What happens to the old credit card after a balance transfer? (2024)

Transferring high-interest debt to a new credit card with a 0% APR could be a smart debt reduction strategy. But if you’re considering this debt consolidation tool, it’s important to understand how it works — including what happens to your old credit card after the balance transfer takes place.

The decisions you make after a balance transfer (both with your original credit card and the new one) could have a meaningful impact on your credit score and your finances. Here’s what you need to know to avoid mistakes.

What happens after a balance transfer?

A balance transfer is a debt consolidation strategy that involves paying off an existing credit obligation with another credit card. Essentially, you’re moving debt from one lender or credit card issuer to a new one.

After you transfer debt from your original credit card to a new account, the balance on the old card will decline. This process typically takes a few days, though sometimes it could be longer.

Whether your old credit card balance moves all the way to zero or just some lower amount depends on how much debt you moved during the balance transfer process. Either way, it’s important to confirm that your original creditor received payment from the new one because mistakes can happen.

Should I cancel my old card after a balance transfer?

After a balance transfer takes place, your old account remains open. The original card issuer will typically only close your account if you make a request for it to do so. Unless you have a good reason to cancel your old credit card, however, you may want to think twice before you close the account.

Closing a credit card could hurt your credit score because it may increase your credit utilization ratio. Credit utilization (aka the relationship between your credit card limits and balances) is an important credit scoring factor which influences both FICO® Scores and VantageScore credit scores.

If you’re worried that you won’t be able to resist the temptation to overspend on an old credit card after a balance transfer, closing the account might be worth considering. Likewise, you might consider closing an account or perhaps downgrading if you’re paying an annual fee but not getting sufficient value from the card.

How much will a balance transfer cost you? It comes down to the balance transfer fee.

What happens to the new account when I pay off the balance?

You may open a new balance transfer credit card for the sole purpose of paying off your credit card debt. Yet even if that’s true, the account doesn’t go away once you pay off the balance on the credit card.

Most balance transfer credit cards feature no annual fees. So, it often makes sense to keep the account open after paying off the balance even if you originally opened the card as a debt consolidation tool. Having multiple credit cards (especially cards with zero balances) could make it easier to maintain a lower credit utilization ratio. And remember, a lower credit utilization is typically good for your credit score.

Even if a balance transfer card has an annual fee, it might make sense to keep the account open. But you’ll need to assess the benefits and rewards the credit card offers to see if the cost is worthwhile.

When does it make sense to do a balance transfer?

It’s wise to take an honest look at both the pros and cons of balance transfer credit cards before you decide if this debt consolidation option could work for you. Once you review the benefits and drawbacks, a balance transfer could make sense under the following circ*mstances:

• You can save money on interest charges by moving debt to a credit card with a 0% introductory APR (even counting the added cost of a balance transfer fee).
• You’re confident you can avoid future overspending on your credit cards.
• Your good credit might help you qualify for a solid balance transfer credit card offer.

Will a balance transfer affect my credit score?

A balance transfer credit card has the potential to affect your credit score, just like any other type of account that shows up on your credit report. Yet how a balance transfer impacts your credit score comes down to several factors.

If you open a new balance transfer credit card and use it to consolidate other credit card balances, your credit score might benefit. In this scenario, the new credit card could decrease your credit utilization ratio which tends to be good for your credit score.

On the other hand, if you open a new balance transfer credit card and make late payments on the account, your credit score could decline. Likewise, if you make late payments on the original credit card after a balance transfer, your credit score might also go down. You still have to manage all of your credit obligations in a responsible manner after a balance transfer if you want to earn or maintain good credit scores.

How to do a balance transfer

Below are the basic steps of the balance transfer process.

1. Apply for a new balance transfer credit card or initiate a balance transfer request on an existing credit card account. Review the terms and conditions to understand any balance transfer fees, when the promotional APR period ends and other important details.
2. Verify the original creditor (or creditors) receive payment. Check both your credit card statements and credit reports to make sure your old credit cards reflect the correct balance after moving debt to your new account.
3. Repay your debt. Make a plan to pay off your balance transfer before the 0% or low-APR period expires, if possible. Doing so will help you make the most of your reduced interest rate and could help you get out of debt faster.

Best 0% APR balance transfer cards to consider

The best balance transfer credit cards feature 0% introductory APRs for an extended period of time. Balance transfer cards often come with no annual fee as well, and some may feature extra perks like modest rewards or welcome bonuses.

Below are the top balance transfer credit cards to consider if you’re in the market for this type of credit card product.

Frequently asked questions (FAQs)