Pros & Cons of Credit Card Transfers (How it Affects Credit Scores)



Transferring Credit Card DebtIf you are looking to save money and get out of debt faster, you may be looking into transferring a balance from a higher-interest credit card to one with a lower interest. It is important to note that while transferring a balance can be helpful in helping you, it can also turn a difficult financial situation into a worse one.

When thinking about it, a zero percent balance transfer is enticing. A few months with no interest? Yes, please. However, in some cases, it does more damage than good. Let’s take a look at both, the pros and the cons of a balance transfer.

Pros of a Credit Card Balance Transfer

Transfer Your Balance to a “Better Terms” Credit Card

By “terms”, we are talking about fees, rewards, grace periods, and the perks of the credit card. By transferring your balances from a bunch of cards with high fees and short grace periods to a card that has no fees or low fees and longer grace periods with better perks, you are winning.  You may even be able to get rewards for certain purchases, maximizing your money spent.

Lower Credit Card Interest Rate

If you currently have some high-interest rates on a bunch of credit cards, consolidating that debt into one with a lower interest rate is optimal. It will provide you with less interest accumulated from charges and hopefully, no finance charges. Most low-interest cards come along with a promotional “no interest” period and you may even be able to have the card paid off before that promo period is over.


Consolidating your credit card debt into fewer (or just one) payments rids off the stress and hassle of paying a bunch of different cards every month. The chances of possibly missing a payment go up also, as you have so many to pay. With just one card and payment, you are sure not to accidentally miss your monthly payment.

Cons of a Credit Card Balance Transfer

Balance Transfers Can Be Pricey

Transferring your balance from many credit cards over to one comes with a fee. This fee is called a balance transfer fee. Also, some of these cards that accept consolidation come with a hefty annual fee as well. It is important to factor in all of these fees to see if it is actually worth it to be consolidating your debt. If the interest you paid leaving your balances on the other cards was less than the new interest and fees, then you are in a good spot.

Balance Transfers Can Leave You With a Higher Interest Rate

In the event that you wind up not qualifying for the promotional advertised rate, you may wind up with an even higher rate than you already have. This is where credit comes in! If you have excellent credit, then you have a much better chance of qualifying.

Your Credit Score Can Be Negatively Impacted by a Balance Transfer

When you apply for and decide to open up a new account, this hinders your score. It goes on your credit report as an inquiry, which has a slight impact on your credit score. The bigger hit that you take is within the usage of credit. When you carry a balance of more than 30% of your credit limit, you risk your credit score going down. If the card that you choose to get to transfer all of your balances over to does not have a high enough limit to only be 30% used after all transfers are made, you will most likely feel the impact of a score drop.