Chip Lupo, Credit Card Writer
@CLoop
After a balance transfer, your old credit card account will remain open, and the balance will be reduced by the amount you transferred away. Credit card issuers don’t automatically close a credit card account after a balance transfer.
Keep in mind that if you still have a balance left after the transfer, you will need to make at least the minimum payment every month until it’s paid off to avoid late fees and potential damage to your credit score. Once you’ve paid off the remaining balance, you can decide whether to keep the card or close it.
What to Do With an Old Credit Card After a Balance Transfer
Continue using the card.
It’s usually a good idea to hold on to your old card following a balance transfer, particularly if it’s a card you’ve had for a while. An older credit card will help you maintain a long credit history, which will benefit your credit score. Keeping your card open will also lower your credit utilization ratio, another plus for your credit score.
If you choose to go this route, it’s important to resist the temptation to overspend on the old card, which could result in running up additional debt. You could use it only when it will save you more than your other cards, or just enough to keep your account active, and then pay the bill in full every month.
Lock the card.
Some credit card companies allow you to lock / freeze your credit card. Doing so will prevent most purchases from being charged to the card, which is ideal if you’re trying to keep your spending under control. You can request a freeze on your account through the issuer’s customer service department, though it’s easier to freeze or unfreeze the card from their mobile app.
Store the card in a secure location.
If you choose to keep the old card but want to remove the temptation to use it and possibly overspend, take the card out of your wallet and place it somewhere you cannot easily access it. Remember, a credit card with a $0 balance can still help you build credit.
Some credit card issuers may close your account or reduce your credit limit after extended periods of inactivity, so make sure you familiarize yourself with any such rules before you set your credit card aside. Consider setting up autopay for any annual fees as well.
Close the account.
If you’re too tempted to overuse the card, or it has an annual fee or benefits you no longer need, consider cancelling the account. Before you do, check out WalletHub’s free credit score simulator to get an idea of how closing the card will affect your credit.
To learn more, refer to WalletHub’s Balance Transfer Guide.
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