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How to manage a new credit card after you have done a balance transfer

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You’ve conducted your balance transfer, but what now? Here are some tips on how you can manage your new credit card and consolidate your debt

Balance transfer credit cards can be an efficient way to free yourself from high interest and start consolidating your debt. Conducting a balance transfer is a simple process, but repaying your debt before the promotional offer runs out can be tricky. Here are a few tips to follow to ensure that your consolidation goes successfully and smoothly once you’ve transferred your balance.

Pay attention to the details of the promotional offer

There are a few key details of the offer that you should pay attention to after you’ve conducted your balance transfer:

  • Offer length

Transfer offers generally sit between 6 and 24 months. Once your card has been approved the balance transfer promotional period begins. The sooner you begin repaying your balance the longer you’ll have to take advantage of the low interest offer.

Set phone and calendar reminders to prompt you to make regular repayments and to flag how long you have left.

  • Promotional rate

Most US providers offer cardholders 0% balance transfer offers, but if it does charge a low interest rate it’s important to understand how much your balance will grow each month and how you’ll need to factor this into your repayments.

Creating a payment plan will help simplify the process and reduce your chances of failing to repay your entire debt by the end of the promotional period.

  • Revert rate

Like all good things the low promotional rate on your balance transfer doesn’t last forever. Once the promotional offer ends, the revert rate will kick in and start collecting interest on your remaining debt. The revert rate is generally the much-higher standard cash advance or interest rate.

To avoid growing your debt again with interest once the offer expires make regular repayments, don’t use your card for purchases and keep an eye on when the offer ends to ensure you don’t have a remaining debt at that point.

  • Minimum repayment

You may have a 0% interest rate, but you’ll still need to make minimum repayments each month. How much you have to pay will vary from card to card, but this amount rarely allows cardholders to repay their entire debt by the time the promotional offer ends.

You should aim to pay more than the minimum amount each statement period to avoid collecting high interest once the promotion expires.

  • Work within a budget

Consider the size of your debt, the length of the promotion and the interest rate to calculate how much you’ll have to pay each month to ensure that your entire debt is repaid by the end of the offer. If not, your remaining balance will begin collecting the higher revert rate and you could get stuck in the debt trap once again.

What is a balance transfer fee?

Decide what to do with your old cards

Opening a balance transfer credit card doesn’t automatically close your old cards. Though you may not want to cancel them just yet, as it may have an impact on your credit score. Both your credit utilization rate and the age of your card can positively or negatively affect your credit rating.

  • Credit utilization rate. This is your debt-to-limit ratio — if you have a $1,000 limit and a balance of $800 you have a rate of 80%. There are no hard-and-fast rules for how long you should try to keep your rate, but many money experts recommend that you should shoot for under 30% as a goal. Your credit score may take a hit upon transferring one or several balances to your new card when it uses most or all of your limit.
  • Age of card. Credit bureaus like to see that you have had a long relationship with your credit card. The older your card, the better.
  • Annual fee. On the other hand, if your old cards have an annual fee and you don’t plan on using them any longer, you may want to consider closing them if you don’t want to keep paying the fee every year.

Is a balance transfer credit card right for me? Key considerations

Compare Balance Transfer Credit Cards

Name Product Introductory Balance Transfer APR APR (Annual Percentage Rate) for Purchases Annual Fee Minimum Credit Score
0% for the first 15 months (then 14.74%, 18.74% or 24.74% variable)
14.74%, 18.74% or 24.74% variable
$0
Fair (660-699)
Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees
0% for the first 18 months (then 12.74%, 16.74% or 20.74% variable)
12.74%, 16.74% or 20.74% variable
$0
Fair (660-699)
An 18-month 0% Intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card. See Rates and Fees
0% for the first 15 billing cycles (then to variable)
16.74% variable
$195
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
0% for the first 15 billing cycles (then to variable)
16.74% variable
$495
Good (700-739)
Mastercard Black Card members receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
0% for the first 15 months (then 14.74% to 25.74% variable)
14.74% to 25.74% variable
$0
Fair (660-699)
Earn 15,000 Membership Rewards® Points after you use your new Card to make $1,000 in purchases in your first 3 months.
0% for the first 15 months (then 14.74% to 25.74% variable)
14.74% to 25.74% variable
$0
Fair (660-699)
Snag a $150 bonus statement credit after you spend $1,000 in the first 3 months
0% for the first 12 months (then 14.74% to 24.74% variable)
14.74% to 24.74% variable
$95
Fair (660-699)
15,000 Membership Rewards points after you spend $1,000 in the first 3 months of opening your account
0% for the first 12 months (then 14.74% to 25.74% variable)
14.74% to 25.74% variable
$95
Fair (660-699)
Earn $200 bonus cash back after you spend $1,000 in the first 3 months
0% for the first 15 months (then 16.74% to 25.49% variable)
16.74% to 25.49% variable
$0
Fair (660-699)
Jumpstart your financial fitness! 60 day introductory balance transfer offer, save on interest, and get your free monthly credit score.
0% for the first 15 statement closing dates (then 14.74% to 24.74% variable)
14.74% to 24.74% variable
$0
Fair (660-699)
Transfer high rate balances and save on interest with an Introductory $0 balance transfer fee for the first 60 days your account is open. After that, the fee for future balance transfers is 3% (min. $10).
0% for the first 15 months (then 16.74% to 25.49% variable)
16.74% to 25.49% variable
$0
Fair (660-699)
Earn unlimited 1.5% cash back on every purchase - it's automatic. No minimum to redeem for cash back.
0% for the first 12 statement closing dates (then 14.99% to 24.99% variable)
14.99% to 24.99% variable
$0
Good (700-739)
Earn more cash back for the things you buy most.

