Perhaps your credit card bills are piling up faster than you can pay down the balance, and you’re wondering “If I cancel my credit card will the interest stop?” By closing your credit card to save on interest charges, you’ve got the right idea but the wrong method. There are some things you need to know, which we’ll cover in this article:
- No, interest doesn’t stop when you cancel a card with a remaining balance.
- You can do a balance transfer to a card that will offer 0% interest.
- We’ll show you the best cards available that offer no interest for up to 18 months.
That being said, let’s dive in.
Interest Will Still Be Charged to Your Card
If you close an account with a remaining balance, the terms of your credit card agreement are still in effect. This means you’re responsible for paying your bill each month and on time, and interest will still be charged on your outstanding balance.
You’ll also still be charged late fees if you don’t make a monthly payment on time. Some issuers even charge additional fees for closing an account with a balance. Be sure to read your credit card agreement to see if this applies to you.
Basically, everything remains the same except for your ability to use the card to make purchases. But there’s another important thing to consider: Your credit score will be negatively affected if you close your card.
Your Credit Score Will Go Down
This is because of your credit utilization ratio. The amount of your available credit for said account will now be $0, but your outstanding debt will still be reported to the bureaus. This means your debt appears higher, therefore your score will be lower.
By how much depends on your outstanding balance, as well as how long you’ve had the account. Closing older accounts hurts your score more than closing newer accounts.
But there IS a way for you to still close that account AND stop paying interest…
To Avoid Problems, Transfer Your Balance to a 0% APR Card
What this means is you actually do the opposite and open a new account and transfer the old card’s balance to the new card. Issuers now offer balance transfers with 0 percent interest for up to 18 months. This means you’re making interest-free payments during that time.
After you’ve transferred your balance to the new card, go ahead and close the old account.
And just like that, you’re making interest-free purchases and your old account is closed. Mission accomplished.
Best Balance-Transfer Credit Cards
We’ve made it easy and compiled a list of the best balance transfer offers out there as reviewed by our credit experts. All the information you need is there, including how long the 0% interest lasts, the regular APR, annual fees and all other pertinent info.
Here are our expert’s top picks for the best balance transfer cards available today:
- For a limited time, get a special 0% introductory APR on purchases and balance transfers for 20 billing cycles, then a variable APR applies
- Enjoy Cell Phone Protection Coverage when you pay your monthly cellular bill with your U.S. Bank Visa® Platinum Card
- View your credit score anytime, anywhere in the mobile app or online banking. It's easy to enroll, easy to use, and free to U.S. Bank customers.
- Fraud Protections detects and notifies you of any unusual card activity to help prevent fraud
- Choose your payment due date
- $0 Annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 20 billing cycles
|
0% for 20 billing cycles
|
14.49% - 24.49% Variable
|
$0
|
Excellent Credit
|
- Earn cash back twice! Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
- To earn cash back, pay at least the minimum due on time
- Balance Transfer Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 13.99% - 23.99%, based on your creditworthiness. Balance Transfers do not earn cash back and will have a fee of either $5 or 3% of the amount of each transfer, whichever is greater.
- If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
- 24/7 access to customer service representatives
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
N/A
|
0% for 18 months
|
13.99% - 23.99% Variable
|
$0
|
Excellent/Good
|
- 0% Intro APR for 18 months on purchases and balance transfers (balance transfer fee applies), then a variable APR applies
- Get free access to your FICO® score online
- With Citi Entertainment®, get special access to purchase tickets to thousands of events, including presale tickets and exclusive experiences for the year's most anticipated concerts, sporting events, dining experiences, and more
- Shop with confidence knowing that you have dependable protection benefits, including $0 Liability on Unauthorized Purchases and Citi® Identity Theft Solutions.
