What Happens After a Credit Card Balance Transfer? (2024)

FAQs

What Happens After a Credit Card Balance Transfer? ›

Once the transfer completes, your balance drops to zero, or whatever is left in that you didn't transfer. For example, if you were unable to transfer the entire amount due to your new card's balance transfer limit, you'll need to keep making payments on your old card and won't have the option to close it just yet.

Your old credit card remains active after a balance transfer until you request to cancel it. Depending on how much you transfer, and your card utilization, you may see your credit score drop. Diligently paying the balance and lowering your utilization should help it back up.

After a balance transfer takes place, your old account remains open. The original card issuer will typically only close your account if you make a request for it to do so. Unless you have a good reason to cancel your old credit card, however, you may want to think twice before you close the account.

Banks don't allow you to pay your credit card balance directly using another credit card. Typically, payments via check, electronic bank transfer or money order are the only acceptable payment methods. There is one primary loophole: a balance transfer credit card.

No, doing a balance transfer from a credit card does not close that account. In fact, when transferring a balance, it's sensible to keep your old account open and continue making payments as required until the provider completes the transfer.

Once that time period ends for your balance transfer credit card, the card's ongoing APR will apply to your remaining credit card balance. The higher the credit card balance is when the 0 percent APR period ends, the more interest you will accrue.

The problem is that transferring a balance means carrying a monthly balance. Carrying a monthly balance by not paying off the minimum amount due each month—even one with a 0% interest rate—can mean losing the card's introductory APR, its grace period and paying surprise interest on new purchases.

You may have to pay a balance transfer fee

Many balance transfer credit cards will charge a balance transfer fee of 3% to 5% of the amount you transfer, usually with a minimum of $5 to $10. Let's say you transfer $5,000 and there's a 3% balance transfer fee. You'll end up paying a $150 fee just to do the transaction.

A balance transfer can improve your credit over time as you work toward paying off your debt. But it can hurt your credit if you open several new cards, transfer your balance multiple times or add to your debt.

If you can't repay your debt in the promotional period, are nearing the finish line on total debt repayment or are planning on applying for major financing soon, a balance transfer may not be a good move.

Does it look bad to do a balance transfer? ›

In some cases, a balance transfer can positively impact your credit scores and help you pay less interest on your debts in the long run. However, repeatedly opening new credit cards and transferring balances to them can damage your credit scores in the long run.

Done correctly, you can pay off your balance and gain significant savings. However, mistakes—like missing the transfer deadline or making a late payment—can be costly or cause you to lose your 0% annual percentage rate (APR). Here are several more balance transfer mistakes and ways to avoid them.

Your request for a balance transfer might be declined if the transfer amount is above your credit limit, your account is in poor standing or you're trying to transfer a balance to a card from the same credit card issuer.

When your balance transfer is complete, your old card isn't automatically closed, and you're not required to cancel it either. Depending on the new card's credit limit, you may not be able to transfer the entire balance. In that case, the old card will have a remaining balance you must continue to pay off.

Applying for a new credit card to transfer your balance will result in a hard inquiry on your credit report. A hard inquiry will shave a few points off your score initially, and it will stay on your credit report for up to two years. Opening a new card also affects the length of credit history.

A balance transfer takes about five to seven days after your request before you'll see it appear in the account you're transferring the balance to. But a word of warning: Some credit card issuers can take 14 or even 21 days to complete a balance transfer.

Process: If you use a physical balance transfer check, you'll fill it out like a personal check and can deposit it in your bank account right away. If you have an online option, you might be able to request the funds be sent directly to your bank account.

If you don't pay off the full transferred balance before the end of the introductory period, you may end up paying more interest down the road.

Yes, you can use a balance transfer card for purchases — but spending may incur interest so check if this is the case. If you need to spend, as well as transfer existing debts, look for a credit card offering 0% on both balance transfers and purchases. They are usually referred to as “all-round” cards.