What Is a Balance Transfer and Should I Make One?

What Is a Balance Transfer and Should I Make One?

When debt accumulates on a high-interest card, interest starts to add up as well, making it harder to pay off the total debt — which, in turn, can become a credit card debt spiral. If you end up with mounting debt on a high-interest credit card, a balance transfer is one possible way to get out from under the interest payments.

A balance transfer credit card allows you to transfer your existing credit card debt to a card that temporarily offers a lower interest rate, or even no interest. This can provide an opportunity to start paying down your debt and get out of the red zone. But before you make a balance transfer, it’s important that you fully understand what a balance transfer credit card is and have carefully read the fine print.

How Balance Transfers Work


The basics of balance transfer credit cards are fairly straightforward: First, you must open a new lower-interest or no-interest credit card. Then, you’ll transfer your credit card balance from the high-interest card to the new card. Once the transfer goes through, you’ll start paying down the balance on your new card.

Generally, when selecting to do a balance transfer to a new credit card, consumers will apply for a card that offers a lower interest rate than they currently have, or a card with an introductory 0% annual percentage rate (APR). Generally, you need a solid credit history to qualify for a balance transfer credit card.

This introductory period on a balance transfer credit card can last anywhere from six to 21 months, with the exact length varying by lender. By opening a new card that temporarily charges no interest, and then transferring your high-interest credit card debt to that card, you can save money because your balance temporarily will not accrue interest charges as you pay it down.

But you need to hear one crucial warning: After the introductory interest-free or low-APR period ends, the interest rate generally jumps up. That means if you don’t pay your balance off during the introductory period, it will start to accrue interest charges again, and your balance will grow.

Recommended: How to Avoid Interest On a Credit Card

What to Look For in a Balance Transfer Card


There are a number of different balance transfer credit cards out there. They vary in terms of the length of no-interest introductory periods, credit limits, rewards, transfer fees, and APRs after the introductory period. You’ll want to shop around to see which card makes sense for you.

When researching balance transfer credit cards, try to find a card that offers a 0% introductory APR for balance transfers. Ideally, the promotional period will be on the longer side to give you more breathing room to pay off your debts before the standard APR kicks in — one of the key credit card rules to follow with a balance transfer card.

You’ll also want to keep in mind fees when comparing your options. Balance transfer fees can seriously eat into your savings, so see if you qualify for any cards with $0 balance transfer fees. If that’s not available, at least do the math to ensure your savings on interest will offset the fees you pay. Also watch out for annual fees.

Last but certainly not least, you’ll want to take the time to read the fine print and fully understand how a credit card works before moving forward. Sometimes, the 0% clause only applies when you’re purchasing something new, not when transferring balances. Plus, if you make a late payment, your promotional rate could get instantly revoked — perhaps raising your rate to a higher penalty APR.

Should I Do a Balance Transfer?

Sometimes, transferring your outstanding credit card balances to a no-interest or low-interest card makes good sense. For example, let’s say that you know you’re getting a bonus or tax refund soon, so you feel confident that you can pay off that debt within the introductory period on a balance transfer credit card.

Or, maybe you know that you need to use a credit card to cover a larger purchase or repair, but you’ve included those payments in your budget in a way that should ensure you can pay off that debt within the no-interest period on your balance transfer card. Again, depending upon the card terms and your personal goals, this move could prove to be logical and budget-savvy.

Having said that, plans don’t always work out as anticipated. Bonuses and refund checks can get delayed, and unexpected expenses can throw off your budget. If that happens, and you don’t pay off your outstanding balance on the balance transfer card within the introductory period, the credit card will shift to its regular interest rate, which could be even higher than the credit card you transferred from in the first place.

Plus, most balance transfer credit cards charge a balance transfer fee, typically around 3% — and sometimes as high as 5%. This can add up if you’re transferring a large amount of debt. Be sure to do the math on how much you’d be saving in interest payments compared to how much the balance transfer fee will cost.

Recommended: When Are Credit Card Payments Due

Balance Transfer Card vs Debt Consolidation Loan

Both a personal loan and a balance transfer credit card essentially help you pay off existing credit card debt by consolidating what you owe into one place — ideally at a better interest rate. The difference comes in how each works and how much you’ll ultimately end up paying (and saving).

