Published in: Credit Cards | Oct. 18, 2019

5 Times You Shouldn't Transfer Your Credit Card Balance to a New Card

By:  Kailey Hagen

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Contrary to popular belief, it doesn't always help you.

Transferring a balance can help you pay down your credit card debt more quickly by giving you a temporary reprieve from the high interest rates that drive up what you owe. But there are times when it's not the smart play. Here are five situations where you're better off leaving your balance where it is and trying to pay it off from there.

A woman holding a handful of credit cards.

Image source: Getty Images

1. You're not making any effort to pay down your debt

Balance transfer credit cards typically offer a 0% introductory APR to new cardholders. This rate lasts between six and 18 months depending on the card. During this time, your balance won't gain any interest, and so any money you put toward it will go toward your principal balance. But once this rate expires, any remaining balance will accrue interest at the standard rate.

Balance transfers make sense if you're actively trying to pay down your debt, but if you’re not, there's no point in making the transfer. You'll incur balance transfer fees and any interest you accrued on your old card becomes part of the principal balance on your new card. That means that when the promotional period ends, you'll owe interest on a larger balance, which could make it even more difficult for you to pay off your debt in the future.

2. You're trying to transfer a balance to a new card with the same issuer

You cannot transfer a balance from one card to another card that is offered by the same card issuer. You may be tempted to open up another card with that same issuer if it offers a nice introductory APR period, but this is typically only for new customers and you probably won't qualify for this deal. You must seek out a balance transfer credit card with a different issuer if you hope to actually reap the benefits of its introductory offers.

3. Your new card charges a higher standard APR

Many credit cards offer balance transfers, but just because a card allows balance transfers it doesn't mean it's a good idea. Ideally, you should choose a card that has a long 0% introductory annual percentage rate (APR) period and a reasonable APR that kicks in after that. It's especially important to pay attention to the standard APR if you don't believe you'll be able to pay off the full balance within the introductory period. 

If the card you're looking at charges a higher APR than your current card, transferring a balance doesn't make sense because your transferred balance will grow even faster and this will make it more challenging to pay off. 

4. You can pay off your balance on your existing credit card

Transferring a balance is a smart idea if you are struggling to pay down your balance on your existing card. But if you're making progress toward paying off your debt on your current card, transferring a balance might not be necessary. A card with a 0% introductory APR could help you pay your debt down more quickly, but you'll also incur balance transfer fees, which means that the total amount you have to pay back will be higher on the new card.

Plus, once your balance is paid off, you may not have any further use for the new card. Having access to all of that credit could also tempt you to spend more than you should and you could end up trapped in that debt cycle again. 

5. You have poor credit

Credit card issuers assign you an interest rate based on your creditworthiness and borrowers with bad credit typically have to pay higher interest rates to account for the increased risk of lending to them. Poor credit might also render you ineligible for the 0% introductory APR on certain credit cards. Or you could just be denied when you apply for a new card you'd like to transfer a balance to.

Work on improving your credit before applying for a balance transfer card. Paying all of your bills on time is key. Make at least the minimum payment on all of your credit cards and set reminders for yourself if you struggle to remember to pay on time. Try to avoid charging more to your credit cards if you can because this will help reduce the rate at which your balance grows and prevent your credit utilization ratio -- the amount of credit you use versus the amount available to you -- from rising even further. Aim to use 30% or less of your available credit if you can.

Transferring a balance is one way to pay down your credit card debt, but it isn't always the best way. If any of the five scenarios above apply to you, consider transferring your balance to a different card, paying down your debt on your existing card, or seeking out another way to pay back what you owe, like taking out a personal loan.

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