How do credit card balance transfers affect my credit rating?


A credit card balance transfer allows you to move your balance from one credit card to another.



You might transfer credit card balances because one credit card has a better interest rate or higher credit limit than the other. 


Video: Balance Transfer Credit Cards

Low Interest Rate Balance Transfers 

Credit card issuers typically make the best balance transfer offers to consumers with good credit scores. Low introductory rates make transferring credit card balances more attractive. It gives you the opportunity to pay off your credit card balance at a low interest rate. You have to be careful though. Once the introductory rate expires, your credit card interest rate can double, or even triple, increasing the amount of finance charges applied to your balance. 

The Cost of a Credit Card Balance Transfer 

There’s often a balance transfer fee that you must pay when you move your balance between credit cards. Balance transfer fees might be a flat rate like $35. Or, they might be a percentage of the amount you’re transferring, like 3%. Before you transfer a credit card balance, you should make sure the balance transfer fee won’t negate the interest savings you receive by moving your balance to a lower-rate card. 

Balance Transfer Example 

Example:  You have a credit card with a 21% interest rate and a $3,000 balance. You’re considering transferring the balance to a card with a 4% introductory rate for six months, a 4% balance transfer fee, and a regular interest rate of 14%. 

You’d end up saving $135 in interest and fees during the six-month promotional period if you make the balance transfer. After the introductory rate expires, you’ll continue to save $17 each month because of the lower interest rate. 

Balance Transfers and Your Credit Score 

Transferring credit card balances could have an effect on your credit score. That’s because 30% of your score considers the level of debt you have. This is known as your credit utilization or debt percentage. It’s the ratio of your credit card balances to your credit limits. For example, a credit card with a $1,000 balance and a $4,000 credit limit has a debt percentage of 25%. Lower debt percentages are better for your credit score than higher ones. In general, it’s best to keep your debt percentage below 30%. 


Video: Higher Credit Card Payments can be a Good Thing


Tips for Doing a Balance Transfer 

When you transfer credit card balances, you must make sure you won’t increase your debt percentage, or you could cause damage to your credit score. The specific amount of damage depends on your debt percentage on your other credit cards as well as your overall debt percentage for all credit cards combined. 

How to Transfer Your Balances 

If you want to make a balance transfer with your existing credit cards, contact that card’s customer service department. You will need to have your credit card number and balance available. For your convenience, here are some contact numbers for some of the major credit card’s customer service. 


If your credit card issuer is not included in the list above, call the number that appears on the back of your credit card or on your billing statement.