What happens to your credit card after a balance transfer?

Transferring your balance to a new card can be a great way to pay off debt, saving money on interest and improving your credit score.

A balance transfer credit card with a long promotional period of 0 percent APR is the perfect place for a balance that sits on your existing card and incurs high interest charges.

But what will happen to the old card after the balance transfer? Should you let it collect dust, use it to pay a recurring bill or two, or just cancel it?

The choice you make can affect your credit, so don’t forget about this old card and its history. This can still play a role in improving your creditworthiness while you focus on paying off your debt.

What to do with an old credit card

You may be tempted to close your old credit card account after a balance transfer, but for most cardholders, keeping it open is the smarter move for your credit score.

Your overall credit usage ratio—the percentage of the total credit limit you use across all credit cards—may increase if you close your account. Credit utilization is the second most important factor in the FICO credit scoring model and it is best to keep it as low as possible.

Because your old card’s credit limit still counts towards your credit usage, it provides more “headroom” between your total available credit and any balances you have on other cards.

However, your old card will not help you keep your credit usage low if you start spending on it again before paying off the transferred balance. To avoid this, place the old card in a locked drawer or cut it off so it can’t be used. And if the card is stored in any of your online shopping or mobile wallet accounts, remove it or replace it with another payment method.

Please note that your card issuer may terminate the card after six or more months of inactivity. You can prevent this by making occasional small purchases with it, or even setting it to automatically pay recurring bills like a subscription or streaming service.

Also, if the old card has an annual fee that you no longer want to pay, you may want to consider canceling it despite the potential impact on your credit score. Another reason to cancel a card is if it’s signed with someone you no longer want to be financially connected to, such as an ex-spouse or partner.

What to do with the new balance transfer card

You should also avoid using a new card for purchases until the balance transfer has been paid off. Keep the balance transfer card in a safe place (perhaps in the same locked drawer as your old card) until then.

After that, you can start shopping on it if you so desire. If the card offers recurring rewards, it can help you save on day-to-day expenses. Just remember to pay your balance in full each month, especially if the zero APR card has expired.

If your card does not offer rewards, you can contact your issuer and ask to switch to another card in its lineup. This will usually not affect your credit score and you will most likely even keep the same account number and payment date.

How does a balance transfer affect your credit score?

A balance transfer credit card can be part of a smart strategy to improve your overall credit score, but it can negatively impact your credit score in the short term.

First, there is the problem of hard investigation. When you open a new credit card account, the issuer will almost certainly check your credit report. A hard request will stay on your credit report for two years, but it will only affect your score for half of that time.

Second, the length of your credit history – the third most important FICO score factor – can shrink as you add a brand new account to your credit report. But the impact can be minimal if you have multiple old accounts, whether they’re credit cards or installment loans.

In the long run, transferring the balance should help your account as you make payments on time and reduce your overall debt. As noted, do not spend on your old card or add purchases to your new card while you are paying off the transferred balance. Otherwise, you may end up in the same position as before. Eventually, your balance transfer card will start charging interest after the end of the 0 percent APR promotional period.

bottom line

If you are using a new credit card to transfer your balance, your old card may well be in your rearview mirror. However, it can help you improve your credit while keeping your credit utilization rate low. So if the old card doesn’t charge an annual fee that you can no longer justify, consider keeping it on your lineup.

CreditCards.com Team This article was created using automation technology and carefully edited and reviewed by our editorial staff.