The only 0% 21-month balance transfer offer used to be the Citi Simplicity Credit Card. Now, it offers 0% for 18 months on balance transfers. It also gives 0% for 18 months on purchases. Having so much time to pay off a balance transfer without interest can certainly help a lot of people pay off their debt. That being said, Citi Simplicity balance transfers aren’t totally free. There’s a 3% (min $5) balance transfer fee, which could end up being a lot of money if you’re transferring a big balance.
Another good balance transfer credit card is the U.S. Bank Visa Platinum Credit Card, which offers 0% for 20 months on balance transfers with a balance transfer fee of 3% (min $5). That could make a balance transfer worth it, depending on the size of your debt and its current APR.
The rule of thumb to keep in mind is that a balance transfer should make it cheaper overall to pay off a debt. For a zero-interest balance transfer deal, if the new card’s transfer fee is more expensive than the interest you would have paid on the old card in the same payoff timeframe, you shouldn’t bother doing the transfer.
Balance transfers don’t hurt your credit, but transferring a balance can indirectly cause credit score damage. When you apply for a balance transfer credit card, it 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.… read full answer
Balance transfers don’t hurt your credit score directly. But when you apply for a balance transfer credit card, it 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 as a result. A balance transfer could still result in high credit utilization, though, and even allow you to rack up more debt than you can afford, if you’re not careful. Both of those things can hurt your credit score.
So, the act of transferring a balance itself won’t affect your credit, but it will indirectly alter several key components of your credit profile, from utilization to the age of your accounts. These changes might lower your score a bit in the short term. But over time, interest savings and the ability to pay off your debt faster should make transferring a balance a net positive for your credit score.
Here is how a balance transfer could hurt or help your credit:
Balance transfers can take up to three weeks, or be completed in just a few days, after you make a request or apply for a card. Transfers to new accounts may take longer than existing accounts. Continue making payments on your original account in the meantime to avoid hurting your credit score.
If you apply for a new balance transfer card, the resulting hard inquiry will likely cause a slight dip in your credit score for up to 12 months.
Adding a new balance transfer card will reduce the overall age of your accounts, which can have a slight negative impact on your score.
Keep an eye on how the transfer affects your account’s credit utilization. Making a transfer will usually add 3%-5% to your debt due to balance transfer fees. If your utilization is over 30% of your credit limit, that’s not good for your score.
If you leave your old credit card(s) open, adding a new card will reduce your utilization ratio across all accounts, assuming no additional spending. The utilization on the card you transferred the balance from will drop, and it will increase on the card you transferred the debt to.
Balance transfer cards often have 0% introductory APRs. This gives you the chance to pay off your balance faster, since the full amount of your payments will go to the principal rather than interest. This is good for your score long-term.
Balance transfers won’t hurt your credit by themselves. But they affect other elements of your credit that could bring your score down a little temporarily. Still, the benefits will outweigh the negatives in the long run, as long as you plan to repay most, if not all, of your balance during your card’s low introductory APR period.
Where people get into trouble is trying to use a balance transfer to support unsustainable spending habits, thinking 0% balance transfer credit card offers are always available. They’re not, and learning that the hard way is a very expensive mistake. So make sure to use a balance transfer calculator to make a payment plan.
A balance transfer is a good idea if you have good or excellent credit and make an affordable payment plan prior to applying. You generally need good credit or better to get a 0% balance transfer credit card, though these introductory periods are temporary. Most balance transfer cards have very high regular APRs, making it important to repay what you owe before the 0% period ends.… read full answer
You’ll also want to make sure the new card’s balance transfer fee is as low as possible. The average fee is just under 3%. But, from time to time, there are credit cards that have both 0% APR on balance transfers and no balance transfer fee.
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. Closing a credit card account after a balance transfer could have a negative effect on your credit score.… read full answer
When you close a credit card, it reduces your total available credit and drives up your utilization ratio. It’s best to maintain a debt level of less than 30 percent of your total credit limit. Also, the average age of your accounts may decrease, particularly if you close a card that you’ve had for a long time. Potential lenders like to see a lengthy history of credit accounts when reviewing applications for additional credit.
The exception to the rule, when it comes to cancelling a credit card after a balance transfer, is if the card has an annual fee. You could pay the fee once a year to keep the card active. Or, if you don’t plan on using the card anymore, you may consider closing the account to save money.
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