Why refrain from BTs?

[Anonymous]

I sense this may be a dumb question, but what are the reasons we should refrain from BTs? Assuming it's a good offer (i.e. 0% and no fee), do BT reflect badly on ones score/profile or something? I understand I should consider the rate after the 0% expires, but if it's the same or lower rate than the balance carries before the BT ....

 ... and if I don't manage to pay off balance before the 18 months (for example) then why not transfer it again? In other words, are there other factors I'm not aware of? Thanks

[gdale6]

Hi there OP,

As the thread you posted this in is nearly a year old I have created your own thread on your question. I changed the title and left everything else intact. You can edit the title if you wish by using the edit message line from the options pull down menu in the upper right hand corner of the post.

[Anonymous]

It does not reflect poorly on your reports. And if you are unable to pay it off then you certainly can transfer the remaining balance.

What's looks poorly is when someone constantly juggles around balances but never reducing the balance.

[deltatee]

From some people's experience, it sounds as though some lenders may be more sensitive to it than others.  I'd imagine lenders ultimately look at whether someone's use of a balance transfer appears to reflect some sort of risky behavior.  In my experience, I have used Discover and Chase for balance transfers and have never had any issues.

[Anonymous]

When I first started building credit I approved for Chase Freedom with a $4k SL. I transfered $3500 on it and paid it off in six months even though I had 15 months at 0%.

I used a $17,800.00 no hassle check at 0% with a 2% fee two months ago and have it already paid it down to $7500. I will draw the rest of it out over the next 15 months and make sure it's completely paid by the time the zero percent ends. 

It's the ONLY card I keep a balance on. And I trust only Capital One to do this with. As it would be highly unlikely they would ever impose AA. I have always put good use on Capital One and pay them back quickly with large payments and that's what they love.

Every other week Cap1 offers me BT's and no hassle checks. I've used no hassles checks in the past with them and always pay back quicker than expected.

I know by treating them good, they will be there when I need them. As they always are. My favorite creditor is Capital One.

[AverageJoesCredit]

Hmm, i love to ask this Donny, but....WHATS IN YOUR WALLET LOL

[Anonymous]

Thanks! That makes me curious though: when you transfer a balance does it register somehow/somewhere - -- when you say "it looks poorly" -- what are creditors seeing exactly? Is there some running tally? Some algorithm that tracks your balance transfers over the years? How would a third party creditor, or even one party to the transfer, notice or remember a BT on varying accounts over time? Sure, never reducing a balance will look bad -- whether I had no BTs or a hundred?

[Anonymous]

Good question. Have you ever seen your raw credit reports? On those reports it lists balance and payment history from date to date under each creditor. Let's use Chase for example: When you request a balance transfer they will say it's under review. A very smart representative in the lending department could look at each line item creditor and and look at your payment and balance history. So, someone who is floating money around continuously from account to account without ever paying down the debt can be detected.

I couldn't tell you how often it is caught, but it is eventually.

[UncleB]

Good stuff here; I'll just add that there comes a point (or there did with me at least) where saving money will be more valuable than being concerned with what a lender might think when reviewing your account.

In my case I now have cards with the 'big' issuers, and I do what I need to save a dollar... if one of them were to have an issue with that they can cut me loose and I'll be fine. 

That said, regardless of what anybody (lender or otherwise) thinks about moving debt around it's really not a good idea to perpetually keep the same balance for extended times, since that increases the chance of not having it PIF by the time the promo expires - that's common sense.  In my opinion (and we all have one... LOL) it's a sign of money management issues if somebody has a balance on a 0% promo and the amount never goes down. 

To me, the promos are useful to pay off things that I would rather not dip into savings for... like major dental work or car repairs.  Even when I have the liquid funds if the fee is low enough I prefer to use somebody else's money and keep my own (that's just my preference).  This also assumes somebody is doing a BT to take advantage of a no (or low) APR promotion... if there's no promotion or the APR isn't significantly lower that's an indicator of an issue, indeed.

Just my 2¢. 

(Note that these are general statements, and there are of course situations that would be exceptions.)

[noobody]

Long term BT is bad news generally.
If you can not pay off or significant reduce balance on account you BT to with zero or very low APR. You have bigger financial problem than credit score.