Transfering Balance

[Anonymous]

I read on Credit Karma that if you transfer funds from one credit card into another...your score will increase.

How is that done? I feel so stupid for asking this, but I've never done it.

Do you have to pay off your balance with another credit card?

[takeshi74]

Always consider your sources -- take CK with a grain of salt.  Transferring doesn't guarantee a score increase. A tranfer may help if it reduces utilization on the card being transferred from -- that is, as long as it doesn't increase utilization on the target card too much.

You initiate the balance transfer from the card you're transferring to.  Typically this can be done online or over the phone.  Be aware of the interest rates, balance transfer fees, and so on.

[NRB525]

+1

It may be possible to engineer a slight increase in your credit score in the following example:

Card #1 has a limit of $250, and a balance on it of $225, 90% utilization. ouch.

Card #2 has a limit of $1,000 and currently no balance.

Transferring the $225 to card #2 (initiated as noted from the card #2 website) results in:

Card #1 has 0% utilization (improvement)

Card #2 has 22.5% utilization (less than 30% so not too bad).

You may pay a 3%-4% fee for the transfer, particularly if going to a 0% APR offer. CapitalOne allows me to transfer without a BT Fee, however that is to the ongoing 10.9% APR. BT has some form of fee, they are never 100% free.

In isolation it is possible this results in a few points gain. It probably would not result in a long term score drop. How many points gain? YMMV.

Often the more compelling reason to make a BT is to save interest expense in the long run, not for any FICO points games.