A debt consolidation loan is an unsecured personal loan that allows you to consolidate a wider range of existing personal debt, including credit card debt and other types of debt. Basically, you use the personal loan to pay off your credit cards, and then you just have to pay back your personal loan in monthly installments.

Personal loans will have one monthly payment. Plus, they offer fixed interest rates and fixed terms (usually anywhere from one to seven years depending on the lender), which means they have a predetermined payoff date. Credit cards, on the other hand, typically come with variable rates, which can fluctuate based on a variety of factors.

Just like balance transfer fees with a credit card, you’ll want to look out for fees with personal loans, too. Personal loans can come with origination fees and prepayment penalties, so it’s a good idea to do your research.

How to Make a Balance Transfer

If, after weighing the pros and cons and considering your other options, you decide a balance transfer credit card is the right approach for you, here’s how you can go about initiating a balance transfer. Keep in mind that you’ll need to have applied for and gotten approved for the card before taking this step.

Balance-Transfer Checks


In some cases, your new card issuer will provide you with balance-transfer checks in order to request a transfer. You’ll need to make the check out to the credit card company you’d like to pay (i.e., your old card). Information that you’ll need to provide includes your account information and the amount of the debt, which you can determine by checking your credit card balance.

Online or Phone Transfers

Another way to initiate a balance transfer is to contact the new credit card company to which you’re transferring the balance either online or over the phone. You’ll need to provide your account information and specify the amount you’d like to transfer to the card. The credit card company will then handle transferring the funds to pay off the old account.

The Takeaway

Whether you should consider a balance transfer credit card largely depends on whether the math checks out. If you can secure a better interest rate, feel confident you can pay off the balance before the promotional period ends, and have checked that the balance transfer fees won’t cancel out your savings, then it may be worth it to make a balance transfer.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How Long Does It Take For a Refund to Appear on a Credit Card?

How Long Does It Take for a Refund To Appear on a Credit Card?

In our digital world we like things to happen immediately. Unfortunately, it can take days, if not weeks, for a credit card refund to appear on a cardholder’s account.

How long does it take for a refund to appear on a credit card? Keep reading for insight into how credit card refunds work, types of refunds, and tips for getting your refund faster.

What Is a Credit Card Refund?

Before we can properly explain what a credit card refund is, it’s helpful to understand how credit card purchases work and who the main players are.

For every credit card transaction, there are two companies that help facilitate the purchase: credit card issuers and credit card networks. The credit card issuer is the company that creates and manages the credit card. The company essentially lends money to the cardholder to make a purchase. The credit card network is the business that processes the transaction electronically. It does this by transferring the money from the credit card issuer to the merchant.

Whenever someone makes a purchase with a credit card, the credit card issuer is the one to pay the merchant. Later, the cardholder pays the credit card issuer back.

With credit card refunds, this entire process works the same way but in reverse. When a merchant refunds a purchase, the money goes to the credit card issuer. Then the credit card issuer returns that amount to the cardholder’s account.

Recommended: What Credit Score is Needed to Buy a Car

How Does a Credit Card Refund Work?

As briefly noted above, when a consumer requests a credit card refund through a merchant, the merchant issues the refund directly to the credit card issuer, and then the issuer pays the account holder back. This is why merchants don’t typically refund credit card purchases in cash.

If the cardholder pays off their balance in full before a refund hits their account, they may end up with a negative balance. In this case, a negative is a good thing: It just means you have a credit on your account instead of the usual charges. You don’t need to do anything about a negative balance.

Types of Credit Card Refunds

There is only one type of credit card refund that consumers are involved in. The merchant and the credit card issuer (with the use of a credit card network) will work together to complete the refund and to get the money to the consumer.

Potential Delays for Credit Card Refunds to Appear

Exactly how long does it take for a refund to appear on a credit card? The timeline can vary based on a few variables. It can take time to process a refund, and all the consumer can do is wait.

In general, the retailer’s return policy dictates how long a consumer will wait to get their refund. Most retailers have a policy of refunding a purchase within three to five business days. The return policy can usually be found on the retailer’s website.

Online returns can be particularly lengthy and usually take longer to process than in-store returns because shipping is involved. It can take over a week just for the returned package to arrive and be processed before the refund process is initiated. Then the cardholder has to wait for the refund to appear on their monthly statement. Let’s look at an example of how this can work.

