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:
- 0% Intro APR for 18 months on purchases and balance transfers (balance transfer fee 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)
- 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 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
|
- Introductory 0% APR offers for 18 months from account opening on purchases and balance transfers (balance transfer fee applies)
- Account protection features such as Zero Liability protection for promptly reported unauthorized transactions, alerts, and cell phone protection
- My Money Map – tools to help you manage spending and create a budget with ease
- Access to your FICO® Credit Score with Wells Fargo Online®
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 18 months
|
0% for 18 months
|
16.49% - 24.49% Variable
|
$0
|
Good
|
- Earn a $150 cash rewards bonus when you spend $500 in purchases in the first 3 months
- Unlimited 1.5% cash back on purchases, and cash rewards do not expire as long as the account is open
- Introductory 0% APR offer on purchases and balance transfers for 15 months from account opening (balance transfer fee applies)
- Account protections such as 24/7 Fraud Monitoring, Alerts, and Zero Liability protection for promptly reported unauthorized transactions
- Cell Phone Protection helps protect your cell phone from damage or theft when you pay your monthly cell phone bill with your eligible Wells Fargo consumer credit card
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 15 months
|
0% for 15 months
|
14.49% - 24.99% Variable
|
$0
|
Good/Excellent
|
- Earn 5x rewards points earned for up to $12,500 spent on gas, grocery, and drugstore purchases for the first 6 months and 1x points on all other purchases - points expire after 5 years
- Rewards have 50% more value when redeemed for airfare
- Introductory 0% APR offers on purchases and balance transfers for 15 months from the date of account opening (balance transfer fee applies)
- Access your FICO® Credit Score with Wells Fargo Online®
- Travel accident insurance plus 24/7 travel and emergency assistance, roadside dispatch
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 15 months
|
0% for 15 months
|
12.49% - 25.49% Variable
|
$0
|
Good
|
- Earn 5x rewards points earned for up to $12,500 spent on gas, grocery, and drugstore purchases for the first 6 months and 1x points on other purchases - points expire after 5 years
- Introductory 0% APR offers on purchases and balance transfers for 15 months from account opening (balance transfer fee applies)
- Flexibility to use points toward travel, gift cards, merchandise, cash redemption, and more
- Account protection features such as Zero Liability protection for promptly reported unauthorized transactions, card and account activity alerts, and cell phone protection
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 15 months
|
0% for 15 months
|
12.49% - 25.49% Variable
|
$0
|
Good
|
- 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 12 billing cycles for purchases and balance transfers made within 60 days of account opening (balance transfer fee applies)
- $0 annual fee
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 12 billing cycles
|
0% for 12 billing cycles
|
13.99% - 23.99% Variable
|
$0
|
Good/Excellent
|
- Earn 20,000 bonus points when you spend $1,000 in purchases in the first 3 months – a $200 cash redemption value
- Earn 3X points on eating out and ordering in; gas stations, rideshares, and transit; flights, hotels, homestays, and car rentals; and popular streaming services - all other purchases earn 1X points
- Introductory 0% APR offers on purchases and balance transfers for 12 months from account opening (balance transfer fee applies)
- No limit to points you can earn, and points don't expire as long as your account remains open
- Cell phone protection helps protect your cell phone from damage or theft
- $0 annual fee and no foreign transaction fees
|
Intro (Purchases)
|
Intro (Transfers)
|
Regular APR
|
Annual Fee
|
Credit Needed
|
|---|---|---|---|---|
0% for 12 months
|
0% for 12 months
|
14.49% - 24.99% Variable
|
$0
|
Good/Excellent
|
- Earn 15,000 bonus points after you spend $1,000 in purchases with your card within 3 months of account opening
- 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)
- $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
|
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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