What is Affected When Transferring Your Credit Card Balance?

Posted by whalehooks

April 5, 2008

Maybe transferring your balance from one credit card to another so that you can get a better interest rate is a dream come true. After all, you are saving who knows how much money.

But maybe it’s not such a great opportunity.You can’t really get away with doing transfer after transfer, with this debt going from place to place. It hurts your credit score, and that’s only one factor.

There are a few other ways that getting your balance transferred from credit card to credit card can hurt your credits core.

Here are a few examples:When you have a credit card, you have something that is called a debt percentage. It is the percentage of your credit limit that you owe on that credit card. In other words, if you have spent about half of what your credit limit is, your debt percentage is approximately fifty percent.You are almost always guaranteed safety if your debt percentage is at fifty percent or below. The higher you go above fifty percent, the more at risk you are of going over your limit, therefore you become a threat to the creditors you are borrowing from.

So, because you are spending freely with your credit card and are letting your debt percentage climb rather than paying off your credit card periodically, they raise your credit score.

If you do a balance transfer from one credit card to another, you must consider whether or not it will hurt your credit score. If your debt percentage is going to go up after this transfer, your credit score will most likely go down. If this happens, it is because your credit limit decreased while your balance stayed the same, therefore leaving you with a higher percentage.

This can be avoided though. If you leave your old account open, the limits on both cards will be combined, resulting in a lower debt percentage.
However, if you close your old credit card account, whether the new one has a higher credit limit or not, your credit score may still go down because the credit history that you built up with the old credit card will vanish, therefore leaving you with little proof of reliability with your new and previously unused card.

However, things can get out of control if you let them. Getting too many credit cards, no matter how low it makes your debt percentage, will hurt your credit score as well. It is a sign that you have so much credit spending room that you could end up borrowing loads of money and not being able to pay it back. This will automatically make your credit score go down because your debt potential is just getting too high.

Making a balance transfer does not have to hurt your credit score, but if you are not careful, it very easily can. Make sure you know, also how long the new low interest rate will last, so that you end up hurting your credit score in the long run by not being able to pay your bills. Being informed and knowing what will happen in either situation will help you to make a more wise decision.

Court helps people to learn about how to apply for credit cards. You can read more of his work by visiting: http://whalehookloans.com.

Debt Consolidation