Let’s say a consumer makes a return on the 16th of the month and requests a refund. But their credit card closing date is the 15th. The consumer won’t see a refund appear until the next month’s statement. To discover exactly when a refund appears on the credit card statement balance, the consumer can review their account online for more up-to-date information.

Of course, this timeline can extend further if delays occur. Here’s a few examples of common issues that cause refund delays.

Billing Disputes

Getting a billing dispute taken care of can take longer than a standard refund. In that case, the customer must file a dispute with the credit card company to receive a credit. Some examples of issues that may require a dispute are:

•   Being billed for a product you didn’t receive

•   Getting charged twice for the same purchase

•   Failing to receive credit for a payment

Mistakes happen and billing disputes can take a while to resolve. In some cases, a credit card chargeback may be necessary.

Merchant Delays

All merchants have their own timeline for processing credit card returns. It can take a week or two depending on how slowly the merchant tends to process their refunds.

Cases of Identity Theft

If someone needs a refund for a purchase on their account that is a result of identity theft, it can take quite a while to fully resolve that issue.

How Does a Credit Card Refund Affect Your Credit?

If someone doesn’t pay off their credit card balance while waiting for a return to process, they will carry the balance on their credit card. In addition to expensive interest charges, carrying a balance affects the consumer’s credit utilization ratio, which can harm their credit score.

A credit utilization ratio compares how much available credit someone has to how much of it they’re using. Ideally, it’s best to keep the utilization ratio below 30%. Financial software like SoFi offer free credit monitoring, a debt payoff planner, and other handy tools to make sure you aren’t taken by surprise.

Check your score with SoFi

Track your credit score for free. Sign up and get $10.*


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Tips To Get a Faster Credit Card Refund

The best chance someone has at getting a quick refund is simply to make the return as soon as possible. If a consumer is in a rush to get their money back, they can request a store-credit refund from the merchant, which will be issued immediately.

That means the customer will have to spend that money in-store, leaving the purchase amount on the credit card bill to be paid off. On the bright side, this method results in the cardholder getting to keep any cash back or rewards points that the purchase earned.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

The Takeaway

It can take anywhere from a few days to a few weeks for a refund to appear on a credit card. The exact timeline varies based on the merchant and credit card issuer involved, as well as other factors that can cause delays (such as slow shipping times). Patience is key, but it helps to be aware of what the merchant’s and credit card issuer’s return policies and expected timelines are.

Want to take your savings to the next level? SoFi’s money tracker app makes it possible to set monthly spending targets, review top spending categories, and set multiple goals.

Learn how SoFi can help make managing money easier today!

FAQ

How long do refunds take to show up on credit cards?

It can take as little as three days for a refund to show up on a credit card. That said, it can take longer depending on the merchant and credit card issuer involved. Returns that require shipping back merchandise can take the longest, because the consumer has to wait for the merchandise to arrive and be processed before a refund can be initiated.

Why is my refund not showing up on my credit card?

A refund can take days, if not weeks, to show up on a credit card. Don’t be afraid to check in with the credit card issuer on the status of a refund. Instead of waiting for a new statement to come in the mail at the end of the month, it can be more expedient to review an online account statement.

Why do card refunds take so long?

Credit card refunds can take a while for a few reasons. To start, all merchants and credit card issuers have different refund timelines. Other things like slow shipping times (for online purchases) or issues with identity theft can cause additional delays.


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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Guide To Paying a Credit Card in Full vs Over Time

Guide to Paying a Credit Card in Full vs Over Time

In a perfect world, you’d be able to zap away debt in a flash. But the reality is, sprinting through payments on high-interest debt isn’t exactly easy to do. That’s because you’ll still need to juggle staying on top of bills and covering daily expenses, among other financial obligations.

If you’re wondering whether it’s better to pay off your credit card or keep a balance, the answer largely depends on your particular set of circumstances. Let’s take a look at the pros and cons of paying off credit cards in full vs. over time to help you determine if you should pay off your credit card in full or space payments out a bit.

Recommended: When Are Credit Card Payments Due

Does Paying Down Credit Cards Slowly Affect Your Credit Score?

Paying off credit cards slowly can impact your credit score because it can affect your credit utilization, which makes up 30% of your consumer credit score. When you’re slow to pay off your credit card balance, your credit utilization — or how much of your total credit you’re using — can be higher. A higher credit utilization rate can adversely affect your credit score.

What Is Credit Utilization?

