7 Balance Transfer Myths Debunked

No. Some lenders charge a fee, and some, like Navy Federal Credit Union, don’t charge any balance transfer fees at all. Before you move your balance to another card, be sure to read the fine print to know whether the lender charges a fee to transfer your balance and whether there are any other charges (annual fee, late payment fee) on the new card.

A balance transfer isn’t the same as repayment. Although a transfer will pay off your old debt, you’ll still have to pay off the balance you’ve transferred to the new credit card. One way you may save money is if the new card has a lower rate than the one you currently use, you may pay less in interest charges. So, it’s a good idea to compare rates before you act.

Your credit score is based on many factors, including your debt repayment history. That's why a balance transfer itself wouldn't necessarily affect your credit score. You see, you're not adding more debt and the transfer wouldn't affect your ability to make on-time payments. However, frequently opening new accounts to transfer balances could have an effect on your score.

Actually, closing a card could have a negative impact on your score. Two of the factors that affect credit scores are (1) how long you’ve had credit and (2) how much credit you have available to you. By closing your card, you may shorten your credit history and reduce the amount of credit available to you. But, if the old card has an annual fee, closing it may be the right move.

Not necessarily. Depending on the lender, you may be able to include other types of debts, like personal loans. If you know you’ll have to carry a balance for a while, look for a credit card with a continuing low interest rate, and check to see if you could include other types of debt.

No. Your creditworthiness matters. Good credit gives you access to the best card offers. Lenders will likely check your credit score and review your credit report before approving a balance transfer. Those who have good or excellent credit are more likely to qualify for lower interest rates. The best balance transfer credit cards not only have low interest rates but also offer rewards programs like cash back and other perks.

No. Continue making at least the minimum payment on your old card until you’re notified your balance has been moved to your new account. Transfers can take up to 2 weeks to complete, and you don’t want to miss payments or get charged late fees in the meantime. Those dings could show up on your credit report.