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Vaishnavi kale
Vaishnavi is a Financial Content Writer at LoansJagat. She holds a B.Sc. and an M.Sc. She has experience in writing SEO-focused content across finance, digital marketing, education, and Ayurveda. Before joining LoansJagat, she worked with digital marketing agencies serving fintech clients and quick-commerce brands like Zepto and blinkit. At LoansJagat, Vaishnavi writes on banking, loans, personal finance, and insurance. Her work involves researching financial topics, understanding user search intent, and creating content that is clear and accurate. She has experience in SEO content writing, keyword research, content optimisation, and AEO. She enjoys simplifying complex topics into practical information that readers can easily understand and use. She believes that well-researched and reliable content plays an important role in helping people make informed financial decisions.
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Multiple balances on high-interest credit cards can be difficult to manage. To get rid of them, you can do a balance transfer. A person can transfer the balance of one credit card to a new card that is offering a lower interest rate. It allows them to save money on interest payments. Some credit card companies (not all) can charge fees on balance transfers. There is no fixed impact of a credit card balance transfer on borrowers' credit. It depends on how it is used.
Key takeaways
A credit balance transfer is the process of transferring one credit card’s account balance to another to take advantage of a lower interest rate or other offers. People generally go for this option when looking for debt consolidation or reducing interest rates. This strategy helps the borrower repay the loan easily.
Whether a credit card balance transfer will hurt your score depends on the decision. Whether you open a new balance transfer card or use an existing card.
The credit card balance transfer affects your credit score in the following way:
If a borrower is applying for a new credit card for a balance transfer, it can trigger a hard inquiry. It can cause a small and temporary dip in credit score. A single inquiry may not take more points off the credit score of most individuals. In India, exact point implications due to a hard inquiry aren't disclosed by CIBIL.
A new balance transfer card can lower the average age of a credit account. It can have a shorter credit history, which can be seen as less stable and result in lower scores.
When multiple balances are transferred to a single card, and a freed-up limit on old cards is also used, credit utilisation can increase. It can lower a score.
Credit card balance transfer does not only negatively affect credit score, but it shows positive signs too.
Multiple credit card bills can be confusing because of different due dates. Transferring all the credit card balance into one single credit card removes the chances of missed payments.
If you transfer your balance to an existing credit card but do not borrow any extra money, your total debt and total credit limit stay the same. That's why your credit score does not change much.
After a balance transfer, you do not need to pay multiple bills. That's why it is important to make timely payments.
Gautami and Rahul use balance transfers at the same time, but the results are different.
Both have 60,000 outstanding on their credit card A, which charges 3.5% interest per month. They want to transfer this balance to Card B, which offers only 1% interest for 6 months.
For both of them:
Card A balance - 60,000
After transferring, Card A has a 0 balance and Card B has 60,000. (2% transfer fee, 61,200)
Gautami doesn't touch Card A again and focuses on her payment of Card B. By 6 months, she's paid it off and saved a chunk of interest.
However, Rahul’s Card A shows a 0 balance; he started using it. Within 3 months, Card A has 40,000 on it again. And on top of that, Card B has 61,200. Rahul's Total debt is now 1,01,200, and both cards are carrying a balance.
Balance transfer didn't cause problems for Rahul, but his spending on the freed-up card did. The transfer works in your favour if the old card's limit stays untouched when you pay down the new one.
A credit balance transfer can be a good option for those who are struggling with multiple credit balances. However, repeatedly opening new cards can damage the credit score. The impact of balance transfer depends on its use. It is important to avoid using or closing old credit cards and applying for new credit cards after a balance transfer.
It depends on the use of balance transfers. Sometimes multiple hard inquiries and new accounts can slightly lower your credit score, but if the borrower has a lower credit utilisation ratio and makes timely payments, it can help improve your score.
The best bank for credit card balance transfer depends on how long you need to pay off your debt. The interest rate, processing fees, and tenure vary bank to bank. That's why no single bank is absolute.
There is no solid proof of a credit card that offers a 0% processing fee alongside 0% interest. But borrowers can get a zero processing fee structure if they opt for a specific long-term plan with a fixed interest rate.
Generally, plans either charge a processing fee or an interest rate, rarely neither. But you can avoid the processing fee specifically with options like the SBI Card balance transfer 180-day plan, which charges 0% processing fee but 1.7% interest per month instead.
You can keep a zero balance. Keeping credit cards active with a zero balance is better for your credit score. If you cancel a credit card, it can spike credit utilisation, shorten credit history, and reduce credit mix.
Methods like balance transfers and debt consolidation loans can help you get rid of credit card debt. Debt consolidation makes it easy by converting multiple debts into one. Transferring a high-interest balance to a new card that offers lower interest helps by reducing the balance.
You can use it, but it can affect your financial situation. Using a previous credit card while paying the new one can create a debt trap. After transferring the balance, one should leave the account open but not use it.
You can take the exact balance and clear it in 60 days. If the balance is too large, you can simply open a second balance transfer credit card with a 0% intro APR offer.
Closing credit after a balance transfer does not guarantee a single outcome. It depends on your financial profile. For some people, closing an account can lead to a drop in credit scores because it reduces total available credit, which can instantly elevate the calculator credit utilisation ratio.
A positive credit balance usually means the card issuer owes you money. For example, you overpaid or received a refund. It can be used toward future purchases.