Credit utilization measures how much credit you have against how much credit you’ve used. This ratio is expressed as a percentage. You can find your credit utilization ratio by dividing your total credit card balances by your total credit limits across all of your cards.

How Credit Utilization Works

As we discussed, credit utilization is expressed as a percentage, and you can find it by dividing your credit card balances by your credit limits. As an example, let’s say you have three credit cards, and your total credit limit across those cards is $30,000. The total of your credit card balances on all three cards is $9,000.

In that case, your credit utilization is 30%, as demonstrated by the math below:

Credit limit on Card 1: $8,000
Credit limit on Card 2: $12,000
Credit limit on Card 3: $10,000

Total credit limit: $8,000 + $12,000 + $8,000 = $30,000
Total balances across Cards 1, 2, and 3: $9,000

$9,000 / $30,000 = 0.30, or 30%

Recommended: What is the Average Credit Card Limit

How Credit Utilization Can Affect Your Score

The lower your credit utilization, the better it is for your credit score. It’s generally recommended to keep your credit utilization ratio under 30% to avoid negative effects on your score. Keeping your score below this threshold indicates to lenders and creditors that you aren’t stretched financially, are a responsible user of credit, and have available credit that you can tap in to.

If you’re wondering, do credit card companies like it when you pay in full? The answer is that it certainly helps with your credit score, as a low credit utilization ratio can positively impact your credit score, and credit card companies generally look more favorably upon higher credit scores.

Recommended: Tips for Using a Credit Card Responsibly

Differences Between Paying a Credit Card in Full vs Over Time

Trying to determine whether you should pay off your credit card in full? Here are some of the key differences between paying off credit cards in full compared to making payments over time:

Paying a Credit Card in Full

Paying a Credit Card Over Time

Might need to spend less or earn more to speed up payments Can make payments based on current income and budget
Can save money on interest charges Costs more in interest payments
Frees up money sooner for other financial goals Continue juggling debt payoff with other financial goals for longer
Can lower credit utilization, potentially improving your credit score Won’t make as much of an impact in lowering credit utilization

Recommended: What is a Charge Card

Reasons to Always Pay Off Your Credit Card in Full

When it comes to paying off your credit card in full, there are a handful of reasons why it could be a good idea:

•   Helps with your credit score: As we talked about, paying off your card balance means keeping a lower credit utilization, which can help keep you maintain a solid score.

•   Frees up money for other goals: By paying off your credit card bill sooner than later, you’ll free up that money you were putting toward debt payments. In turn, you’ll have “extra” cash to put toward savings, retirement, and your short-term and long-term goals.

•   Allows you to save on interest: The longer you stretch out your payments, the more you’ll end up paying in interest. By paying off your credit card in full each statement cycle, you won’t owe interest, given how credit card payments work.

Reasons to Pay Down Your Credit Card Over Time

While it may be ideal to pay off your credit card all at once, credit card debt is hard to pay off — especially when you’re spinning a lot of plates money-wise. Let’s take a look at why you might opt to pay down your credit card over time instead:

•   Allows for a more manageable debt payment schedule: Paying down your credit card over time won’t put pressure on you to cut back on your living expenses, or find ways you earn more so you can pay off your credit card balance more quickly. Depending on your situation, gradually making payments might feel like the more reasonable route.

•   Frees up money now: By not focusing on aggressively paying off your credit cards, you can potentially work on other money goals, such as saving for retirement or creating an emergency fund. Still, you’ll want to at the very least make your credit card minimum payment to avoid the consequences of credit card late payment.

Strategies for Paying Off Credit Card Debt

If the idea of paying off your credit card debt feels overwhelming, here are a few popular strategies to consider for crushing your debt.

Debt Avalanche Method

With the debt avalanche method, you focus on paying off the card with the highest interest rate first. Meanwhile, you’ll continue making the minimum payments on all of your other accounts.

Once your account with the highest interest rate is paid off, you’ll move on to focusing on the account with the next highest rate, continuing to make minimum payments on the others. You’ll continue this cycle until all of your debt is paid off.

The major benefit of this method is that you’ll save on interest payments.

Recommended: How to Avoid Interest On a Credit Card

Snowball Method

In this strategy, you make the minimum payments on all your cards by the credit card payment due date. Then, you put any remaining funds toward paying off the card with the lowest balance. Once that’s paid off, you move on to the card with the next lowest balance.

