Q: I had a 0% interest rate on a credit card, but now the rate is going to be fairly high. Another credit card company just sent me a balance transfer offer of 0% for a full year. Is there any reason not to do it? 

A: There’s a very good reason not to do it. When you transfer debt from one credit card to another, you increase your credit lines … and while you haven’t borrowed a penny more (unless there’s a transfer fee, which is often 3% or more), you now have the capacity to borrow the full amount you’ve just paid off with another card … not a good idea. 

Even if you “know” you’re not going to run up more debt, too many open credit accounts can affect your credit score, and the temptation will be there. Aggressive credit card companies have been known to mail a stack of blank cheques to cardholders to make it easy to borrow again … after all, writing out a cheque feels like there’s money there. In this case, though, it’s not money you already have, but money they want you to borrow. 

If you do decide to go ahead with it, close the first account. Better yet, there might be another, more suitable solution. Come in and talk to us. As your credit union, we’ll look at the whole picture, and help you find the solution that’s in your best interest. 

This content is intended for general information and discussion purposes only. It does not constitute financial, legal, or professional advice. Readers should seek independent guidance from a qualified professional to ensure decisions are appropriate to their personal situation when applicable.