Does paying off a credit card with another credit card hurt your credit score?

Does Paying Off a Credit Card with Another Credit Card Damage Your Credit Score?

Utilizing a balance transfer, where debt from one credit card is paid off with another, can be a useful strategy to manage debt. However, it’s crucial to approach this option prudently to avoid any detrimental effects on your credit score.

Understanding Balance Transfers

Balance transfers involve transferring an outstanding balance from one credit card to another, typically with a lower interest rate or a promotional introductory rate. While this can provide temporary relief from high interest charges, it’s essential to understand the potential consequences.

The Impact on Your Credit Score

Paying off a credit card with another credit card can have varying effects on your credit score. Here’s a breakdown:

• Hard Inquiry: Applying for a new credit card, even for a balance transfer, results in a hard inquiry on your credit report, which can temporarily lower your score by a few points.
• Credit Utilization: Transferring a balance increases your overall credit utilization ratio, which measures the amount of credit you’re using compared to your available credit limits. A high utilization ratio can negatively impact your score.
• Payment History: If you don’t make timely payments on the new credit card, your payment history will be affected, which is a key factor in determining your credit score.

Responsible Use for Credit Score Growth

To ensure a positive impact on your credit score when using balance transfers, it’s crucial to use them responsibly:

• Avoid Repeated Transfers: Repeatedly transferring balances can lead to a pattern of high credit utilization and multiple hard inquiries, both of which can damage your score.
• Borrow Moderately: Only transfer amounts that you can realistically pay off within the promotional period or at a manageable interest rate. Excessive borrowing can strain your finances and impact your creditworthiness.
• Make Timely Payments: Prioritize making on-time payments on both your old and new credit cards to maintain a positive payment history.

By adhering to these responsible practices, you can harness the benefits of balance transfers to manage debt while protecting and even improving your credit score over time.