Do Balance Transfers Hurt Your Credit Score
A balance transfer can potentially hurt your credit score, at least for a while.
Thats because your credit score is based on factors like the age of your accounts, so a new credit card will temporarily ding your credit. Likewise, hard credit inquiries can hurt your credit scoreand youll definitely get a hard credit check when you apply for a credit card.
That said, a balance transfer could help your credit score in the long run. If a new credit card offers a much lower interest rate than your old card, youll be able to pay off your debt soonerand that can lead to an improved credit score.
So while a balance transfer can hurt your credit score, it may be worth taking the hit if it lets you repay your credit card debt.
How Can I Find A Good Balance
Follow these steps to finding the best balance-transfer option:
- Understand your creditworthiness: The higher your credit score, the better offers you will be eligible for.
- Choose the combination of 0% APR period and ongoing interest rate that best suits you: Figure out how long it will take to pay off your debt and select a card that aligns with that timeframe.
- Factor in any transfer fee: When comparing cards, then, be sure to include the impact of a fee as you run the math.
- Consider any rewards the card offers: Earning rewards can make keeping the card valuable for you beyond the introductory APR offer.
- Weigh any other features: Look at other perks and benefits, such as cell phone or rental car insurance, that may be valuable for you after you’ve paid off your balance.
Make Sure You Make At Least The Minimum Payment
If you donât make at least the minimum payment every month , you could be disqualified from the credit cardâs promotional balance transfer offer and your interest rate could increase sharply. Make sure you have the cash on hand to meet your monthly payment obligations before you jump ahead and open a new balance transfer card.
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Citi Diamond Preferred Card: Best For Balance Transfers
Why we picked it: This card pairs one of the longest balance transfer offers currently on the market with a potentially low go-to interest rate: Cardholders receive a 0% introductory APR for 18 months on balance transfers made in the first four months .
Pros: The 18-month 0% introductory APR extends to purchases, too . Plus, theres no annual fee.
Cons: Youll pay a balance transfer fee of 3% . Plus, the fact that theres no base rewards program may limit its long-term value, though there are a few ancillary perks to enjoy, like access to Citi Entertainment®, Citi Flex Plan and the Citi Easy Deals program.
Who should apply? So long as youve done the math on that 3% balance transfer fee , the Citi Diamond Preferred is an attractive option for anyone hoping to pay down debt or finance a big purchase.
Who should skip? While this card does come with excellent perks, its lack of rewards may be a dealbreaker for some.
Us Bank Business Cash Rewards World Elite Mastercard: Best Overall Balance Transfer Credit Card
- $0.00 annual fee
Data effective as of 5/11/21. Offers and availability may vary by location and are subject to change.
Meet our favorite balance transfer credit card: the U.S. Bank Business Cash Rewards World Elite Mastercard®.
While it may have an overly complicated name, this card offers simple benefits that make it a clear standout.
It all starts with the promotional balance transfer APR, which gives you one year of 0% introductory APR on your transferred credit card balance. Thats not quite the longest introductory APR period weve seen , but it still gives you plenty of time to pay off your debt before worrying about interest charges. After that, you get a competitive balance transfer 13.99%22.99% variable APR.
Even setting aside its balance transfer offer, the U.S. Bank Business Cash Rewards World Elite Mastercard® offers a great credit card experience. It earns cash back rewards on all your purchases, with a reward rate between 1% and 3% .
And if you spend $3,000 in your first three months, you get a sizable $500 bonus reward. Plus, you get an annual cash back bonus of up to $250. In other words, you have plenty of opportunities to get rewarded for your business purchases. Not bad for a card with no annual fee.
Put simply, the U.S. Bank Business Cash Rewards World Elite Mastercard® has great perks for balance transfers and everyday use alikemaking it our pick for the best small-business credit card for balance transfers.
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Citi Custom Cash Card: Best For Automatically Maximizing Rewards
Why we picked it: This new cash back from Citi comes with a lengthy 0% introductory APR on balance transfers .
Pros: That 15-month 0% introductory APR also extends to purchases . Cardholders also earn rewards: 5% cash back on up to $500 in purchases in your top spending category each billing cycle, then 1%, and 1% cash back on all other purchases. Theres a sign-up bonus offering cardholders $200 if they spend $750 in the first three months of account opening .
Cons: The big drawback here is the balance transfer fee, which is 5% of the transferred balance . Thats on the higher side for a balance transfer. Many cards charge 3% of the transferred balance and a few, like the Navy Federal Credit Union Platinum card, waive the charge entirely.
Who should apply? This card is an option if youre looking for a balance transfer, but want to earn rewards once youre finished paying down your debt.
Who should skip? Anyone transferring a particularly high balance may want to steer clear of this cards 5% balance transfer fee.
