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Credit Card Q&A: With a balance transfer, when can I stop making payments to my old credit card issuer?

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Credit card question: If I make a balance transfer to a new credit card, when can I stop making payments to my old card issuer?

Answer: This is a question I get all the time. It’s extremely important that you continue to make timely payments to your old card issuer until you’ve received news that the transfer is complete. Otherwise, you could get hit with a late fee and possibly see your FICO score take a hit.

It might be helpful to get a picture of how the balance transfer process works. First of all, choose a card that offers a zero percent intro APR on balance transfers. Before making a final decision, read the terms and conditions carefully so you understand the “rules” for the balance transfer. I’ve recently seen terms that require making a balance transfer within 30 days. The fine print is also where you’ll find information about the balance transfer fee.

The specific process will vary a little by issuer, but here’s a general idea of what happens after you choose a new card for your balance transfer:

1. Follow the new card issuer’s instructions for making a balance transfer. Some allow you to indicate this during an online application, but others might request that you call customer service after you receive your new card.

2. Your new card issuer will pay off your balance with your old card issuer. When that occurs, you’re now responsible for paying off the balance with your new card issuer.

3. Your new card issuer will notify you when the transfer is complete. Even if your new credit card issuer says that the balance transfer is complete, follow up with your old card issuer to confirm it.

4. What do you do with your old credit card? For starters, don’t use it. Closing an account can have a negative impact on your credit score, so I don’t recommend doing that. If you simply can’t keep yourself from using the card, try cutting it in half. And maybe hiding it!

5. Remember that getting a zero percent intro APR doesn’t mean you don’t have to make payments. Make timely payments and use the interest-free period to pay down as much of the balance as you can afford.

Image: RogueSun Media, via Flickr.com

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