- 24/7 access to customer service representatives
- Enjoy the flexibility to choose the payment due date that works best for you - the beginning, middle or end of the month
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 18 months
|
0% for 18 months
|
14.74% - 24.74% Variable
|
$0
|
Excellent/Good
|
- No Late Fees, No Penalty Rate, and No Annual Fee... Ever
- 0% intro APR offers on both purchases and balance transfers (balance transfer fee applies), then a variable APR applies
- Choose a payment due date that works best for you — beginning, middle, or end of the month
- Stay protected against identity theft with Citi® Identity Theft Solutions
- $0 liability on unauthorized charges
- 24/7 access to customer service representatives - save time, just say "representative" when you call, to enjoy fast, personal help
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 18 months
|
0% for 18 months
|
14.74% - 24.74% Variable
|
$0
|
Excellent/Good
|
- Earn 15,000 bonus points after you spend $1,000 in purchases with your card within 3 months of account opening, redeemable for $150 in gift cards
- Earn 2X ThankYou® Points at supermarkets & gas stations for the first $6,000 per year and 1 point per $1 spent thereafter
- Earn 1 ThankYou® Point per $1 spent on all other purchases
- Automatically rounds up to the nearest 10 ThankYou® Points on every purchase - with no cap, and get 10% Points Back for the first 100,000 ThankYou® Points you redeem per year
- 0% Intro APR offers on purchases and balance transfers (balance transfer fee applies), then a variable APR applies
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 15 months
|
0% for 15 months
|
13.49% - 23.49% Variable
|
$0
|
Good/Excellent
|
- Earn 10,000 bonus points after spending $500 on purchases in the first 90 days
- Earn 2X points on NFL and team purchases and 1X points on all other purchases
- 0% introductory APR for 15 billing cycles on balance transfers made within 45 days of account opening, then a variable APR applies
- Special ticket financing: 0% promotional APR for 6 billing cycles on eligible NFL ticket purchases, then a variable APR applies
- Enjoy 20% off at NFLShop.com
- Redeem points for exclusive NFL experiences, game tickets, NFLShop.com purchases, gift cards, or cash back
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
N/A
|
0% for 15 billing cycles
|
15.99%, 20.99%, or 25.99% variable, based on your creditworthiness
|
$0
|
Good
|
- Earn 50,000 bonus miles after spending $500 on purchases and paying the annual fee in full, both within the first 90 days
- Earn 5X miles on eligible purchases at flyfrontier.com, 3X miles on restaurant purchases, and 1X miles on all other purchases
- 0% intro APR for 15 months on balance transfers made within 45 days of account opening (3% balance transfer fee applies), then a variable APR applies
- Earn a $100 flight voucher every account anniversary after spending $2,500 or more on purchases with your card during your card membership year
- Cardmembers enjoy Zone 2 priority boarding
- $79 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
N/A
|
0% for 15 billing cycles
|
15.99%, 19.99%, or 24.99% variable, based on creditworthiness
|
$0 intro; $79 thereafter
|
Good
|
- Earn $150 cash back after spending $500 on purchases in the first 90 days
- Earn 1.25% Cash Back Rewards on every purchase
- Earn 1.529% Cash Back Rewards on your purchases when your Upromise Program account is linked to an eligible College Savings Plan
- 0% introductory APR for 15 months on balance transfers made within 45 days of account opening (balance transfer fee applies), then a variable APR applies
- Free online access to your FICO® Score
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
N/A
|
0% for 15 months
|
14.99%, 19.99%, or 24.99% variable, based on creditworthiness
|
$0
|
Good
|
- Earn a $200 cash rewards bonus after making at least $1,000 in purchases in the first 90 days of your account opening
- Earn 3% cash back in the category of your choice: gas, online shopping, dining, travel, drug stores, or home improvement/furnishings and 2% cash back at grocery stores and wholesale clubs on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then earn 1%
- Unlimited 1% cash back on all other purchases
- 0% Introductory APR on new purchases and balance transfers for 15 billing cycles (balance transfer fee applies), then a variable APR applies
- Optional overdraft protection option helps prevent declined purchases, returned checks or other overdrafts when you link your eligible Bank of America® checking account to your credit card. Transfer fees may apply.
- $0 Annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 15 billing cycles
|
0% for 15 billing cycles
|
13.99% - 23.99% Variable
|
$0
|
None/Limited
|
- Enjoy a $200 cash rewards bonus after spending at least $1,000 in purchases in the first 90 days of account opening
- Earn 3% cash back in the category of your choice: gas, online shopping, dining, travel, drug stores, or home improvement/furnishings and 2% cash back at grocery stores and wholesale clubs on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then earn 1%
- Unlimited 1% cash back on all other purchases
- Introductory 0% APR for your first 15 billing cycles for purchases and balance transfers made within 60 days of account opening (balance transfer fee applies), then a variable APR applies
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 15 billing cycles
|
0% for 15 billing cycles
|
13.99% - 23.99% Variable
|
$0
|
Good/Excellent
|
Control Your Spending & Be Mindful of Fees
With a new card comes the opportunity to use it, of course. If you’re worried about spending and racking up a balance on the new card, there are some things you can do to prevent abusing credit:
- Cut up the new card, and close it when your balance is paid.
- Freeze the card in a block of ice. Sounds weird, but you won’t be able to get to it unless you really need to.
- Have your significant other/someone you trust hold on to it. You’ll have to go through them to justify any use of the card.
While transferring a balance really can be a great solution, be sure to check for any balance transfer fees. Some issuers charge a small percentage of the balance you’re transferring and tack it on to your statement. If the fee is more than what your current interest charges equate to over the life of your payments, it may not be worth it.
Photo credits: nextadvisor.com
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