The main advantage of the snowball method is that it keeps you motivated to continue to pay off your debt. That’s because it feels good to get a card paid off, which is easier to do with a card that has a lower balance.

Debt Consolidation

With debt consolidation, you take out a new loan that you then use to pay off all of your outstanding debts. This effectively rolls all of your credit card payments into a single fixed payment each month.

In turn, debt consolidation can simplify your payments, and potentially lower your payments. However, depending on the new payment schedule and terms, you might end up paying more in interest over the course of the loan. Also keep in mind that you’ll generally need a decent credit score to qualify for debt consolidation.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

When Carrying a Balance Hurts Your Credit Score

Carrying a balance on your credit card hurts your score if it pushes your credit utilization too high. You’ll want to keep your credit utilization under 30% to avoid adverse effects.

Keeping a low balance, which decreases your credit utilization, can help your credit score. Besides paying off your cards, other ways to lower your credit utilization are to open a new credit card or request a credit limit increase. Both of these actions will increase your overall credit limit, thus potentially improving your credit utilization rate.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

While paying a credit card in full can help with your credit utilization, which also can improve your score, it’s not always realistic. You’ll want to weigh the pros and cons of both paying off credit cards in full and making payments over time to see which one is right for your current situation.

While making credit card payments is one way to lower your credit utilization, another option is opening a new credit card.

If you’re looking for a new credit card, you might apply for a credit card with SoFi.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1



Take advantage of this offer by applying for a SoFi credit card today.

FAQ

Is it better to pay off your credit card or carry a balance?

While paying off your credit card in full can help with your credit utilization ratio and save you on interest, spreading out your payments over time might make debt payoff more manageable. Which approach is best depends on your financial situation and preferences.

Does completely paying off a credit card raise your credit score?

Paying off a credit card can lower your credit utilization, which can positively affect your credit score.

Why did my credit score go down when I paid off my credit card?

Paying off your credit card doesn’t usually bring down your credit score. However, your credit score may drop if you closed your account after paying it off, as that can impact your credit mix or the average age of your accounts. It could also decrease your available credit, which can drive up your credit utilization.

Do credit card companies like it when you pay in full?

Paying in full shows creditors that you’re a responsible cardholder and that you have the financial means to pay off what you owe. It can also help to improve your credit score, which credit card companies look upon favorably.


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1Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

1See Rewards Details at SoFi.com/card/rewards.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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Guide to Paying for Dental Care With a Credit Card

Guide to Paying for Dental Care With a Credit Card

Good dental health is essential to your overall well-being, but the cost of dental work — even after dental insurance — can make it challenging to pay upfront. According to the American Dental Association (ADA), the average cost of a porcelain or ceramic crown is $1,213, while the cost of a root canal can range as high as $1,539 for a single session.

Securing a dental credit card is one way to cover these costs in smaller, more manageable installment payments. Although a credit card for dental work can serve as a useful financing tool, it’s also important to be mindful of the caveats of using credit for dental care.

Recommended: When Are Credit Card Payments Due

What Is a Dental Credit Card?

A dental credit card is a medical credit card that’s specifically for your out-of-pocket dental health care costs. These cards are typically offered in dental offices that accept the particular medical card it advertises as a form of payment.

Like a basic credit card, a dental credit card requires patients to undergo a credit check for qualification. The card’s use is limited to dental offices within the card issuer’s network for the purpose of financing your dental bills.

Dental care credit cards typically have high interest rates, even if they offer a temporary deferred interest period.

Recommended: Tips for Using a Credit Card Responsibly

How Do Dental Credit Cards Work?

Your dental provider’s office might mention a dental credit card as a payment option if you’re unable to cover the expense in one lump sum. The office facilitates the process of completing your application for credit approval, but it is not financing the cost directly. In other words, your dental office isn’t the lender.

Instead, credit for dental care is provided by a third-party credit card issuer. Similar to how a conventional credit card works, your application is reviewed by the issuer’s underwriting team, and your credit history and score are evaluated.

If you’re approved, the card issuer will send you a physical credit card that you can use for services at an in-network health care office up to your approved credit card limit. Your dental provider is paid in full by the card issuer, and you’ll repay the issuer through monthly payments, plus interest if you carry a balance.

