Transferring a Credit Card Balance Can Hurt Your Credit Rating

Transferring credit card balances does not always help your credit score.

Transferring balances from high-interest cards to low- or no-interest cards can save you a bundle in interest charges. But beware of the effects of transferring balances on your credit score.

New Accounts

Transferring balances often means opening a new credit card or card(s). Applying for new credit, especially if you already have high balances on other accounts, has a negative affect on your credit.

Debt Utilization

If you open a new credit card account to transfer balances from several high-interest cards, chances are the balance on the new card will be near the credit limit. Maxed-out credit cards are unattractive when it comes to credit scoring; however, as you pay the debt down, your credit score should rebound.

Closing Accounts

Use caution when closing accounts from which you have transferred balances. Closing credit card accounts can have a detrimental effect on your credit score. If you fear accumulating debt on the cards again, cut up the cards and do not apply for replacements.

References

• MSN Money: Weird Stuff That Hurts Your Credit

Resources

• MSN Money: Balance Transfers and Your Credit Score