What Is The Best First Time Credit Card
- First Progress Platinum Elite Mastercard secured credit card. Mastercard has recommended this secure card on its list of original credit cards.
- OpenSky Secure Visa Credit Card.
- Deserve EDU Mastercard for students.
- Capital One Platinum credit card.
- Discover it secured credit card.
- Citi Secure Mastercard.
% Balance Transfer And 0% Purchase Rate Credit Card Offers
A 0% balance transfer and 0% purchase rate credit card allows you to save on both existing and future interest costs. You can move over balances you already owe and pay 0% interest, as well as make new purchases and not have to pay interest for an introductory period. Revert rates apply to any existing debt after the promotional period ends, so it’s important to pay off both of the balances in full to avoid interest.
How to use these credit cards wisely
Your 0% balance transfer and 0% purchase rate credit card will be a huge boon during its initial offer period, but only if you make effective use of it. Keep in mind the main dos and don’ts when using this type of card:
How Long Is The 0% Transfer Period
That will depend on the deal you choose. Typically, 0% interest free periods can range from six months up to two years or more. For example, if you choose a 0% introductory deal for 20 months, you wont pay any interest on your balance for the first 20 months. The longer the period, the more time youll have to pay off your balance without being charged interest.
The idea of a 0% balance transfer card is to pay off the full balance before the interest free period ends. So, before you start looking at cards, work out how long youll need to do that.
Lets say you have £1,000 on your current credit card and you can afford to pay back £50 a month. Youll need to look for a balance transfer card with a 0% introductory period of at least 20 months. Youll also need to factor in the one-off transfer fee, if there is one. Its usually worked out as a percentage of the balance youre transferring, often up to 3%.
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How Long Do Balance Transfers Take
The time it takes to complete a balance transfer will vary by card issuer, but generally you should expect the process to run anywhere from a few days to several weeks. To avoid any unpleasant surprises, its a good idea to contact the issuer before initiating the transfer and confirm exactly how long the process will take to complete. If youve only recently opened the account, that could have an impact on your wait time.
On the lower end of the waiting scale, Capital One balance transfers can take as little as three business days, while Citi can take up to 21 days. See our comprehensive guide to balance transfer processing times by issuer.
Check When The 0% Offer Ends
0% balance transfer offers do not last forever. When the introductory offer ends, the interest will go back to a more expensive standard rate.
To avoid paying interest, when you transfer your credit card balance to a new card, always make a note of when the introductory 0% interest rate ends. You may wish to consider moving any outstanding balance to a new balance transfer card to pay it off without costly interest payments.
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Be Careful Not To Get Into Further Debt
When you take out a new credit card to transfer a balance, the danger is that you put a balance back on your old card and end up with twice the problem.
If you don’t want that to happen, you could:
- Cut up your old card to prevent you from spending on it and close the account with the card provider.
- Ask your credit card provider to reduce your credit limit.
Best For Fair Credit: Chase Slate
|0% for 15 Months|
|Balance Transfer Fee||$0 intro fee for the first 60 days your account is open, then either $5 or 5%, whichever is greater.|
|Rewards Earning Rate||This card does not offer a rewards program.|
- Why We Chose This Card
- Pros & Cons
When your credit score is below average, getting an attractive balance transfer offer can be a challenge. The Chase Slate is designed to help people with fair credit pay off their debt. New cardholders receive a 15-month 0% APR promotion for both balance transfers and purchases. During the first 60 days, there’s no balance transfer fee, which is a substantial savings when other cards charge a 3% to 5% fee. After 60 days, there’s a 5% fee on balance transfers. It does not have an annual fee, but it does not earn any rewards or offer a welcome bonus.
Competitive 0% APR offer for purchases
No balance transfer fee for a limited time
No annual fee
Longer balance transfer rate offers are available
Not currently accepting new applications
5% balance transfer fee after 60 days
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Frequent Asked Questions About Balance Transfer Credit Cards
Q. Will getting a balance-transfer credit card hurt my credit? Everyones credit situation is different, but when used responsibly, a new balance-transfer credit card will help your credit than hurt it. Thats because the goal of getting a balance-transfer credit card is to pay down your existing balances, which is an important factor in working towards raising your credit score.
Q. Whats the best way to use a balance-transfer credit card? Once you are approved for a balance-transfer credit card, you should immediately transfer as much of your existing balances as possible, starting with the ones with the highest interest rates. You should also set the goal of paying off as much of your balances as possible before the promotional financing period expires
Q. Can you transfer a balance from another credit card issued by the same card issuer? No. For example, if you have the Citi Double Cash, you cant transfer a balance from your Costco Anywhere Card from Citi. It has to be a balance from another bank or credit union.
