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Credit Card Blog - Is it Bad to Keep Transferring Your Balances on Credit Cards?

 Tuesday, 19 December 2006

If you're transferring balances constantly, the answer is yes. If you're constantly moving balances from one card to another, you probably aren't making a significant dent in your credit card debt, so the transfers are just helping to delay the inevitable.

Perhaps more importantly, the pattern of opening new accounts and transferring balances can negatively affect your ability to obtain new credit. Each new credit card requires another credit inquiry. Too many inquiries can lower your credit score. Also opening new lines of credit can lower your score as it increases the amount of debt you could potentially rack up. Creditors will see the pattern of transferring balances, and that may affect their decision to grant you a line of credit, even if it hasn't lowered your credit score.

For a balance transfer credit card to benefit you, you have to be willing to pay off the balance quickly. Those attractive balance transfer interest rates do not last forever – 6 months is typical. After that, they go back up to the normal rate which may be higher than on a card that doesn't offer an attractive rate on balance transfers. The good rate will generally also disappear if you're late making a payment, so it is important to pay on time every time.

While you're thinking about a balance transfer credit card, it couldn't hurt to call your current issuer and ask about getting your interest rate lowered. They'd rather have your business at a lower interest rate than have you move your balances elsewhere since they can't make any money off you if you have no balances with them.


Tuesday, 19 December 2006 20:12:53 (GMT Standard Time, UTC+00:00)  #     
Balance Transfers | Credit  | 
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