FAQs
Applying for a balance transfer credit card will generate a hard inquiry on your credit report, causing a slight dip in your credit score. If you transfer a balance to an existing credit card account, however, there is no hard inquiry and no credit score damage.
What is the catch with a balance transfer credit card? ›
If you're unable to pay down your debt before the introductory rate expires, you may face steep interest charges that can eat into your anticipated savings. May temporarily damage your credit scores. Applying for a balance transfer credit card will likely trigger a formal credit check known as a hard inquiry.
Do balance transfers hurt your credit score? ›
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.
What is a common pitfall associated with balance transfers? ›
Not taking into account the balance transfer fee
A balance transfer credit card can save money on interest, but it's not without cost. In most cases, the amount you move over will be subject to a balance transfer fee — typically 3% to 5% of the total amount transferred.
Is it a good idea to do a balance transfer? ›
If you need extra time to pay off a big credit card purchase, transferring the balance to a balance transfer card can be a smart move. If you manage to pay off your balance before the intro period ends, you can successfully dodge interest that may otherwise have been added to your balance.
What happens to an old credit card after a balance transfer? ›
Your old credit card will remain open after the balance transfer is complete, and you can decide whether you want to keep using it, stop spending on it, or close your account.
Is it better to pay off credit card or transfer balance? ›
If you make $500 monthly payments, you'll pay off your card in 19 months – but it'll cost you $1,848.79 in interest along the way, or nearly $100 extra per month. By contrast, if you transfer your $7,600 balance first, you'll pay off your debt three months faster – and pay $0 in interest.
What is a disadvantage to a balance transfer? ›
Cons of Balance Transfers
The balance transfer credit cards charge a fee typically between 3% to 5% of the transferred amount. This upfront cost can cancel out some of the savings from the lower interest rate.
When should I not do a balance transfer? ›
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.
What is the best credit score for balance transfer? ›
Balance transfer credit cards typically require good credit or excellent credit (scores 670 and greater) in order to qualify.
A balance transfer can affect your credit score, depending on 1) if you open a new card to transfer a balance and 2) what you do once your balances have been transferred. If you simply move your balances around on your existing cards, your credit score likely won't be impacted.
What happens if you keep doing balance transfers? ›
You can do multiple balance transfers on a credit card, but there are a few key things to remember. Keep in mind that each transfer can impact your credit score. Applying for a new balance transfer card may result in a hard inquiry on your credit report which can have a minor negative effect on your score.
How to avoid balance transfer fee? ›
How to avoid balance transfer fees. Usually, the only way to avoid balance transfer fees is to find a card that waives the fee entirely. These types of cards are typically issued by credit unions as opposed to major credit card issuers — which can have both benefits and disadvantages.
Is there a catch to balance transfer cards? ›
A balance transfer isn't a get-out-of-debt-free card. Balance transfers typically come with fees, and you'll likely have to pay interest on whatever balance you transfer. Here are some things to keep in mind before opting to use a balance transfer card.
How much is too much for a balance transfer? ›
Card issuers typically have rules surrounding the amount of debt you can transfer in relation to your credit limit. Many issuers are generous, giving cardholders the ability to transfer their full credit limit, but in some cases, your transfer limit may be capped at 75 percent of your overall credit limit.
How long does a balance transfer affect credit score? ›
How a balance transfer could hurt your credit score. 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.
What is the 3% balance transfer fee? ›
Balance transfer fees are typically 3 percent or 5 percent of the total balance you transfer to your new card. So, for every $10,000 in debt you move to a balance transfer credit card, you'll owe an additional $300 or $500.
Do you lose rewards on balance transfers? ›
Generally, balance transfers don't count towards reward points, nor will points be gained on a card if a balance is being transferred to it. Cardholders can only earn rewards on eligible purchases they make with a rewards credit card.
What happens if I spend on a balance transfer card? ›
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.
