Does a Balance Transfer Affect My Credit Score?

Short answer: it depends. Depending on your circumstances, a credit card balance transfer may have a positive or negative impact on your credit score – or it may have no impact at all. Like any tool, balance transfers have their specific uses, and work best when used in specific cases. The People's Community Federal Credit Union team is here to help you learn about these tools – and decide whether they’re right for your situation.

How to Use Balance Transfers Effectively

For a credit card balance transfer to have the best possible impact on your credit score, you need to open a new card with a low APR and pay down your balance. This naturally means you’ll need to have a plan to pay it down. Here are a few tips to help you on your way:

• Avoid using your balance transfer card to buy things. The point of a balance transfer card is to reduce your debt, not increase it.
• Budget effectively. Track your spending and cancel unnecessary recurring payments, like streaming services you aren’t using.
• Set up autopay. This will prevent you from missing payments – potentially saving you from late fees and further negative credit score impact. Building a solid payment history accounts for up to 35% of your credit score, so it’s important to be consistent.
• Keep your current accounts open. The age of your existing accounts is a big part of your credit score; the older, the better. Closing an old account can make your credit score take a big hit.
• Avoid opening new accounts. Similar to the importance of old accounts, opening several new accounts close together can also impact your credit. Stick to one account and pay down your principal balance without adding to it.

Are There Negatives to Credit Card Balance Transfers?

As we mentioned, credit card balance transfers won’t work for every debt situation. In themselves, they aren’t harmful; they just need to be used correctly.

If you have a poor credit score to begin with, you may not get approved for this type of transfer. Since applying for a new credit card for this purpose will necessitate a hard inquiry on your credit, it may also trigger a temporary drop; the best way to mitigate this hazard is to open only one card and consolidate your credit card debt there.

At People's Community Federal Credit Union, we want the best for all of our customers; if a credit card balance transfer wouldn’t be helpful for you, we’ll let you know and help you explore other options for reducing your debt. If it will be helpful, we’ll advise you on the best card to use for your needs.

Struggling With Credit Card Debt? Count on People's Community Federal Credit Union

The People's Community Federal Credit Union team has been helping Clark County and Southwest WA residents get out from under their debts since 1954. If you think a credit card balance transfer might be the right choice for you, don’t hesitate to give us a call. Our team has a people-first approach; our ultimate goal is always to do right by our clients. If an option isn’t the best for your situation, you can count on us to offer an alternative. We want to make this as easy for you as possible.

Give us a call to get started.