February 6, 2019

10 Ways You Think You’re Helping Your Credit But Are Actually Hurting It

Doing a balance transfer

Moving all of your credit card debt to a new credit card with a low or no interest rate offer can seem like a smart move. Except when it’s not. While the move can save you a boatload in interest charges as long as you pay off the balance on time, it can hurt your credit score.

This happens for two reasons. First, opening a new credit card shows up as an inquiry on your report and dings your score. Additionally, credit utilization rate models look at how much credit you’re carrying on individual cards as well as across all accounts. Doing a balance transfer offer can get you very close to the credit limit for your new card, causing your utilization rate (and your score) to take a dip.

Doing a balance transfer can still be a good move if you can pay off the balance quickly. Once your card is paid off, your credit score should recover. However, make sure you can pay off the full balance before the promotional rate expires and avoid running up new charges on your old card.

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