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Does a balance transfer close my card?
What happens to your card after you transfer a balance?
After your balance transfer is complete, your old account doesn’t automatically close. In fact, it could still hold a balance depending on the amount you were able to transfer. Despite that, you can still close your credit card with a balance with most card providers.
Work with the provider to take the necessary steps should you want to close the account. Note that this may not always be the best option, however, depending on your financial needs.
Can you close a credit card with a balance?
Yes, in most cases you can close your credit card with a balance. But that doesn’t mean your balance has vanished. You are still liable for the outstanding balance, you just don’t have a card to spend.
If you close your credit card with a balance, try to pay it off as soon as possible. Otherwise, you will accrue interest and depending on the amount, you could end up with piling debt.
How to close a credit card with a balance
The process varies between card providers. But, in general, here’s how it goes:
- Call the number on the back of your card.
- Request to close your credit card.
- Provide customer support with your name, phone number and address.
The customer support representative will guide you from there.
|Bank of America|
When you do a balance transfer, does it close the account?
No. Your credit card account is still active after a balance transfer. You can proceed to close the account if you don’t need it anymore.
Should you close your account after a balance transfer?
It depends. Closing your account can remove temptation to spend, but it also may impact your credit score.
Here’s what to consider before closing your old account:
- Can you resist the temptation of spending? If the answer is no, you may want to strongly consider closing the account or looking into ways of removing that temptation.
- Does the card have an annual fee? An annual fee for a card you’re not using can feel like a waste of money. However, you may want to consider more than just its face value.
- Are you applying for other credit products? Closing an account can have a negative impact on your credit score. If you’re seeking loans or other credit, you may want to hold off on closing the account until after.
- Do you want to use the card in the future? Of course, there’s a reason you got the card in the first place. A good cashback rate, a lower APR or unbeatable travel benefits may make it a keeper.
How closing an old account can impact your credit score
Two of the five portions of your FICO credit score are your credit utilization ratio and credit history. Both can be impacted by closing your old account.
The total amount of credit you have versus what you’re currently using makes up your credit utilization ratio. Closing an account lowers the total amount of credit you have and raises the ratio, which can negatively affect your credit.
Similarly, the credit history portion of your score is the average age of your credit accounts. Longer established accounts indicate a good relationship with creditors, and closing an account lowers that average age.
Alternatives to closing your old account after a balance transfer
You don’t necessarily have to close your account to avoid spending more on your old card. Here are three ways to help keep yourself in check:
- Budget and stick to it. A good way to avoid spending on credit is to make a detailed budget and adhere to it.
- Cut up your card. Make it more difficult to spend from the account.
- Delete the card from digital wallets and saved sites. Similar to the last one, this is about making it difficult to spend the funds. It can also help curb midnight impulse buys.
Our pick for a balance transfer card
Citi Simplicity® CardRead more
Compare balance transfer credit cards
To manage a credit card after a balance transfer requires a certain level of dedication and planning. Just getting the debt shifted over won’t be an instant home run, and smart budgeting is crucial to prevent you from falling into the same place you were before the transfer. Also, if you close your credit card with a balance, know that you still have to make payments and accrue interest if you don’t.
Nail down your plan, and if you’re going to use a back-up card make sure to compare your options before securing it.
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