Will Merging Two Cards From the Same Company Affect the Credit Score?

Combining credit card balances can help you save money.

Combining credit card balances can help you save money.

Reducing the number of credit card payments you make every month makes it easier to track your finances and avoid accidental late payments. Although you can't combine two credit card accounts into a single account, you can move the balance of one card to another. The key is to use the right strategy to ensure you don't do anything that might damage your credit score.

Understanding Balance Transfers

Technically, you can't "merge" two credit cards, even if both cards were issued by the same company. However, you can make a balance transfer, which allows you to move the balance of one card to another card -- ideally, a card with a lower interest rate. Transferring your balance won't automatically cancel the old card. Instead, it simply means you have a zero balance on the card and won't have to pay interest on it anymore.

Paying Down Your Cards

The primary benefit of transferring your balance is that it can make it easier to pay down debt. This can improve your credit score, because 30 percent of your score is a result of how much debt you have. When you transfer your debt to a card with a lower interest rate you can pay down debt more quickly.

Debt Load and Credit

Because a significant portion of your credit score is a result of how much debt you have, an unwise balance transfer decision might harm your credit. If you transfer debt to a card with a much higher interest rate, for example, you will have a harder time paying the debt down. If you go over your limit, this can ding your credit and possibly result in fees. Consequently, you should only transfer your debt to a lower interest card, and then make timely monthly payments.

Canceling the Old Card

After you transfer one card's balance to another, you might be tempted to cancel the card with a zero balance. However, this strategy can undermine your credit score because you lower your amount of available credit while your debt remains the same. Part of your score is determined by the percentage of debt to available credit. Instead of canceling the card, try cutting it up so that you're not tempted to use it. Leaving the card open so that you can have a card with no balance reflects positively on your credit.

About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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