Recommended: What is the Average Credit Card Limit

Deferred Interest Periods on Dental Credit Cards

Some credit cards for dental work offer zero interest charges for a limited period, also called deferred interest. This option can be advantageous if you’re confident that you can successfully repay the full balance before the deferment period ends.

However, if there’s a remaining balance after the deferment period ends, interest charges that accrued throughout the deferment period are added to the principal balance that’s due. Additionally, the new higher balance continues to accrue interest charges at the dental credit card’s APR.

Because of this, use medical credit cards for dental work cautiously, as it’s a high-interest financing option that can lead to higher medical debt if you’re unable to repay your dental expenses quickly.

Recommended: What is a Charge Card

Choosing a Dental Credit Card

When applying for a credit card specifically for dental care expenses, make sure you ask about the card’s features, terms, annual percentage rate (APR), and how it calculates interest during and after any deferment period.

If you’re approved, ensure that your dental office provides you with a copy of your dental credit card’s disclosure agreement. Also pay attention to the agreed-upon amount for any dental services you receive so you can verify that the card was charged for the correct amount.

You’ll want to note the deferment dates for your card, if any, and the interest rate you’re offered. That way, you can make enough monthly payments to repay your balance in full before interest kicks in.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Paying for Dental Care If You Have Bad Credit

Getting approved for a dental care credit card might be challenging if you have bad credit. If you’re in a difficult position and need help paying for expensive dental work now, here are some options to explore:

•   Inquire about a low-fee payment plan. Even if your dental provider doesn’t typically offer payment plans, it’s worth asking. This will likely be a better option than resorting to a secured credit card for payment, for instance, as these tend to have higher interest rates than unsecured credit cards.

•   Shop around with other dental providers. Prices vary across dental offices, so compare costs across a handful of affordable sources. You might consider a non-profit dental clinic or a dentistry school.

•   Seek help from a family member. Ask a relative if they’re willing to offer a low-interest loan for your dental care.

•   Explore local government programs. Some state and local governments offer low-cost dental care programs to residents.

Alternatives to Dental Credit Cards

If a dental credit card isn’t an option for you, there are a handful of other financing options to cover dental work, such as the cost of a root canal.

Credit Cards With 0% Interest Rates

Other types of credit cards, like a 0% APR card, are a good alternative to dental care credit cards. They offer a promotional period — sometimes from six months to 18 months — during which you don’t incur interest charges.

This kind of card may differ from deferred interest programs. With some promotional APR cards, interest only starts accruing on your outstanding balance after the promotional period ends. Still, the credit card rule applies to try to pay off your balance in full before the promotional period ends to avoid paying interest.

Payment Plans Through Your Provider

Some medical providers offer a payment plan at no additional cost or at a small installment fee. In this situation, you’re arranging low installment payments directly through your dental office until you’ve repaid your balance in full.

Not all dental offices offer this type of payment plan. But if yours does, it can work with you to create a custom monthly payment amount and due date that’s manageable for your finances.

Personal Loans

Compared to a dental credit card, personal loans might offer lower interest rates for qualified borrowers. A low-interest personal loan achieves the same result as a credit card for dental work in that you can chip away at your outstanding balance in small increments, plus interest.

The main difference is that you’ll receive a lump-sum loan disbursement from your lender that can be used to pay your dental office upfront.

Recommended: How to Avoid Interest On a Credit Card

Help From Relatives

Seeking financial assistance from a close relative can help you avoid dental care debt. When asking for help, clarify whether the funds are a gift or need to be repaid.

If it’s the latter, discuss the repayment window and additional interest (if any). Also talk about expectations if you’re suddenly unable to make payments due to an injury or job loss, for instance.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

Getting a credit card for dental work can be useful if you’re faced with an urgent oral treatment or procedure and need fast financing. However, the incredibly high interest rates of credit cards for dental work compared to other financing options can make it a financially risky option.

If you believe a credit card is the best way to pay for dental care, see if a rewards credit card — like the cash-back rewards credit card from SoFi — makes sense for you.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1



Take advantage of this offer by applying for a SoFi credit card today.

FAQ

What credit score do I need to get a dental credit card?

Credit score requirements vary by credit card issuer, but generally, you’ll need at least fair credit. However, a higher score can help you qualify for more competitive interest rates.

Is a dental care credit card hard to get?

Dental care credit cards are commonly offered online or at your provider’s dental office, so applying for a card is typically straightforward. However, being approved for a dental credit card involves many factors, like your credit history, income, debt-to-income ratio, and other factors.

