6. Not everyone qualifies
Another drawback about balance transfers is that not everyone will qualify for these deals. Banks and credit card issuers usually approve balance transfers only for people with good credit ratings. So unless your FICO score is in the 700 range or better, you might have a tougher time taking advantage of a balance transfer. Another problem for those with average credit profiles: Even if you do get approved, the credit line may not be as large as was initially advertised or as big as you’d hoped.
Applying for a new credit line generates an “inquiry” on your credit report, which usually dings your credit score for a short time. Even if you just shift debt around – as opposed to adding to your debt levels – your credit may still be affected. Because of quirks in the credit scoring system, your credit score may take a hit if you load up all your debt onto one low-rate credit card and max out (or nearly max out) a single card.
The good news is that over time, a credit card balance transfer can give your credit score a boost. This mostly occurs because you have an additional credit line open and more credit at your disposal. And the more available credit you have and are not using, the higher your credit score.
Credit card issuers know they can attract new customers by tempting them with zero percent interest deals for a period of time. Continue reading 7. You may lower your credit score in the short run