Credit score impact of multiple balance transfers


Opening Credits
Columnist Erica Sandberg
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for

Ask a question.

'Opening Credits' stories


Dear Opening Credits,
I had a credit card for which I did a balance transfer to an interest-free card. I have kept up to date with my payments, but the new credit card has now started to charge interest. If I transfer again to another interest-free card will that look bad on my credit?  -- Kristy


Dear Kristy,
It's a shame you missed out on the complete discount a great balance transfer provides. Can you get in on another? Perhaps, but it may not be the best decision.

As I'm sure you know, the advantage of a balance transfer is the major break you can get on finance charges. When a new credit card issuer takes over the debt that you've accumulated on a high rate card and you pay it off within the advertised time frame (three to 18 months, typically), you won't pay much or any interest. The only cost to you would be the transfer fee, which is often around 3 percent of the amount you move over. The savings can be astronomical.

Here's an example:

Let's say you owe $8,000 on a credit card with an interest rate of 29 percent. If you were to pay a fixed $250 every month, it would take more than five years to pay off and cost about $7,500 in interest. If a different creditor is willing to assume this debt at 0 percent interest for 12 months, the only fee would be the initial transfer cost of about $240 in this case. The catch? You'd have to increase your payments to at least $700. If you didn't, the real rate would kick in on any remaining debt, which could be more or less than what you had with the first creditor.

Without knowing the card's current interest rate and your balance, I can't tell how much you've forfeited by missing the deadline. The good news is that you've made your payments on time and the debt must have lightened. Your credit rating has most likely improved, too, especially if you kept the old card open and have used it responsibly. For these reasons, another balance transfer is possible.

If you feel certain that you can pay the rest of the debt off in a short period of time, review the current roster of transfer offers on this site. Be sure to check your credit scores first though, as you'll want to apply for the card that aligns with your rating. Look for one with the longest and best promotional rate. A low rate thereafter is nice, too.

Balance transfer deals can adversely affect a credit rating, however. Shifting a debt from one creditor to another isn't the problem, but if you max out the new card your credit utilization ratio rises. The amount you owe relative to what you can borrow is a very important factor in the FICO score calculation. A smart rule of thumb is to keep the balance well below 30 percent of the credit line. For a $3,000 debt, the card limit should be at least $9,000.

Before applying for a new card (which will also add a hard pull to your report, an action that can drive a score down a little further), consider other ways to deal with this debt. If you can repay it with large, steady payments in less than a year, I say stick with it.

Here's another example:

If your remaining balance is $3,000 and the rate is 15 percent, you can delete it all in 11 months with steady payments of $300. The total added interest would be only $225. That's more than the $90 or so transfer fee, but you'd preserve your credit scores. In fact, this strategy would definitely help them rise. You'd maintain a long relationship with this creditor, and length of credit history is also a scoring factor.

I've thrown a lot of figures at you, but I think it's enough to make the right decision! You can input different payoff scenarios with the payoff calculator to figure out what your best approach will be.

See related: 2015 Balance Transfer Survey: Offers more generous

Meet's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday,'s Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.

Published: June 17, 2015

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Follow Us

Updated: 10-24-2016

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.