The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.

Applying for a balance transfer might initially lower your credit score. However, don't be discouraged by this short-term impact. The slight dip in your score during the application process is usually offset by the potential long-term benefits to your credit health.

We’ll break down all the details about balance transfers and their effect on your immediate and future credit score. We’ll also discuss how you can use a balance transfer to save money and have better financial health.

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  • While balance transfers can temporarily decrease your credit score; responsible management can improve long-term credit health.
  • Getting the most out of balance transfers means having a good plan to pay off your debt and sticking to your payment schedule.
  • Regular, on-time payments on your new balance transfer card can contribute to a positive payment history and improve your credit score over time.

Do Balance Transfers Hurt Your Credit?

Yes, balance transfers can initially hurt your credit score. Applying for a new credit card to facilitate the balance transfer can result in a hard credit inquiry. These hard pulls are noted on your credit report and can lead to a small, temporary drop in your credit score.

Getting a new balance transfer card can also lower the average age of your credit accounts. Credit age, or the length of your credit history, affects your credit score. A shorter credit history might be seen as less stable, potentially resulting in a lower credit score.

Despite these initial setbacks, balance transfers aren't necessarily bad for your credit health. If handled correctly, they can help you save on interest, so you to pay off your debt faster. As your debt decreases, you could see your credit score rise. Understanding these dynamics can help you use balance transfers effectively.

How Balance Transfers Help Your Credit

While a balance transfer may cause an initial drop in your credit score, it can lead to positive changes in your credit health over time. We explore potential benefits that come along with a carefully handled balance transfer:

Lower Credit Utilization Ratio

A balance transfer could lower your credit utilization ratio. This ratio represents the amount of available credit you're currently using, and is important in your credit score calculation.

For instance, if you owe $2,000 on a card with a $5,000 limit, you're using 40% of your available credit. If you transfer that $2,000 to a new credit card with the same limit and keep your old card open without adding any new charges, you now have a total credit limit of $10,000 with the same $2,000 debt (plus the balance transfer fee). This means you're using just 20% of your available credit, which can reflect positively on your credit score over time.

Debt Reduction

A balance transfer, and a sound debt repayment strategy, can help your debt reduction. As your overall debt decreases, your credit score could increase. This shows lenders that you're effectively managing and reducing your debt, showing you as a lower credit risk.

Fewer Late Payments

Consolidating your credit card debts into one balance transfer could simplify your debt management if you have been struggling to manage multiple debts. This streamlined approach can help you avoid late fees if you occasionally miss payments. Remember, paying on time plays a significant role in your credit score.

When You Should Do a Balance Transfer

Deciding if a balance transfer is right for you isn't always straightforward. However, there are specific situations where it might make sense.

You Can Pay Off Debt During the Introductory Period

Balance transfer cards usually come with an introductory 0% APR period, which ranges from 6 to 21 months. If you believe you can pay off the amount you transferred within the given time, a balance transfer could be a good way to pause added interest. This could help you pay off your debt quicker and reduce your overall payments.

You Need Relief from High Interest

A balance transfer could be a savvy strategy if you have high-interest credit card debt. Transferring your balance to a card with a lower interest rate can significantly reduce the amount of interest you pay over time. This could save you a considerable sum and help you pay off your debt sooner.

You Have a Repayment Strategy

Balance transfers are not a magic solution to erase debt—they require financial discipline. If you're ready to commit to not incurring new debt and have a plan to pay off the transferred balance, a balance transfer can be a useful tool.

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It is important that you make all payments on time during your promotional offer. If you miss a payment, the card issuer may prematurely end your 0% APR offer and start charging interest before you are able to pay off the balance. -- Lee Huffman, credit card expert at

When You Should Avoid a Balance Transfer

While balance transfers can be a powerful tool for managing high-interest credit card debt, there are instances where there might be better choices.

You Can't Pay Off During the Introductory Period

Balance transfer cards usually offer a 0% APR during an introductory period. However, if you can't pay off the transferred balance within this time, the remaining debt could be subject to a high interest rate, leading to an increased financial burden.

The Balance Transfer Fee Is Too High

Balance transfer cards often come with fees, typically around 3% to 5% of the transferred amount or a set amount by the issuer. If this fee is too high, it could offset the savings from the lower interest rate, making the balance transfer less beneficial.

You're Tempted to Spend More

Having additional credit available might tempt some people to incur more debt. If you struggle with overspending, a balance transfer could worsen your debt situation rather than help it.

You're Planning a Major Loan Application

Applying for a balance transfer card can temporarily drop your credit score due to the hard credit inquiry. If you're planning to apply for a significant loan, such as a mortgage, this temporary decrease might not be beneficial.

When You Lack a Solid Repayment Strategy

Balance transfers aren't a magic solution for erasing debt—they require a disciplined approach to debt repayment. If you don't have a clear plan for paying off the transferred balance, a balance transfer might not be the best choice.

Tips for Finding the Right Balance Transfer Credit Card

When considering a balance transfer, finding the right credit card to fit your needs can make all the difference. Here are a few tips to guide you in making the best choice:

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    Consider the Introductory APR

    Look for a card with a 0% introductory APR. This period allows you to pay off your balance without accumulating more interest. However, keep in mind the length of the introductory period and ensure that you’re capable of paying off your balance within that time.

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    Check the Balance Transfer Fee

    Most cards charge a fee for balance transfers, usually 3% to 5% of the amount you're transferring (or a set amount, whichever is higher). Compare these fees and consider how they impact your overall debt repayment plan.

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    Review the Ongoing APR

    After the introductory period, the ongoing APR will apply to any remaining balance on your balance transfer card. Finding a card with a competitive ongoing rate is crucial, particularly if you anticipate needing more time to pay off your balance.

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    Understand the Credit Requirements

    Many balance transfer cards require good to excellent credit. Ensure you meet the credit score requirements of the card you're considering to increase your chances of approval.

Next Steps

It's easy to think a balance transfer is a quick fix for credit card debt, rather it needs to be combined with a debt-elimination strategy to confront your debt situation. This strategy and diligent payment habits, can lead to a healthier credit rating.

Having a robust credit score is more than just a point of pride — it can mean better loan terms, lower interest rates and greater financial opportunities in the long run. Your credit health reflects your financial health, so use balance transfers responsibly.

FAQs About Balance Transfers and Your Credit Score

Are you still wondering whether or not a balance transfer affects your credit score? MoneyGeek answers some frequently asked questions to equip you with the knowledge you need to make confident financial decisions.

About Grace Pilling

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Grace Pilling is passionate about empowering readers to make informed financial choices to support their best lives, not a company’s bottom line. Prior to joining MoneyGeek as a senior content manager, Grace was a senior editor at and Bankrate, where she focused on teaching people how to use credit cards wisely.

*Rates, fees or bonuses may vary or include specific stipulations. The content on this page is accurate as of the posting/last updated date; however, some of the offers mentioned may have expired. We recommend visiting the card issuer’s website for the most up-to-date information available.
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