While possible, experts say most people should avoid using several new balance transfer cards at the same time. For starters, the high monthly payments you'll need to pay off so many balances in a limited amount of time can be a huge financial burden. No, balance transfers do not directly harm your credit score, although transferring a balance may indirectly damage your credit score. When you apply for a credit card with a balance transfer, for example, a comprehensive query will be generated in your credit report, causing a slight drop in your credit score.
There is no limit to the number of times you can make balance transfers, although they are subject to approval. While one-time balance transfers are common, expecting to pay off your credit card debt by repeating the process several times is fraught with challenges. If you plan to transfer the entire outstanding amount on a credit card, you can consider this as the average daily balance. Balance transfers work by requesting a new card with a low initial APR, initiating a balance transfer, and paying the balance.
Once the balance transfer is complete, you should start making timely payments for the new account. Once the introductory period ends, any outstanding balance begins to accrue interest according to the card's regular APR for balance transfers. And if you want to transfer debts from both a Citi card and a Discover card, opt for a balance transfer card that isn't from either of those issuers, such as Amex, Wells Fargo, Chase and Bank of America cards. There are different variables at play when it comes to calculating how much money you could save if you transfer the balance from one credit card to another card.
Therefore, transferring a balance itself will not affect your credit, but will indirectly alter several key components of your credit profile, from the use to the age of your accounts. Keep in mind that multiple balance transfers can affect your credit score, but if you handle them responsibly, they may be the right financial decision for you. Sometimes, balance transfers can also be initiated using convenience checks or checks mailed to you by issuers. Determine if you could benefit from this path after reading the answers to other frequently asked questions about credit card balance transfers.
You might be able to move a credit card balance from one balance transfer card to another, but it's probably not the best way to manage debt. Depending on the card you get, you may not pay interest on transferred balances for up to 21 months. In general, credit cards with a balance transfer are very useful, but knowing their potential disadvantages is useful so that you can pay off your debts as efficiently as possible. If you demonstrate responsible use of the card over time, the issuer may also contact you with another balance transfer offer in the future.
The problem with credit cards for balance transfers is that a balance transfer fee usually applies and you'll have to start paying interest on the remaining balance when any low-interest introductory period ends. With most balance transfer cards, you can choose to transfer any amount that is lower than your available credit limit.