Best Practice for Balance Transfer

sliceofham

Hi everyone,

I'm looking to do a balance transfer as the 0% interest on my current credit card is coming to an end. I was just wondering what is best practice for the 'old' card when you do this? Is it common to close the account or keep it open? Any benefits/drawbacks of doing either?

Thanks for any help! 

CliveOfIndia

There's never a clear-cut answer to this one.  If you're never going to use the card again, then you may as well close it.  The card issuer will normally close the account anyway after an extended period of inactivity.  And you never know, in a year's time you may find yourself being offered further deals as a "new" customer.

The flip side is that long-running, well-managed lines of credit reflect positively on your credit history.  So there is an argument to say keep it open, use if for a few small purchases each month and always repay in full.

The deciding factor is probably how many other cards you've got.  If you've only got a couple then it's probably worth keeping it active (especially if it offers any rewards/cashback/points/whatever).  If you've already got several cards on the go then you can close it if you want.

If you do close it you'll almost certainly see a drop in your credit score.  But pay no heed to this, as it's just a meaningless marketing gimmick that's not used - nor, indeed, even seen - by any lender.

retiredbanker1

Keep it open would be my advice you might get offers to balance back in 12/18 months time.

Brie

If you have a bit of available credit on a card you might be offered more 0% deals.  Some cards are quicker to offer those than others.  

sliceofham

Thanks for the answers!

I've got one that has been inactive since I got my current one, so the new one will be my third. I haven't seen any offers to remain at 0% but maybe I haven't been looking hard enough on the two that I have just now so will double check to make sure.

retiredbanker1

Put some transactions through empty credit cards once say every quarter - it is amazing how many offers you will get if your credit history is clean.