How Balance Transfers Impact Credit Scores: Dangers & Insights

How Credit Card Balance Transfers Can Damage Your Credit Rating

How can balance transfers affect your credit score negatively?

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Since the banks and finance providers have been castigated for the way they seemingly indiscriminately awarded credit to people who could ill afford it, the chances of being accepted for loans and credit cards have decreased. Concurrently, there is a greater focus on individual's being aware of how credit works and what their financial behaviors means in terms of a credit score and history.

Why Balance Transfers Are So Readily Available

Concurrently, there is a greater focus on individual's being aware of how credit works and what their financial behaviors means in terms of a credit score and history.

The so called Credit Crunch has engendered a change in behaviours and has led to banks not only thinking about whom they extend credit to but also how they lend it.

It has also meant these card issuers have had to find new ways to increase custom.

Debt Stressed?

If you're struggling to pay your debts and covering living expenses, we're here to help. Through our national panel of Debt Management specialists, we can help customers with $10k or more in debt by consolidating your existing loans, stopping Debt collectors from contacting you and re-negotiating repayments on your terms!

... start your free debt analysis ...

The market has been hit with a whole slew of prepaid credit cards but also balance transfer offers have become a major marketing tool in the battle for new customers.

What is a balance transfer?

Quite simply, a balance transfer is moving the outstanding balance from one credit card to another that has a lower rate of interest. It is a simple way of reducing your monthly repayments on your card balance.

Why are they so attractive right now?

The credit card marketplace is highly competitive and these transfer is a relatively low risk option for the issuers to attract new customers. The need to attract new customers without creating a whole new generation of credit card owners unable to pay their debts has resulted in very attractive credit cards with transfer offers. Most major US issuing banks now have 0 balance credit cards in their portfolio of financial products. With offers extending from zero interest from 3 months right up to 18 months, there appears to be a credit card war raging with each bank trying to introduce the most attractive transfer offers.

Why balance transfer offers are not a get out of jail free card

The mere idea of reducing your monthly out goings by transferring existing credit card balances to a new card or cards where you can obtain an extended interest free period is very enticing. Prima facie, it seems entirely logical and indeed, eminently sensible. There are however, certain considerations that need to be taken into account before simply responding to the click here or apply now button on 0 balance interest credit cards:

You can adversely affect your credit score

Every time you make an application for a new card or apply for new credit of any form (loan, mortgage, cash advance and hire purchase), there is a note made on your credit file and your score is impacted with a reduction.
If you apply for multiple credit cards or respond to a number of balance transfer offers in a short period of time, there is a significant impact on your credit score.

There are fees involved

No credit is for free; even those deals with 0% interest on balances transferred will have an associated fee - after all, these card provider still has to make money from your transaction even if you are paying zero interest. Typically, balance transfer fees can be between 3-5% of the balance transferred meaning that when your interest free period starts it is with a higher amount that you had on your old card.

The APR after the initial offer period is high

One of the major pitfalls you could fall into is to take advantage of a balance transfer offer only to find that after the offer expiry date, the APR is higher than you were paying on your original credit card from where the balance was transferred.

It is imperative that you read the small print and are fully conversant with the interest rate you will be paying after the interest free period.

What not to use balance transfers for

When you are facing debt issues it is easy to succumb to ways of managing your finances that seem entirely logical at the time. There are two main ways of not managing your finances with balance transfer offers:

Do not use it as an excuse simply to get another credit card

If you are transferring a balance the temptation is there to keep the original credit card thereby increasing the availability of the credit at your disposal. This is a definite no-no unless you can absolutely afford the repayments on all of your cards
Do not use balance transfers as a way to avoid paying your debt.