Should I pay for dental care with a credit card?

If you don’t have the cash flow to pay for your dental costs upfront, using a dental credit card helps you cover costs in small, monthly payments. That being said, doing so might cause you to incur high interest charges, so evaluate your financial situation and proceed with caution.

Can I get a dental loan with bad credit?

Dental loans for patients with bad credit are available, though they might come with high interest rates, low limits, or other restrictive factors.


Photo credit: iStock/zadveri

1Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

1See Rewards Details at SoFi.com/card/rewards.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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Closing a Credit Card With a Balance: What to Know

Closing a Credit Card With a Balance: What to Know

Closing a credit card with a balance remaining is possible to do. However, keep in mind that even if your credit card account is closed, you’ll still have to pay off the remaining balance. Additionally, you’ll need to cover interest that’s accrued as well as any fees, and you could face other consequences, including losing out on rewards and seeing potential impacts to your credit score.

Still, there are instances when closing a credit card can be the right move. If you’re thinking about closing a credit card account with an outstanding balance, you’ll want to weigh these considerations — and also ensure you have a plan for paying off your remaining balance.

Recommended: How to Avoid Interest On a Credit Card

What Happens If You Close a Credit Card Account With a Balance?

Once you’ve closed a credit card account with a balance, you’ll no longer be able to use that card to make purchases. Beyond that, here’s what else you can expect after your account closure.

Payment of Balance and Interest

Perhaps the most important thing to keep in mind when a credit card is closed with balance is that you’re still liable for the credit card balance you’ve racked up. You’ll also owe any interest charges that have accrued on your outstanding balance.

As such, expect to continue receiving monthly statements from your credit card issuer detailing your balance, accrued interest, and minimum payment due. And until you’re absolutely positive your debt is paid off, keep on checking your credit card balance regularly.

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Loss of Promotional APR

If the card you closed offered a promotional interest rate, this offer will likely come to an end. If you’ve been carrying a balance on a credit card, your balance could start to accrue interest. Plus, you may have to pay the standard APR on the remaining balance rather than the lower promotional rate.

Recommended: Can You Buy Crypto With a Credit Card

Loss of Rewards

Before you move forward with canceling a credit card that offers rewards like points or airline miles, make sure you’ve redeemed any rewards you’ve earned. That’s because you may forfeit those rewards if you close your account.

Policies on this can vary from issuer to issuer though, so just make sure to check with your credit card company to be safe rather than sorry.

How Closing Credit Cards With Balances Can Impact Your Credit

There are a number of ways that closing credit card accounts with a balance can adversely affect your credit score given how credit cards work. Closed accounts in good standing will remain on your credit report for 10 years, whereas those with derogatory marks may fall off after seven years.

For starters, closing your account could drive up your credit utilization ratio, one of the factors that goes into calculating your score. This ratio is determined by dividing your total credit balances by the total of all of your credit limits. Losing the available credit on your closed account can drive up this ratio.

Further, closing your account can impact your credit mix, as you’ll have one fewer line of credit in the mix. It also could decrease your length of credit history if the card you closed was an old one.

That being said, the impacts can vary depending on your credit profile and the credit scoring model that’s being used. If, after closing your account, you pay off your account balance in a timely manner and uphold good credit behavior across other accounts, your score can likely bounce back.

Recommended: What is the Average Credit Card Limit

Is Keeping the Credit Card Account Open a Better Option?

In some scenarios, it may make sense to keep your credit card active, even if you don’t plan on spending on the card. Here’s when opting against closing your credit card account might be the right move:

•   When you can switch credit cards: If your card carrier allows it, you might be able to switch to a different credit card it offers rather than closing out your account entirely. This might make sense if you’re worried about your card’s annual fee, for instance. You’ll still owe any outstanding debt on the old credit card, which will get moved over to the new card (the same goes if you happen to have a negative balance on a credit card).

•   When you have unused credit card rewards: With a rewards credit card, closing the account may jeopardize the use of earned rewards. Avoid that scenario by keeping the credit card active until you’ve used up all the rewards earned on your current credit card, or at least until you’ve transferred them to a new credit card, if that’s an option.

•   When you don’t use the credit card: Even if you don’t use your credit card, or use it sparingly, keeping the card open can help your credit score. This is because creditors and lenders usually look more favorably on credit card users who don’t rack up significant credit card debt, which is why maintaining a low credit utilization ratio is one of the key credit card rules to follow.

