Can You Close Your Credit Card After a Balance Transfer?


Balance transfer Q&A: “Can you close your credit card after a balance transfer?”

First things first, let’s do a quick refresher on how a balance transfer works to provide some background for this question.

Put simply, when you execute a credit card balance transfer, you move existing debt from one credit card to another credit card.

The “balance transfer credit card” may either be a new credit card you open specifically for the purpose of the transfer, or an existing card that has a good balance transfer offer attached to it.

In any case, the old credit card will have a reduced or zero balance (ideally) once everything is said and done.

So you may be thinking about closing the old credit card, especially if it wasn’t doing much aside from landing you in overwhelming debt.

It’s Okay to Close the Old Card

Here’s the deal. Most “experts” and others with an opinion will cry bloody murder when you inquire about closing a credit card.

But it’s really not that big of a deal in most situations. Look, if the old credit card is your only credit card aside from the balance transfer credit card, it’s probably wise to keep it open.

For one, you won’t want to make new purchases on the balance transfer credit card because your focus should be on reducing the outstanding balance.

Secondly, if that credit card is reserved for debt reduction, you’ll need another credit card for everyday purchases.

And if there’s still a balance on the old credit card, you can’t close it unless it’s paid off in full.

That’s all pretty obvious. But there’s also the credit score ding that may accompany a closed credit card account.

Again, this isn’t a huge deal if you’ve got decent credit history and multiple credit cards. However, it can reduce your available credit (since the line of credit disappears) and increase your credit utilization.

This factors into Fico scoring, and may hurt you, at least temporarily. But over time, reducing your debt via the balance transfer will help your credit score.

Tip: Don’t carry out balance transfers before and during applications for other major loans, such as auto loans and mortgages, as they can depress your credit score.

[Does a balance transfer lower your credit score?]

Close the Card If You Want To

When it comes down to it, there’s no real reason to keep an old credit card open if it’s of no use to you, or worse, a detriment to your finances.

If the old credit card landed you into trouble, don’t keep it open. Pay it off via the balance transfer and then close it. Just be sure the balance transfer payment actually goes through before you go and close it.

[How long does a balance transfer take?]

If you like the old credit card, but simply spent more than you should have, keep it open and spend more wisely in the future.

Keeping the card open and making on-time payments can also help your credit score over time, but your number one priority should be staying out of debt.

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