Should I Close My Account After I Transfer the Balance to a New Card? - Experian (2024)

FAQs

Should I Close My Account After I Transfer the Balance to a New Card? - Experian? ›

Quick Answer

While it might be tempting to close it to help avoid racking up more credit card debt in the future, keeping the card open is likely the smarter move for most people.

Your old credit card remains active after a balance transfer until you request to cancel it. Depending on how much you transfer, and your card utilization, you may see your credit score drop. Diligently paying the balance and lowering your utilization should help it back up.

Key Takeaways

Closing a charge card won't affect your credit history (history is a factor in your overall credit score). Closing a credit card could hurt your credit score by increasing your credit utilization if you don't pay off all your balances.

The longer you've had credit, the better it is for your credit score. Your score is based on the average age of all your accounts, so closing the one that's been open the longest could lower your score the most. Closing a new account will have less of an impact.

A balance transfer can improve your credit over time as you work toward paying off your debt. But it can hurt your credit if you open several new cards, transfer your balance multiple times or add to your debt.

If you close a credit card with a balance, you'll still be responsible for that debt. Card issuers will continue to send statements in the mail, and interest will still be applied to that balance. It's best to leave your account open, as there can be negative impacts on your credit score if you close a card.

The problem is that transferring a balance means carrying a monthly balance. Carrying a monthly balance by not paying off the minimum amount due each month—even one with a 0% interest rate—can mean losing the card's introductory APR, its grace period and paying surprise interest on new purchases.

If you can't repay your debt in the promotional period, are nearing the finish line on total debt repayment or are planning on applying for major financing soon, a balance transfer may not be a good move.

Contact the new credit card company to do the balance transfer. The best way to transfer a credit card balance is by contacting the new credit card company with the balance transfer request. You can typically do a balance transfer over the phone or online.

Is it bad to have a lot of credit cards with zero balance? ›

However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.

Your credit utilization ratio goes up

By closing a credit card account with zero balance, you're removing all of that card's available balance from the ratio, in turn, increasing your utilization percentage. The higher your balance-to-limit ratio, the more it can hurt your credit.

Pay off your credit card debt

“Ideally, if you want to protect yourself, pay every balance down to zero before picking the card you want to close,” says McClary. If your CUR is 0%, it's still going to be 0% when you close a card. No jump in CUR or late payments means no credit score penalty.

While there's truth to the idea that closing a credit account can lower your score, the magnitude of the effect depends on various factors, such as how many other credit accounts you have and how old those accounts are. Sometimes the impact is minimal and your score drops just a few points.

Owning more than two or three credit cards can become unmanageable for many people. However, your credit needs and financial situation are unique, so there's no hard and fast rule about how many credit cards are too many. The important thing is to make sure that you use your credit cards responsibly.

In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active. At Experian, one of our priorities is consumer credit and finance education.

It may sound like a good idea to keep transferring your balance to a new card to avoid paying interest altogether. However, repeatedly opening new credit cards and transferring balances to them can damage your credit scores in the long run.

In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active. At Experian, one of our priorities is consumer credit and finance education.

A balance transfer takes about five to seven days after your request before you'll see it appear in the account you're transferring the balance to. But a word of warning: Some credit card issuers can take 14 or even 21 days to complete a balance transfer.

Balance transfers can also be done with an existing card, especially if the issuer is running a special promotion. This can be tricky, however, if the existing card already has a balance that the transfer will only increase.