Compare up to 4 providers

Don’t use your balance transfer credit card for purchases

  • Repayment hierarchy

The sole purpose of getting a balance transfer is to consolidate your debt. Using your balance transfer card for purchases completely contradicts your debt consolidation aim.

Balance transfer credit cards often charge high interest on purchases, and depending on their terms and conditions your repayments could automatically go to whichever debt is collecting the least interest. By using your card for purchases your payments go towards your balance transfer debt while the balance for your purchases accrues interest.

  • Interest-free days

Interest-free days are only active if you’re not carrying a balance at the end of the statement period, so you won’t be able to cut interest costs that way.

  • Emergency purchases

If you want a card for emergency purchases, you might want to consider applying for a different card with a low interest rate on purchases and do your best to keep the other card for consolidating only.

  • Visualizing payment hierarchy

Watch out for payment hierarchy

After the offer ends

If you’ve found yourself with a remaining debt at the end of your promotional period, you might want to consider doing a second balance transfer. However, credit history that shows you were unable to repay your debt during the promotional period could cause lenders to be less likely to approve your application.

Applying for too many credit cards and rejected applications can have a negative impact on your credit file, so it’s important to consider what affects using a second balance transfer as a back up will have.

Balance transfer credit cards can be a worthwhile consolidation tool, but only when used properly. Plan your strategy, make regular repayments and follow the above simple tips to ensure you get the most out of your balance transfer.

Bottom line

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. Nail down your plan, and if you’re going to use a back-up card make sure to compare your options before securing it.

Adrienne Fuller

Adrienne Fuller leads the publishing team at finder.com. She has one goal: to deliver the accurate and transparent information she wishes she had when she made some of life's important financial decisions. When she's not helping folks save money, she's hiking with her two Catahoulas around her home in San Diego.

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10 Responses

  1. Default Gravatar
    ShaneJuly 2, 2018

    After a balance transfer and the old card is on zero ,hi Adrienne ,can that card be used again with the same limit,,
    Does the balance transfer to the new card add or subtract from the limit
    5000 credit become 8000 or 2000 after a balance transfer of 3000..
    Thankyou for your reply

    • finder Customer Care
      nikkiangcoJuly 2, 2018Staff

      Hi Shane!

      Thanks for getting in touch!

      Yes, you can still use your previous credit card (balance transferred to a balance transfer card) and you’d still have the same credit limit unless otherwise changed by your creditor.

      Regarding this question – Does the balance transfer to the new card add or subtract from the limit – This depends on the balance transfer card you choose, as there are banks who offer 80-100% balance transfer limits.

      To paint a better picture, for example, you have a balance of $5000 from an old credit card and you got approved of a 95% balance transfer, you can transfer $4500 to the balance transfer card and the remaining $500 money owed on the old card must be paid in full so you won’t incur other interest.

      To choose and compare balance transfer credit cards, you can go to this page.

      Hope this helps!

      Regards,
      Nikki

  2. Default Gravatar
    isaacFebruary 22, 2018

    Hi, Will conducting a balanced transfer close off my existing card?

    • finder Customer Care
      RoslynFebruary 23, 2018Staff

      Hi Isaac,

      Thank you for contacting finder.com about balance transfers.

      No, your old card won’t be closed after completing a balance transfer to your new card. You can continue to use your old card until you close your account.

      If you decide to close your old card, keep in mind there might be an impact on your credit score. You might be thinking of closing your old card to avoid paying the annual fee or simplify your monthly bills. But if that’s your oldest credit card or it has a high limit, the hit to your credit utilization ratio and age of credit might lower your credit score.

      You can learn more about the pros and cons of balance transfers. We hope this helps you make an informed decision.

      Cheers,

      Roslyn

  3. Default Gravatar
    JoseFebruary 7, 2018

    What to do with a card after the balance transfer is paid in full, and if the card interest is high and the card has no rewards benefits?

    • finder Customer Care
      RenchFebruary 20, 2018Staff

      Hi Jose,

      Thanks for your inquiry.

      That’s great that you have already paid your balance transfer in full. Whether to use or not your credit card after you’ve settled your account depends entirely on your own decision after considering your overall financial situation.

      If you think that you’d need to close your account, you may so by contacting your bank’s customer care and they’d be happy to assist you.

      Just in case you’re considering to apply for a new card, you can check and compare credit cards with low interest on this page and credit cards with rewards here. Please review the card’s eligibility requirements and its features and consider whether the card/product is right for you.

      Best regards,
      Rench

  4. Default Gravatar
    MelNovember 8, 2017

    Can you cancel a balance transfer card after you’ve paid off the entire balance? Without it affecting credit score.

    • Default Gravatar
      DanielleNovember 8, 2017

      Hi Mel,

      Thank you for contacting finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

      If you’re closing an account with positive account history, positive credit data stays on your credit report for 10 years from when the account is closed. This allows good credit information to stay longer than negative, giving you the change to improve your financial situation. See more information here.

      I hope this helps.

      Cheers,
      Danielle

  5. Default Gravatar
    nadineAugust 30, 2017

    transfer from capital one to chase bank will capital one know about the transfer and close my account

    • Default Gravatar
      LiezlAugust 31, 2017

      Hi Nadine,

      Thanks for your question. Capital One will know about the balance transfer since they will receive the payment from your new credit card. However, a nil balance on your old card will not automatically close your account unless you’ll instruct them to do so. You can read more about credit card balance transfer on this page.

      Kind regards,
      Liezl

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