Will Transferring a Credit Card Balance Hurt My Credit?

If you’re struggling with credit card debt, often the last thing you’re thinking about is how to open a new credit card. But balance transfer credit cards are a tool that are often recommended by experts as a way to get some breathing room from your debt.

A reader, Joan, asked us recently whether transferring a balance to a new credit card would hurt her credit scores in any way. The answer, happily, is that it’s unlikely to do much damage, and it might even boost her score in the long run. Applying for any type of credit can result in a small, temporary drop in your credit score due to the inquiry that results. But if you get approved, your scores may benefit from the additional credit available to you. (A little mythbusting: Getting declined for a credit card has no additional penalty on your credit score.)

You may find that the cards with the best balance transfer offers also require the best scores. For example, Chase Slate offers a 15-month interest-free period and no fee for balances transferred within 60 days of opening the account, but your credit needs to be in the good to excellent range to get this card. (Here’s a full review of the Chase Slate card, which was named the Best Balance Transfer Credit Card in America this year.) If you’re not sure where you stand, you can check your credit scores for free using the free monthly credit report summary on Credit.com.

But You’re Not Totally Safe Yet…

A balance transfer could hurt your credit if it raises your credit utilization ratio. For example, if you transfer multiple balances from cards with relatively low balances to a single card that now has high debt relative to the limit — or is even maxed out, says credit score expert Barry Paperno, who blogs at Speaking of Credit.

“However, even in this rather extreme scenario, only ‘individual utilization’ (each card’s utilization) would tend to be impacted by now having a maxed-out card where there wasn’t one before,” he wrote in an email. “Here the ‘overall utilization’ (total balances/total limits) percentage probably wouldn’t change much, especially if the balance transfer card is a new one that adds total credit availability and the balances haven’t increased. In fact, in such a situation the overall utilization percentage might actually be lower than before, with the score remaining about the same or even going higher.”

So that’s good news for Joan, along with anyone else who has good or excellent credit and wants to use that to get some interest-free financing while they pay off their debt.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.