How Many Balance Transfers Should You Do?
When using balance transfers as a debt payoff strategy, carefully consider how many cards you take this approach with. While consolidating debt can help, transferring balances too liberally runs risks. Evaluate your specific situation to determine the optimal number of balance transfer cards to use.
How Balance Transfers Consolidate Debt
Balance transfers allow you to consolidate multiple high-interest credit card balances onto a new card offering a temporary 0% intro APR promotional period. This provides:
- Lower interest accrual by transferring debt to the 0% card
- Consolidation of several payments into one monthly payment
- Improved focus on rapidly paying down the transferred balance
When used deliberately, balance transfers facilitate repayment of credit card debt.
Benefits of Consolidating Through Transfers
The main benefits of credit card debt consolidation using balance transfers include:
- Avoid interest charges during 0% intro periods, saving substantially over time
- Simplify tracking multiple payments into one lower monthly payment
- Free up credit availability on old accounts by moving balances
- Motivate accelerated payoff by focusing on new single payoff account
- Take advantage of card rewards offers after transferring existing debt
Consolidating into fewer accounts streamlinesrequired debt repayment.
Risks of Opening Too Many New Accounts
While opening new accounts for balance transfers consolidates existing debts, opening too many new cards carries risks:
- Each hard inquiry for new accounts temporarily dings credit scores
- Lowering average age of credit history by closing old accounts after transferring
- Revolving debt shuffling if continuously opening new cards
- Confusion tracking several 0% expirations and minimum payments
- Paying multiple balance transfer fees that offset interest savings
Using fewer dedicated accounts for transfers avoids over complexity.
Recommended Number of Balance Transfer Cards
Financial experts generally recommend limiting balance transfers to 1 or 2 new credit cards at a time. Ideal scenarios:
One Balance Transfer Card
Consolidate all debts onto a single new 0% card. Simplest to manage but may require high limit approval.
Two Balance Transfer Cards
Split debts across two cards offering promotional 0% APR periods. Adds flexibility but doubles minimum payments.
More than two concurrently open balance transfer cards tends to increase risks and complexity without much added benefit.
Determining the Optimal Number for Your Situation
Consider the following factors when deciding the ideal number of balance transfer cards for your debt payoff plan:
- Your total current credit card debt amount
- Minimum payment amounts on current debts
- Your income and ability to manage multiple payments
- Whether current debt is on two cards or ten cards
- Your credit score’s ability to qualify for ideal new card options
- Any setbacks delaying new card applications and transfers
Weigh your specific circumstances, debts, and timing to identify the optimal consolidation approach.
Tips for Multi-Card Balance Transfers
If pursuing balance transfers across two cards makes sense for your situation, follow these best practices:
- Prioritize highest-rate debts onto the card with the longest 0% term first
- Sequence applications spaced 2-3 months apart to manage hard inquiries
- Transfer only amounts you can fully payoff before respective 0% expirations
- Mark calendars with both expiration dates and minimum payments
- Make at least the minimum payment on time for both new cards
- Designate new cards for dedicated purposes to avoid confusion
Stay organized and disciplined to avoid becoming overextended across multiple transfers.
Closing Accounts After Transfers
A key step once transfers are complete is closing old paid off credit cards so they don’t get reused:
- Leave accounts open until balances fully transfer to the new 0% card(s)
- Continue paying minimums on old cards until they reflect $0 balances
- Request old card issuers close accounts with $0 balances
- Destroy old cards to avoid reactivation temptation
Closing revolving accounts after transfers simplifies your finances.
When to Avoid Closing Old Cards
Some cases where you may opt to keep old accounts open after transfers include:
- The old account is your oldest line of credit history
- You need the additional total credit limit capacity
- The card provides benefits you still need
- Account closure would hurt credit utilization ratio
- You think you may reuse the card responsibly later
Evaluate each old account carefully before closing after transfers.
Alternatives to Balance Transfers
Other debt consolidation options besides balance transfers include:
- Directly contacting card issuers to negotiate hardship programs or lower interest rates
- Non-profit credit counseling and enrolling in debt management plans
- Taking out a debt consolidation loan with fixed repayment term
- Using 401(k) loan to repay credit card debt (if permitted)
- Part-time income dedicated to accelerated repayment
- Asking family or friends for low-interest loan to repay cards
Compare alternatives to determine the best overall debt payoff strategy.
- Limiting transfers to one or two dedicated cards usually provides the best consolidation benefits.
- Too many concurrent transfers risks over-complexity.
- Close paid off old accounts to avoid reuse after transferring balances.
- Weigh specific factors like total debts and issuer terms to identify ideal number of cards.
- Consider alternative debt consolidation strategies as well.
Thoughtfully consolidating through a reasonable number of balance transfer cards simplifies repayment focus. But opening excessive accounts risks becoming counterproductive.