Will Closing an Old Card Hurt Credit Score After a Balance Transfer?
When you move existing credit card balances to a new account with a 0% intro APR via a balance transfer, it raises the question of whether you should close the old paid off account. Doing so could influence your credit score. Evaluate impacts to determine the best approach.
How Balance Transfers Work
A credit card balance transfer allows you to transfer high-interest balances from an existing card over to a new account offering a 0% introductory promotional period, typically lasting 12-21 months.
You continue making monthly payments on the new card during the 0% window to pay off the consolidated balance while saving on interest. Old accounts may get closed after paying off.
Should You Close Old Accounts After Transfers?
Once you’ve paid off your old credit card that had balances transferred, is it better to close the account or leave it open?
Reasons to Close Old Accounts
- Avoid temptation to reuse and accumulate new debt
- Streamline finances and credit tracking
- Cards no longer needed after transferring balances
- Lower risk of fraud on unused accounts
Reasons to Leave Old Accounts Open
- Preserve credit history length
- Maintain higher total credit limits
- Keep longstanding accounts open
- Avoid hard inquiries from reapplying later
Weigh these factors against your credit profile and goals to determine whether to close old cards or not.
How Closing Accounts Impacts Credit Scores
When deciding whether to close old credit cards after balance transfers, consider how account closure may influence your credit scores:
Credit History Length
Closing very old accounts shortens your credit history which can lower scores. A long credit history is ideal.
Eliminating old revolving accounts impacts credit mix. Keeping cards open maintains a healthy mix.
Losing available credit lowers total limits which could increase overall utilization ratio. Keeping accounts open preserves available credit capacity.
No direct payment history impact from closing an account in good standing and paid off. Closed accounts still contribute payment data for 10 years.
Weighing Credit Score Impact Factors
The degree your credit scores may get impacted by closing old accounts after balance transfers depends on:
- How old the credit card account is
- Total number of accounts you have
- Remaining available credit limits after closure
- Your current credit utilization on open accounts
Generally, younger accounts with shorter history get closed with less score impact. But evaluate trade-offs based on your entire credit profile.
Tips to Minimize Credit Score Impacts
If you do opt to close older paid off credit cards after balance transfers, take these steps to reduce score damage:
- Keep accounts open until balance transfers successfully complete
- Pay all cards down to $0 balance before closure
- Maintain low balances on remaining open accounts
- Avoid applying for new credit to fill gaps in short term
- Continue practicing responsible credit management habits
- Monitor score fluctuations and check for inaccuracies
Proactively minimizing risks allows old account closure with limited credit score disruption.
Evaluating Account Value Before Closing
Before deciding whether to close a paid off credit card post-transfer, assess:
- Age of account – Older cards are more valuable to keep open
- Impact on available credit or utilization – Keep if limit needed
- Ongoing benefits or rewards – Keep if you still use perks
- Fees – Cancel to avoid annual fees if not using anymore
- Re-application needs – Will you reapply soon if closed out?
Consider all factors unique to each old account when determining closure.
Alternatives to Full Closure
Options besides completely closing old credit cards after balance transfers include:
- Downgrading to a free account version with no annual fee
- Keeping the account open but inactive by storing the card
- Using the card only once or twice annually to keep active
- Having issuer temporarily suspend charging privileges if inactive
These alternatives allow keeping accounts open and on credit reports without ongoing usage or fees.
Revisiting Closure After Time Passes
If you initially closed paid off cards after balance transfers, reevaluate after 6-12 months. Over time with prudent habits, credit scores often recover from the closure’s temporary impact.
At that point, keeping old accounts closed simplifies finances without credit score damage. The aging positive history keeps contributing even for closed accounts.
Key Factors If Scores Are Unchanged
If your scores remain unchanged immediately after closing old cards post-transfer, it signals:
- You had a sufficient number of other open accounts
- Enough remaining credit available on open cards
- The closed accounts were not your oldest lines of credit
- Healthy credit utilization rates maintained on open cards
If no initial score drop occurs, keeping old accounts closed is likely prudent.
Strategizing Account Closures
Here are some guidelines on strategically timing old account closures after balance transfers:
- Keep accounts open until balance transfers fully process
- Pay off remaining balances to $0 before closure
- Close newer cards first while leaving older cards open
- Allow 6-12 months before closing very old accounts
- Monitor scores for declines before closing additional cards
- Only close multiple accounts if utilization remains low on open cards
Thoughtful timing and limits on the number of closures can help minimize score impacts.
- Closing old paid off cards can simplify finances but may affect credit scores.
- Keeping accounts open maintains history length, mix, and available credit capacity.
- Monitor for score drops before closing additional accounts.
- Cards with short histories get closed with less score impact.
- Downgrade or use old cards periodically rather than close completely.
Carefully weigh credit score factors against the benefits of simplification when deciding whether to close old credit cards after successfully transferring balances to a new 0% account.