Can you keep transferring credit card balances?

When it comes to cutting down on debt and managing big purchases, a credit card balance transfer can be an effective strategy for cutting down on the potential interest you have to pay.

But it’s important to approach balance transfers with caution, especially if you’re juggling multiple balance transfers. If you’re still paying off a balance after your card’s introductory 0% APR period ends, it could defeat the purpose of the balance transfer in the first place.

If you use a balance transfer responsibly, it can help you manage or eliminate your credit card debt. But is it worth it to keep transferring balances to avoid interest? Read on to find out.

Can you transfer a balance multiple times?

In most cases, it’s possible to transfer a credit card balance from one credit card to another as the 0% APR promotions expire.

There are some limitations, however. You may be restricted by the available credit on the balance transfer card, which considers any existing balance. Sometimes, the credit limits for balance transfers may be lower than those for regular card transactions.

Additionally, if you attempt multiple new balance transfer cards simultaneously, your borrowing capacity may be affected by your creditworthiness. Each card issuer has its own rules regarding the maximum number of balance transfers allowed.

Downsides of multiple balance transfers

While many cardholders have successfully managed multiple balance transfers, you’ll want to consider the associated risks carefully.

First, balance transfer fees. Most balance transfers incur a fee of 3 to 5% of the transfer amount, meaning if you make multiple transfers, you’ll end up paying more than necessary to move your balance elsewhere. It’s an easy thing to forget about, but it can add up if you’re constantly transferring balances.

You also want to minimize the number of credit inquiries you make. If you’re applying for multiple balance transfer cards, each credit card issuer’s inquiry will be recorded on your credit report. Although the impact of a single credit inquiry is temporary and minimal, multiple inquiries can have a cumulative effect on your credit score. Being denied a credit card that could help you manage your debt may put you behind the 8-ball.

Opening multiple balance transfer cards can make it harder to keep track of your monthly bills. While this approach can help eliminate high-interest credit card debt in the long run, it requires diligent tracking and organization of multiple payment obligations in the short term.

If the reason you’re in debt in the first place was a lack of organization or forgetting to make timely payments, it’s unlikely that owning several balance transfer credit cards will help much in the long run.

If you decide to make a balance transfer, pay close attention to the expiration of the low- or no-interest period. Be aware of the interest rate that will kick in if the transferred balance remains unpaid after the introductory period ends. Prioritize paying off your balance in full to get out of the debt spiral you find yourself in.

Alternatives to balance transfers

While balance transfers can be a good strategy for reducing debt, credit card issuers may limit the number of balance transfers you can make. If so, here are four alternatives to consider:

Budgeting: This is a fundamental step toward managing debt. Track your income and regular expenses, such as rent, credit card payments, loan payments and utilities. Nowadays, you can do this easily using budgeting apps or spreadsheets.

Debt consolidation: You may be able to consolidate multiple high-interest debts into a single debt consolidation loan, resulting in a single monthly payment. When pursuing this option, make sure the interest rate on the loan is lower than your credit card rates.

Debt counseling: Nonprofit consumer credit counseling agencies can help you analyze your finances, create a monthly budget and find solutions to reduce your debt burden. They may recommend a debt management plan to help you pay off unsecured debts (such as credit cards) at lower interest rates.

Debt relief: For-profit debt relief companies will negotiate with your creditors to reduce the amount of debt you owe, particularly unsecured debts like credit cards. Exercise caution with this option, as you’ll often face high fees and negative effects on your credit score. Watch out for possible scams. Due to the potential drawbacks, debt relief should generally be considered as a last resort.

Bottom line

One or more balance transfers can help you pay off debt and improve your credit by temporarily eliminating high credit card interest rates. But if you find yourself regularly using balance transfers, you may need to address a deeper financial issue rather than relying on temporary solutions.

Thankfully, alternative methods, such as debt counseling or consolidation, can also help. These options aim to diagnose and treat the underlying causes of your financial challenges, which can help you improve your long-term financial well-being.