Q. How is the balance-transfer fee paid? Nearly all balance transfer credit cards have a 3% or 5% balance transfer fee, and this amount is added to your new balance.
Best Cashback Credit Card
Cashback credit cards reward you for spending in the form of pounds or credit on your account. The amount you can earn is determined by the cards earn-rate and any applicable earnings caps. Cards affiliated with a particular brand may offer a higher earn rate when you spend with that brand, and some cards offer an introductory enhanced earn rate for a specified period or an enhanced earn rate once your spending exceeds a certain threshold.
American Express Platinum Cashback Everyday Card
- Benefits: Get 5% cashback on your purchases for the first 3 months of Cardmembership, and 1% thereafter.
- Account fee: £0.
- Why we like it: An accessible and easy-to-use card that rewards your everyday spending with cashback. With no annual fee, you can also keep your costs low, provided you pay off your balance in full each month.
- Need to know: If you dont pay off your balance in full every month, youre likely to pay more in interest than youd earn in casback, and a 0% purchase or low rate card might be more suitable for you.
- Representative example: When you spend £1,200 at a purchase rate of 24.5% p.a., your representative rate is 24.5% APR .
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Bmo Preferred Rate Mastercard*
This Mastercard comes with a low annual fee and an appealing balance transfer welcome offer. The interest rate on your balance transfers is 3.9% for nine months. Note that youll be charged a 1% fee on the amount you transfer over After the nine months are up, youll be charged 12.99% on any remaining balance. If you make any additional purchases during that nine-month period, you will be charged 12.99% on new balances, if you dont pay in full by the end of the grace period noted on each statement. Perks include: Extended warranty and purchase protection, plus a 15% discount on Cirque du Soleil shows in Canada and 20% off on shows in Los Vegas.
- Annual fee: $20, refunded in the first year
- Balance transfer offer: 3.99% introductory interest rate on balance transfers in the first 9 months 1% transfer fee
- Interest rate: 12.99% for purchases and cash advances
- Additional benefits: Extended warranty and purchase protection discounts on Cirque du Soleil admission
Navy Federal Credit Union Platinum Card: Best For No Balance Transfer Fee
Why we picked it: The Navy Federal Credit Union Platinum card is one of the fews cards currently on the market that skips a balance transfer fee. Plus, it comes with a 12-month 0% introductory APR on balance transfers requested within 30 days of account opening. After that, the APR will be a relatively low 5.99% to 18% variable. The 0% intro APR offer on balance transfers expires June 30, 2021.
Pros: The regular APR on purchases is low, relative to the current industry average. Theres no annual fee.
Cons: Theres no rewards, which, again, can eat into the long-term value of the card. Theres also no 0% introductory APR on purchases. You have to join the Navy Federal Credit Union to apply for the card. To do so, you must be a veteran, have current ties to the armed forces, Department of Defense, or National Guard, or have an immediate family member with a Navy Federal membership.
Who should apply? If you meet the credit unions eligibility requirements, this card can save you a chunk of change on a balance transfer given it doesnt charge a balance transfer fee.
Who should skip? Reward-seekers, this card can offer you a lot of things but a rewards program isnt one of them.
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What’s The Maximum Balance I Can Transfer To A New Credit Card
The balance transfer limit is determined by the card issuer, on an individual basis. Some cards may take into account your creditworthiness and account history when determining this amount.
The same goes for determining your credit limit. The card issuer will take into account factors like your credit score, credit utilization, income and housing payments when establishing your credit limit. Remember that the credit limit may be less than you expected and therefore less than your current outstanding balance. To successfully raise your limit, you usually need an adjustment in your financial situation, like increased income or lower housing payment, or an extended period of paying your bills on time, which obviously isn’t a great option if you’re qualifying for a balance transfer to take advantage of an introductory 0% APR period.
What Do I Do If I Have Sub
Unfortunately, most of the cards recommended above require good to excellent credit scores, meaning above 670 or so. If your credit score is lower than that and you’ve been unsuccessful securing one of the cards above, there are alternative methods for refinancing your debt. You can call your current card issuer and try to negotiate a lower APR or explore a debt consolidation loan, which could allow you to gather all of your debt under a new, lower APR.
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How Do 0% Balance Transfers Work
With a new 0% balance transfer credit card you can shift debt from expensive credit and store cards and freeze the interest for a set period with some deals almost three years.
This gives you the chance to pay the debt down faster and save money, as all your payments will go towards the debt rather than the debt and interest.
For example, a £2,000 debt on a card charging 18.9% APR that you pay £60 a month towards will take 46 months and cost you £2,755 to clear.
In contrast, a £2,000 debt moved onto a 0% balance transfer card, with the same repayments of £60 a month will take 34 months to clear and cost £2,000 saving you £755.