Do balance transfers affect credit scores?

Like all financial changes, a balance transfer has the potential to impact your credit score.

Applying for a balance transfer credit card can initially lower your credit score, but this decrease is usually temporary. If you make regular repayments towards your debt, your credit score can improve in the long term.

How does a balance transfer affect your credit score?

Before you can get a balance transfer credit card, your lender will review your credit report to see if you qualify for it. This hard credit check can temporarily lower your credit score, especially if you’ve applied for multiple balance transfer cards.

How to reduce the chances of any negative impact

While you can’t avoid a hard credit check, there are steps you can take to reduce the impact on your credit score.

1. Choose your balance transfer card carefully

Applying for multiple credit cards can indicate poor money management and lower your credit score. Before applying, research and compare different cards to find the most favourable terms for you. If you’re unsure if you’ll qualify for the card, try an eligibility checker beforehand. An eligibility checker can give you an indication of whether you are likely to be accepted, without affecting your credit rating.

2. Repay the credit card debt

Many balance transfer credit cards come with an introductory period that offers 0% interest. This gives you time to pay off debt without paying high interest rates.

To manage your balance transfer, you’ll need to make at least your minimum monthly payment to clear your debt. Not making a payment can result in credit card fees and negatively impact your credit score.

3. Keep old accounts

The length of time you’ve had an account is one of the factors that impacts your credit score. Closing old credit card accounts shortens your credit history and can potentially lower your credit rating.

To manage multiple accounts, you’ll need to be informed about each credit card’s details. If you remember to make minimum monthly payments on each card, you can avoid late fees and negatively impacting your credit score.

How a balance transfer can help your credit score

Transferring a credit card balance to a new card allows you to create a new payment plan. Making timely payments on the balance transfer card demonstrates responsible credit management. This can positively impact your credit score.

Consolidating multiple credit card balances through a balance transfer creates one single debt. This can simplify your situation, making it easier to stay organised and make timely payments. Consistent on-time payments can improve your credit score.

When should you do a balance transfer?

If you’re facing high interest rates while trying to clear debt, a balance transfer can help you clear debt faster by moving it to a card with a lower interest rate. This also allows you to save money on interest.

Some credit cards – such as M&S Credit Cards – offer an introductory 0% interest period (balance transfer fee of 3.49%, minimum £5, applies*). If you can pay off the balance within this period, you can save money and boost your credit score.

All credit is subject to status. Eligibility criteria and terms and conditions apply.

Representative example

24.9% Purchase rate p.a (variable)
24.9% APR Representative (variable)
£1,200 Assumed credit limit

How to do a balance transfer

If you’re considering a balance transfer, follow these steps:

  1. Check eligibility – review the eligibility requirements for the credit card and make sure you meet the criteria.
  2. Apply for the card – complete the application process for your chosen card. You may need to provide your details, financial information and the amount you want to transfer.
  3. Wait for approval – the credit card provider will review your application through a hard credit check. You‘ll receive the new card if approved.

Once you have your credit card, you begin the process of transferring your balances. Typically, you’ll have the option to transfer your balance online, through a mobile app or over the phone.

Follow the instructions given by your credit card provider to start the balance transfer.

Published August 2023

*Our Purchase Plus & Transfer Plus balance transfers have a 3.49% fee and our Shopping Plus balance transfer has a 2.99% fee, minimum £5. Terms and conditions apply. Don’t forget to make at least your minimum payments on time to keep your promotional rates on balance transfers and purchases and save on interest. We accept balance transfers from most credit or store cards held with other lenders.