How will a balance transfer affect my credit rating?
19 Nov 2021
Under the right circumstances, a credit card with a balance transfer offer could help you pay down credit card debt. But it’s important to consider this strategy carefully and whether it could affect your credit score or lead to further debt.
What is a credit card balance transfer?
A credit card balance transfer involves transferring your credit card debt to a new credit card with a 0% or low-interest rate, which may make it easier to repay your debt. The no or low-interest rate is typically only offered for a limited time, so you’ll need to pay off your credit card debt before this promotional period ends. After the promotional period, you’ll be charged interest and this rate could be higher than the rate on your original credit card.
Some cards won’t let you transfer the full amount from your current card, so it’s worth carefully looking at the interest and fees you could be charged if you end up with multiple credit cards. It’s also important to avoid or limit new purchases on the card, as you will usually be charged a different interest rate on purchases.
What is my credit score?
Your credit score or credit rating is a number that may be used by lenders to help them decide whether to approve you for credit or lend you money. It is typically between 0 and 1,000 or 1,200, depending on the credit reporting body (Equifax, Experian or illion). The higher your credit score, the more creditworthy you are seen to be. Your credit score is based on information in your credit report.
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This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.
