Avoid Transferring Credit Balances Too Frequently
Transferring your credit balance to a card with a lower interest rate seems like a good idea however there is a risk that transferring credit card balances may in fact have the effect of lowering your credit scores. This is because all you are doing is performing a “debt transplant.â€
Transferring balances from one credit card to another does not eliminate the debt itself. All it does is just shift it from one place to another. In this respect, your FICO score still records it as money you owe. This is because the FICO credit score is calculated on the amount of debt you owe in total.
Another problem is that when you transfer balances to a new credit card, the new credit card company initiates a new credit inquiry that can also lower your credit score. If the new company approves you for the transfer of the balance you can also receive a negative comment for closing the account that you are going to transfer your balance from (this principle of credit reporting is explained even more thoroughly in point 11.)