Assuming my payments have been consistently on time, and that I am nowhere near my credit limit, how badly will making a balance transfer from one credit card to a new one and closing out the first account hurt my credit?
Not at all. Your credit is based on your repayment history. Another lender may want proof that the account you payed out is in fact closed since available but unused credit is still considered a liability but a balance transfer will have no impact.
Your general idea is right but there could be small variations in the credit score based on the exact circumstances. Most importantly, closing a credit card account can affect your score. It probably won’t be much. I have heard that having three credit cards is optimum but cannot verify that. In addition, the credit limit on the new card may be different than the old one. That would alter the ratio between the balance and the credit limit possibly affecting your score.
I wouldn’t worry about it at all and it probably won’t do much to your score but it could change it a couple of points.
I used to do this all the time when CC interest rates were dropping and I had some largish card balances. My credit rating is golden, and it never affected my credit rating in the slightest except for receiving these annoying letters for the CC companies saying (essentially)
“We noticed you have transferred your CC balance lately and we are concerned. . We really love you as customer, and want to keep your financial ass well pounded so please let us know if we can do anything to regain your business in the future (short of being more competitive interest rate-wise).”
I think closing an account can have SEVERE impact on your credit history.
Basically, your credit history is as old as your oldest open account (there’s a 2 year leeway after closure I think).
Consider the hypothetical: You opened a CC 8 years ago. You opened another one 2 years ago. You open a new one and close the oldest one. Now in 2 years, your credit history will be only 4 years old not 10 as you would expect.
Actually now I’m starting to doubt my own words… anybody?
side note:
Make sure you read your credit card agreement. Often balance transfers are paid off last in the queue of debt and charged the highest interests. This can turn out to be fairly expensive if you carry the debt for long.
Thanks, Harmonix. That’s why I’ve never done one before. 
Yeah, Suze Orman will back you up on that. I read it in one of her books shortly before I was planning on cancelling a card from 1998 (got a new one, with a points system) and I specifically did not cancel because of what she wrote.
Dunno about U.S. but in Canada credit reports only go back 7 years. Many variables can affect credit score in an insignificant way. I’d be more concerned about applying for credit after starting a new job. Work at the same job for 20 years then accept a new job for twice the pay and watch your score go down.
What do you mean?
How long you have been at your current job is heavily weighted (or at least it was when I was in the business) People who moved on to better prospects were penalized by the system.
Well, first of all, on the US reports there’s no employment as far as I know. Why would your job affect your credit worthiness score. It can be a major consideration whether to extend you credit, but it has nothing to do with either your credit worthiness or your credit history. So banks get employment information separately, if they even bother.
Second, if the credit history only goes back 7 years, it will still show the account as opened before that. So that if you have a credit card that’s 15 years old, it might not have month-to-month information but it will show “Account in good standing for the past 7 years, opened 15 years ago”