Do Balance Transfers Hurt Your Credit? What You Should Know

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If you’re drowning in credit card debt, transferring your balance to a card with lower interest might sound like a lifesaver.

But before you jump in, you’re probably wondering: “Do balance transfers hurt your credit?” Good news: A balance transfer won’t wreck your credit score if you handle it carefully.

This article breaks down exactly how balance transfers affect your credit — both positively and negatively — and gives you tips on how to come out ahead.

What Is a Balance Transfer?

A balance transfer is just what it sounds like: Relocating the debt from one credit card to another.

At first, that may sound silly. After all, you still owe the same amount of money — and balance transfers often cost between 3% to 5% of the transferred balance. Depending on the amount you’re transferring, you may have to pony up hundreds of dollars for the privilege.

In reality, doing this can save you an unbelievable amount of money if you’re struggling with high-interest debt. It lets you:

• Benefit from lower interest rates. If you’ve got a card that charges a considerably lower APR than the card carrying your debt, it could be worth moving that balance to the lower-APR card.
• Consolidate multiple debts onto a single card, which can lower your total monthly payment.

Do Balance Transfers Hurt Your Credit?

Transferring a balance doesn’t hurt your credit score. It can actually improve it a lot. Still, there are some caveats to be aware of if you open a new card:

• You’ll endure a new credit inquiry: Your credit score will get dinged for the hard credit pull that results from submitting a credit card application.
• Your length of credit history will decrease: The longer your average account age, the better it is for your credit score. When you open a new card, the average age will decrease.

Both of these effects are only temporary. Use your credit responsibly, and your score will bounce back in no time.

Again, you’ll almost certainly be hit with a balance transfer fee of 3% to 5% (though sometimes this fee is waived during a promotion).

How Credit Utilization Affects Your Score After a Balance Transfer

Credit utilization is a major factor of your credit health, accounting for a whopping 30% of your overall score. It represents the amount of available credit that you’re currently using. As an example, let’s say you’ve got two credit cards, each with a limit of $10,000. If you’re carrying a balance of $5,000 on each card, your credit utilization is 50%.

Experts recommend keeping your utilization below 30% to maintain a good score. Credit bureaus mostly care about your overall credit utilization more than your per-card balances (though some credit scoring models may sting your score if you’ve maxed out a credit card).

Transferring a balance generally won’t affect your credit score at all, as you’re simply moving money around. What will affect your score is opening a new balance transfer credit card (we’ll cover why below).

Can a Balance Transfer Actually Help Your Credit Score?

A balance transfer can positively affect your score because you’re adding to your total available credit, which lowers the percentage of credit you’re using.

Let’s use the same example above: Say you open a balance transfer credit card with a $15,000 limit and transfer your $10,000 in balances to that card. You still have $10,000 in debt, but you’ve now got $35,000 in available credit. This lowers your overall credit utilization to 28% (down from 50%).

Plus, if your new balance transfer credit card offers a low intro APR, more of your monthly payment will go toward the principal. That means you’ll be able to pay off your balance faster — which will also lower your credit score.

Opening a new credit card will also give you the ability to report more on-time payments to the credit bureaus.

But consider this, as well: If your credit utilization is high, your credit score is probably not great. If it’s below 670 (considered a “good” score according to FICO), you may have trouble getting approved for a balance transfer credit card.

And even if you are approved, the credit limit you’re given may be low. That’s a problem, because you can’t transfer more debt than you can house on your balance transfer credit card. So if you’ve got $10,000 of debt but you’re only approved for a balance transfer credit card with a $1,500 limit, the card is of little value.

Balance Transfer vs. Personal Loan: Which Hurts Your Credit More?

Balance transfers and personal loans are distinct, but they can serve similar purposes. The difference is that a balance transfer affects your credit utilization, while a personal loan doesn’t. In terms of consolidating debt:

• A balance transfer moves credit card debt from one card to another.
• A personal loan gives you cash to pay off your balances.

Here’s a clear breakdown to help you choose:

Both options cause minor, short-term dips in your credit score initially but can significantly benefit your credit in the long run if managed properly.

How to Do a Balance Transfer Without Hurting Your Credit

To transfer a balance without hurting your credit score, remember to make sure you’re creditworthy enough to win a credit line large enough to transfer a meaningful portion of your high-interest debt. Just make sure there are no hidden fees.

Here are some smart strategies to ensure your balance transfer helps rather than hurts your credit:

1. Select the Right Card: Choose a card with a high enough credit limit and low or 0% interest.
2. Pay Attention to Terms: Avoid surprise fees or short introductory periods by reading the fine print.
3. Always Pay On Time: Set reminders or automatic payments to avoid missed payments, as this is crucial for your credit score.
4. Keep Old Cards Open: Don’t rush to close old cards; keeping them open helps maintain a longer credit history.
5. Prioritize Debt Reduction: Use the balance transfer to actively pay down debt faster, not to delay financial responsibility.

You should also only transfer a balance if the APR you’ll pay is considerably lower than the interest you’re currently paying — or if your monthly minimum payment is considerably less (freeing up more of your money to throw at the principal). Do the math to ensure you’re saving money after you pay the balance transfer fee.

As long as you use your balance transfer card responsibly, you won’t hurt your credit. Do the following:

• Always make the minimum payment on time (this is the most weighty factor of your credit score).
• Don’t use your newly available credit as a license to spend more.
• Keep your balance transfer credit card open so that your average account age isn’t hurt.
• Pay down your balances as fast as you can (instead of simply using the low APR to delay paying off your cards).

Final Take to GO: Balance Transfers Can Boost Your Credit (When Done Right)

So, do balance transfers hurt your credit? Only minimally and temporarily — if handled correctly, the positives significantly outweigh the negatives. Balance transfers are a powerful tool to save money and pay off debt faster, ultimately improving your financial health.

Ready to take action? Check your credit score first, then explore and compare the best balance transfer options available to you.

The information is accurate as of March 28, 2025.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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