without paying a dime, you now can get an even better loan or better credit card in the future. There’s no doubt about it; you are a genius.
Your family member or friend could save money.
Well, they’ll save money, if they transfer debt to your card, especially if they leave you high and dry. But let’s say that it does all work out well.
They pay off the debt that’s now on your card, and they save a lot of money, from having a low interest or possibly no interest (some credit cards offer 0% interest with balance transfers for a certain period of time, say, 12 or 18 months).
They have a much better financial life because of that, and their credit score goes up, and they have extra money to spend.
Everybody is happy. There’s no doubt about it; you and your friend or family member made the right decision.
Your family member or friend may end up being grateful to you for life.
Because, again, you saved them money, and you really helped them. There’s no doubt about it; you are a good, good person.
If somebody else’s debt is on your card, you have less available credit.
It isn’t just the credit utilization ratio to think about.
- Do you sometimes use the credit card for emergencies? What if an emergency happens?
- Or, what if there’s something fantastic but very expensive that you want to purchase? Will you be able to use your card, or will this debt prevent you from doing that?
There’s no doubt about it; you’re doubting the wisdom of this decision.
Your relationship could be destroyed.
Again, as we’ve noted, things may not work out. You could end up having a lot of hurt feelings. You might end up resenting your family member or friend for leaving you on the hook for all of this money.
There’s no doubt about this, you will think: I am a chump.
In fact, perhaps you’ll blow up one day and say a lot of things you’ll later wish that you hadn’t said, and nothing will ever be quite the same with you and your friend or family member again.
Maybe you both will go to small claims court over this. Maybe you’ll lose in small claims court and then one day you’re driving along, and you see that no good swindler ex-friend crossing the street, and you speed up, and… okay, this has gotten dark really fast.
So, look, as you can see, there are pros and cons, which is why you might want to try and transfer somebody else’s debt to your own credit card – or you may want to do anything but that.
But if you do try a balance transfer with somebody else’s debt onto your credit card, you really do want to discuss it at length and make sure you and your debtor’s expectations are in check.
After all, if your family member or friend is having trouble paying a credit card, while it may be due to the out of control interest rate, it could be a matter of having financial problems.
And if somebody’s having a difficult time paying a credit card back for money owed, isn’t it likely that they’re going to have trouble paying you back, too?
So, yes, you can transfer somebody else’s card balance to your own credit card. But just because you can, it doesn’t mean that you should.