Key Takeaways. Transferring your balance from one credit card to another can save you money and help you pay your debt off faster. Some cards have promotional periods when they charge low or even 0% interest on your transferred balance. Some cards also charge balance transfer fees, which can cost you money upfront.
But in general, a balance transfer is the most valuable choice if you need months to pay off high-interest debt and have good enough credit to qualify for a card with a 0% introductory APR on balance transfers. Such a card could save you plenty on interest, giving you an edge when paying off your balances.
Balance transfers won't hurt your credit score directly, but applying for a new card could affect your credit in both good and bad ways.
How much can I move?" The amount that can be moved to a balance transfer credit card is determined by the cardholder's credit limit. Most providers specify that cardholders can transfer a percentage of their total limit - often 90 to 95% - and sometimes impose a maximum cap too.
Paying more than the minimum will reduce your credit utilization ratio—the ratio of your credit card balances to credit limits. ... That's because it isn't the total amount of debt that matters, but the percentage of available credit that you're currently using that really matters.
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.
Depending on the deal and the fees, transferring a balance may not save you enough money to be worth the trouble. After transferring your balance from a higher-interest to a lower-interest card, consider keeping the higher-interest card open if it is an older account.
When you're up to your ears in debt, taking advantage of a balance transfer offer is just like kicking the can down the road. Rather than helping you pay off debt interest-free, it can prolong difficult decisions unnecessarily. In part, that's because balance transfers don't allow you to move huge amounts of debt.
When You Shouldn't Get A Balance Transfer
Unless your balance is always zero, your credit report will probably show balance higher than what you're currently carrying. Fortunately, carrying a balance won't hurt your credit score as long as the balance you do have isn't too high (above 30 percent of the credit limit).
No, a balance transfer does not cancel a credit card. You are not required to close the account once a balance transfer is complete, either. It may actually be a good idea to keep your old credit card account open, even if you don't plan on using it.
Balance Transfers Offer a Chance to Improve Credit
3 However, bear in mind that when an existing balance is transferred the new credit line could get utilized to an extent that it could lower your credit score. That's because lenders don't like to see credit utilization rise above 30%, ideally.
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