What Happens After a Credit Card Balance Transfer?

ByDoug Milnes, CFA
Edited byBenjamar Gabawa

Updated: March 21, 2024

ByDoug Milnes, CFA
Edited byBenjamar Gabawa

Updated: March 21, 2024

Advertising & Editorial Disclosure

When you transfer a balance on your credit card, you're moving your debt from one card to another, often to take advantage of lower interest rates. You’ll know your balance transfer is complete when your old card's balance decreases and the new card reflects the transferred amount. However, this process won't close your old card automatically.

Key Takeaways

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  • Your old credit card remains active after a balance transfer until you request to cancel it.
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  • Depending on how much you transfer, and your card utilization, you may see your credit score drop. Diligently paying the balance and lowering your utilization should help it back up.
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  • While there may be exceptions, keeping your old credit card account open is generally beneficial as it can positively impact your credit score.

What Happens After You Do a Balance Transfer?

Your old card doesn't automatically close after successfully transferring a balance to another credit card. It remains open and active, minus the debt you've moved to the new card. If you still have charges, fees or interest on your old card, you must keep paying these off.

Here's how a balance transfer works: The issuer of your new credit card either pays off the old card directly or provides you a check to do it yourself. Continue payments on the old card until you receive confirmation that the balance transfer is complete.

You'll see the transferred balance on your new card, including any applicable balance transfer fees. Due to timing differences, you may see the balance in both your new and old cards. In this case, call your card issuers to ask about the status of your transfer.

Remember, while transferring credit card balances can be a strategy to manage debt, continually transferring balances without paying them down can negatively impact your credit score.

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MONEYGEEK EXPERT TIP

Instead of closing your old credit card, keep it open to maintain your credit history and available credit. If the card charges an annual fee, consider downgrading it to a no-fee card if its perks aren't worth the cost. -- Lee Huffman, credit card expert at BaldThoughts.com

What a Balance Transfer Does to Your Credit Score

A balance transfer can affect your credit score in various ways. Whenever you apply for a new credit card (and not just for balance transfers), card companies pull a hard inquiry on your credit report, which can temporarily lower your credit score.

Once your application is approved, your overall credit limit increases with the addition of the new card, which can decrease your credit utilization ratio, a positive for your credit score. However, if the balance transfer almost maxes out the new card, the utilization rate on that specific card spikes, potentially harming your credit score.

Your credit utilization across accounts drops as you pay off the balances, especially on the new card. Along with better financial habits, you’ll see the impact of the hard inquiry roll-off, and your credit score will improve over time.

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WHAT HAPPENS WHEN A CREDIT CARD BALANCE TRANSFER COMES IN TOO LATE?

If your balance transfer is delayed and you've paid the minimum to avoid penalties, interest will accumulate on the remaining balance until the transfer is complete.

After the balance transfer is finalized, the payment you made will be adjusted against the balance on your old account. Should the transfer amount cover the whole balance, and there's an overpayment, you'll usually see a credit on your account. You can use it for any future charges on that card.

What to Do After You Pay Off Your Balance

Once you've transferred a balance from one credit card to another, there are several steps you should take to ensure you're managing your debt effectively.

1
Keep track of the promotional period

Mark your calendar with the end date of the promotional period. Focus on paying off your balance before the end of the introductory period. Any remaining balance will accrue interest at a higher rate after this period.

2
Manage your old card wisely

Decide what to do with your old card. If you choose to keep it open, use it responsibly to avoid accumulating more debt. If you decide to close it, know the potential impact on your credit score.

3
Monitor your credit score

Regularly check your credit score and report to ensure all the information is accurate and to see how the balance transfer impacts your credit over time.

Should You Cancel Your Old Card?

Before you decide to cancel your old card after a balance transfer, there are questions that you need to ask. Does your old credit card carry any annual fees? Or maybe you still need the card in the future and don’t want to lose any current rewards.

You should keep your card open if:

  • Your card charges no annual fee: If there's no annual fee, keeping the card open can help maintain your credit score by contributing to a longer credit history and lower credit utilization ratio, which accounts for 15% and 30% of your credit score.
  • You maximize the rewards and benefits: It might be worth keeping if you benefit from the card's rewards. For example, if you're close to unlocking a new rewards tier, keep the card open.
  • You need to have a backup card: Keeping this card means avoiding the need for a new application and subsequent hard inquiry, should you require additional credit later.

Otherwise, we suggest closing your old card if:

  • Your card charges high annual fees: If the card has a high annual fee and you're not getting enough value from the rewards or benefits, it makes more sense to close it.
  • You’re tempted to overspend: If you tend to overspend and find it hard to resist the urge, canceling your credit card can be a smart move to keep your spending in check.

Option to Downgrade Your Card

If you don’t want to close your account but are worried about the annual fee, you can request a credit card downgrade. Essentially, you’re requesting a new card with lower annual fees and fewer benefits. And since you’re already an account holder, you won’t be subject to any hard inquiry, and the average age of your credit remains.

Be sure to ask your card issuer about its policies on downgrading a card, as it may limit your options. For instance, Chase only allows downgrading within the same card category. You can’t downgrade an Ink Business Preferred (business card) to a Chase Freedom Unlimited (personal card). You can’t also downgrade between Chase’s co-branded cards.

FAQ: What Happens After a Balance Transfer

We've answered some common questions about the topic to help clarify this process and its effects on your credit management.

Does doing a balance transfer close the old card?
What to do if the balance transfer is not showing on your old card?
How does the balance transfer affect my relationship with the old credit card issuer?
What are the implications for my rewards or points with the old card after a balance transfer?
Should I cancel my balance transfer credit card after paying it in full?

About Doug Milnes, CFA


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Doug Milnes is a CFA charter holder with over 10 years of experience in corporate finance and the Head of Credit Cards at MoneyGeek. Formerly, he performed valuations for Duff and Phelps and financial planning and analysis for various companies. His analysis has been cited by U.S. News and World Report, The Hill, the Los Angeles Times, The New York Times and many other outlets.

Milnes holds a master’s degree in data science from Northwestern University. He geeks out on helping people feel on top of their credit card use, from managing debt to optimizing rewards.


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