The attraction of balance transfer offers does actually promote a way of carrying the debt; instead of paying off the debt you merely transfer it from one card to another and repeat after each introductory rate expires

In conclusion, are balance transfer offers and 0 balance transfer credit cards a bad thing? No! Not at all, but like every form of credit, they require close scrutiny before application and responsible management thereafter

Published: Sunday, 1st Aug 2021
Author: 148

Jet Ski Loans Articles

4 Ways To Finance Your Jet Ski

Jet skiing is a thrilling watersport that has become increasingly popular in recent years. If you’re thinking of purchasing a jet ski, you may be wondering how to finance your purchase. There are a few different ways to finance a jet ski, and the best option for you will depend on your individual circumstances. - read more

Make a Splash Without Sinking Your Budget: Affordable Jetski Financing Options

Imagine the splash of water on your face and the adrenaline rush as you glide over waves at exhilarating speeds. The thrill of owning a jetski offers a unique brand of excitement and freedom found only on the open waters. However, before you can make waves, it's essential to navigate the sea of financial considerations that come with purchasing such a prized possession. - read more

Jet Skiing with Kids: Safety Guidelines Every Parent Should Know

Jet skiing can be a fun and exhilarating activity for families, but safety should always be a top priority, especially when children are involved. In Australia, there have been numerous jet skiing accidents involving children, with some resulting in serious injuries or even fatalities. It is important for parents to be aware of the potential risks and to take appropriate safety measures to protect their children when jet skiing. - read more

Jetski Essentials: The Safety Must-Haves for Every Aussie Rider

Safety on the water is paramount, and as thrilling as jet skiing can be, it is essential to recognize the risks involved and the importance of being well-prepared. When we talk about jetski safety, it isn't just about compliance with laws and regulations—it's about ensuring that every ride is as safe as it is enjoyable. Understanding the importance of safety on the water is the first step to becoming a responsible jetski operator. - read more

Financial Tips for First-Time Jetski Buyers in Australia

Buying your first jetski is an exciting venture, offering a unique combination of fun, thrill, and the freedom to explore Australia's beautiful waterways. However, it's crucial to make a well-informed purchase to ensure that your investment complements your lifestyle and financial circumstances. - read more

Finance News

Hanwha's Stake in Austal: Australia's Conditional Approval

13 Dec 2025: Paige Estritori

In a significant development for Australia's shipbuilding industry, the Australian government has approved South Korean conglomerate Hanwha's proposal to increase its shareholding in Austal Limited from 9.9% to 19.9%. This decision comes with stringent conditions aimed at protecting national security interests. - read more

Yamaha Tops Australian Marine Market Searches Ahead of Summer

13 Dec 2025: Paige Estritori

As Australia gears up for the summer season, Yamaha has solidified its position as the most-searched marine brand in the country. According to Retain Media's Q3 2025 Marine Market Brand Consideration Report, Yamaha holds an 8.4% share of search queries, maintaining its lead from the previous quarter. - read more

South Australia Invests in Advanced Coastal Research Vessel

13 Dec 2025: Paige Estritori

The South Australian government has committed $44 million in the 2025–26 State Budget to fund a new state-of-the-art coastal research vessel. This 37.7-metre vessel is designed to support a wide range of marine research activities, including fisheries, aquaculture, climate science, and oceanography. - read more

Australia's Marine Industry Surges to $229 Billion Economic Output

05 Dec 2025: Paige Estritori

Australia's marine industry has demonstrated remarkable resilience and growth, achieving an economic output of $229 billion in 2023. This represents a 19% increase compared to two years prior, as reported by the Australian Institute of Marine Science (AIMS). The sector now supports 712,000 full-time equivalent jobs, marking a 52% rise in employment. - read more

Australia and Vanuatu Strengthen Ties with $325 Million Nakamal Agreement

05 Dec 2025: Paige Estritori

In a significant move to bolster regional partnerships, Australia and Vanuatu have signed the Nakamal Agreement, a $325 million bilateral treaty aimed at enhancing economic, security, and cultural cooperation. Named after Vanuatu's traditional communal meeting place, the 'nakamal,' this agreement underscores the deepening ties between the two nations. - read more

Click for more Finance News

Knowledgebase

Loan Amortisation Schedule:
This is the formal name for the repayment schedule that shows each of your mortgage payments with a breakdown of how much is applied to principal and how much is applied to interest.

How Credit Card Balance Transfers Can Damage Your Credit Rating

How can balance transfers affect your credit score negatively?

Why Balance Transfers Are So Readily Available

What is a balance transfer?

Why are they so attractive right now?

Why balance transfer offers are not a get out of jail free card

You can adversely affect your credit score

There are fees involved

The APR after the initial offer period is high

What not to use balance transfers for

START HERE.