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Can you make money in the balance transfer game? |
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Credit management is key
Once again, it all depends. Remember, Bilker says he has 80 cards.
Today, his credit score is good. In all likelihood, he acquired
most, if not all, of those cards years ago -- and he's managed his
credit well in the meantime.
"If, however, he'd opened four or five of those
cards within, say, a six-month time frame, then the chances are
his credit score showed some negative impact because of that,"
Katz says.
In fact, as you consider whether to take the balance
transfer plunge into a brand-new card, also take into account what
else you've done recently that could affect your credit. Did you
buy a new car or refinance your mortgage? Is it the Christmas season,
and did you take advantage of one or more of those in-store offers
where you get 20 percent off all purchases that day if you apply
for a store credit card? And that flat-panel plasma screen hanging
on your wall? Is it courtesy of Best Buy's credit department?
"Each one of those things is going to put an
inquiry on your account," Katz says. "It all adds up.
You can't isolate the balance transfer component from everything
else that you're doing."
APR not on credit report
You might think that's unfair. I mean, you are making a credit smart
move, right? Yes, moving my 18 percent balance to a zero percent
card was smart -- at least, I think so. But your credit report doesn't
report those smarts, says Craig Watts, spokesman for Fair Isaac.
"Your FICO
score is based entirely on the credit history reported to the
credit bureau, and credit bureaus do not record interest rates or
other terms of the account," he says. "The lender looking
at that report can't tell why you're transferring money between
accounts. All it knows is the surface appearance of that activity."
In short, whether your balance transfer will affect
your credit score for good or for bad depends on the interplay between
the many moving parts in your credit life. Keep those parts well-oiled,
and you should be fine. Forget to do that ... well, you know the
drill.
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