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To understand the relationship between balance transfers and your credit score, you first need to know what a balance transfer is. If you currently have debt on a card with a high APR, you’re probably racking up high-interest expenses. When you do make payments on your balance, they often are going toward interest and not the principal amount you owe. It may feel as if you’re paying your bill but not making any real progress at all.
That’s where balance transfers come in handy.
You can transfer a balance from a high APR card to a new card (from a different issuer) with a 0% intro APR period. By doing so, you can save on interest and put your payments solely toward the principal amount you owe.
What credit score do I need to qualify for a balance transfer card?
All of the balance transfer cards listed on our site require good or excellent credit to qualify, and even then there is always a chance issuers won’t approve your application. The best balance transfer cards are reserved for people who have excellent credit and these often include cards with the longest intro 0% APR periods up to 21 months and intro $0 balance transfer fees. If you have good credit, you still have a chance to qualify for those cards too, but may have better odds with cards that have shorter intro periods.
Those who have fair or bad credit most likely won’t qualify for any balance transfer cards. Rather than applying for balance transfer cards and getting denied (which could hurt your credit score), consider consolidating your credit debt by using a personal loan instead. (Disclosure: MagnifyMoney is owned by LendingTree, the parent company of CompareCards.) They can be a good alternative and often approve people with lower credit scores.
Some lenders allow you to check the rates you may receive by performing a soft credit pull which doesn’t hurt your credit score. This allows you to shop around for the best rates — but keep in mind there will be a hard pull when you apply for the loan. LendingTree, the parent company of CompareCards, has a great tool that allows you to compare personal loan offers from dozens of lenders in minutes.
Can transferring my balance hurt my score?
Completing a balance transfer can either have a positive or negative effect on your credit score — it all depends on the actions you take. Below are some actions that may cause a transfer to help or hurt your score.
|Actions that help your score||Actions that hurt your score|
How can I protect my credit score and transfer a balance?
When completed successfully, balance transfers can be a great way to help your credit score and can possibly raise your score. Paying off lingering debt within the intro period not only allows you to save on interest payments, but it can improve various credit factors like payment history and amounts owed. Those two factors make up 35% and 30% of your FICO® Score, respectively.
Make on-time payments: A good rule of thumb is to always make on-time payments so you don’t have negative information reported to the credit bureaus and to avoid late fees. You can set up autopay to make the minimum due each month, preventing you from both missing payments and getting hit with a late payment fee. Autopay can also be used to make a fixed payment each month. For example, if you’re paying off a transferred balance, only paying the minimum payment each month won’t suffice. Set up autopay for an amount you can afford each month like $100 or $200. This way you’ll start to see your balance dwindle and good payment history will be reported to the credit bureaus.
Keep amounts owed to a minimum: Having a large balance on your account increases the amount you owe, lowering your available credit limit and raising your credit utilization rate. Your credit utilization is the percent of available credit you use. If you have a credit limit of $1,000 on one card and $4,000 on another, your total available credit limit is $5,000. Then, say you owe $2,000 from a balance transfer and $1,000 from new purchases — that would make your credit utilization 60% ($3,000 in combined debt / $5,000 total credit limit). That’s a very high utilization rate and can hurt your credit score. We recommend keeping your utilization around 20%. To lower amounts owed, try and limit spending and make sure you pay new purchases before your statement is due.
Pay your balance before the intro period ends: The purpose of a balance transfer is to get out of debt, not buy more time. Meaning, you should make it a goal to pay your entire balance before the intro period ends and not push off making payments since you’re not incurring interest. By paying your balance in full, you can avoid falling into the same cycle of high-interest charges you just left. Another benefit of paying before the intro period ends is that you won’t be charged deferred interest. Not all cards have deferred interest, but those that do will hold you responsible for all the interest you accrued during the intro period if you continue to carry a balance after the intro period — all the more reason to pay your balance before the intro period ends.
Suggested balance transfer cards
The Amex EveryDay® Credit Card from American Express: The Amex EveryDay® Credit Card from American Express is a great pick for a balance transfer card, offering cardholders a wide range of benefits. There is an intro 0% for 15 Months on balance transfers (after, 14.99% - 25.99% Variable APR) with a $0 balance transfer fee. To take advantage of the offer, you must make the transfer within 60 days of account opening. In addition, there is a rewards program where you earn 2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases. Excellent/Good credit is required.
The information related to The Amex EveryDay® Credit Card from American Express has been collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.
Chase Slate®: The Chase Slate® has a good balance transfer offer with a 0% Intro APR on Balance Transfers for 15 months and an Intro $0 on transfers made within 60 days of account opening. After that: Either $5 or 5%, whichever is greater. After the intro period, 17.24% - 25.99% Variable APR). There are no rewards with this card, but it can help you get out of debt if used responsibly. You need excellent/good credit to qualify.
The information related to the Chase Slate® has been collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.
Citi® Diamond Preferred® Card: If you’re looking for a lengthy intro period, the Citi® Diamond Preferred® Card has you covered with the longest intro period of any card in our database with intro 0%* for 18 months on Balance Transfers* and an ongoing 15.24% - 25.24%* (Variable) APR. That’s nearly two years to pay off any debt you transfer, but just remember there is a balance transfer fee — 5% of each balance transfer; $5 minimum. Take note excellent/good credit is required.
The information related to the Citi® Diamond Preferred® Card has been collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.
Check out our roundup of the best balance transfer credit cards.