That being said, there are certainly some scenarios when it can make sense to say goodbye to your credit card account. Here’s when to cancel your credit card, or at least consider it:

•   You want to avoid the temptation to spend.

•   You want to stop paying your card’s annual fee.

•   The card’s interest rate is rising.

•   You’d like to have fewer credit card accounts to manage.

Guide to Paying Off a Credit Card Balance

No matter what you do with your credit card account, you’re going to have to pay down your credit card debt. That scenario grows more important with a closed card account, which can easily be forgotten — along with the debt you owe.

To avoid making that mistake, here are some options you can explore to pay off your closed credit account with a balance as soon as possible.

Recommended: Tips for Using a Credit Card Responsibly

Debt Consolidation Loans

A personal loan at a decent interest rate can make it easier to curb and eliminate your card debt. Once the funds from the loan hit your bank account, you can use the cash to pay off all your credit card debts. Then, you’ll only have to keep track of paying off that one loan with fixed monthly payments, making it easier to manage.

Keep in mind that you’ll generally need good credit to secure a personal loan with competitive terms though.

Recommended: When Are Credit Card Payments Due

Balance Transfer Credit Cards

A balance transfer card with a 0% introductory interest rate can buy you some time when paying down debt. You can transfer your existing debt to the new card, allowing you to pay down credit card debt at a lower interest rate, without racking up any additional interest payments during the promotional period.

Just make sure to pay off the entire balance before the card’s introductory interest rate period ends, and the interest rate rises significantly. Otherwise, you may be right back where you started — with high credit card debt and a high interest rate. Also note that a ​​ balance transfer fee will likely apply.

Debt Avalanche or Snowball

For credit card debt repayment, consider the debt avalanche or snowball approach.

With the avalanche debt repayment method, you prioritize paying off your credit card with the highest interest rate first. Meanwhile, you’ll maintain minimum payments on all of your other debts. Once your highest-rate debt is paid off, you’ll roll those funds over to tackle your balance with the next highest interest rate.

The snowball method, on the other hand, is all about building up momentum toward debt payoff. Here, you pay as much as possible each month toward your credit card with the lowest outstanding balance, while making minimum payments on all of your other outstanding debts. When the smallest debt is paid off completely, repeat the process with the next smallest balance.

Debt Management Plan

If you’re still having trouble paying down your credit card either before or after you close the account, that could be a red flag signaling that you need help. In this case, consider reaching out to an accredited debt management counselor who can set you on the right path to credit debt insolvency.

In addition to helping you create a debt management plan, a credit counselor can help by negotiating a better deal on interest rates and lower monthly payments. That could result in paying down your credit card debt more quickly, which not only saves you money, but also helps protect your credit score.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

The Takeaway

If you decide to close your credit card account with a balance, it’s critical to do so in a way where your debt obligations are covered and your credit score is well-protected. The key to doing the job right is to work with your card company, keep a close eye on outstanding balances and payment deadlines, and work aggressively to pay your card debt down as quickly as possible.

Since closing a credit card can have consequences, it’s especially important to consider a credit card carefully before you apply.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1



Take advantage of this offer by applying for a SoFi credit card today.

FAQ

Can you close a credit card with a balance?

Closing a credit card with a balance is possible. However, you’ll still be responsible for the outstanding balance on the card, as well as any interest charges and fees.

Does it hurt your credit to close a credit card with a balance?

Closing your credit card with a balance remaining has the potential to impact your credit score. However, the exact implications for your score can vary depending on your overall credit profile and which credit scoring model is being used.

Is it better to close a credit card or leave it open with a zero balance?

That depends on your personal situation. Closing a card for good may impact your credit score, but you also won’t be able to use the card again and risk racking up unwanted debt in the process.

What happens if you close a credit card with a negative balance?

If you close a credit card with a negative balance, that means the card issuer owes you money instead of vice versa. In this situation, the card issuer will typically refund you that money before closing out the account.

How do I close a credit card without hurting my credit score?

You can mitigate the impacts of closing your account by paying off the balance on that account and all other credit card accounts you have. If you have $0 balances, then closing your account and losing that available credit won’t affect your credit utilization rate.


Photo credit: iStock/staticnak1983

1Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

1See Rewards Details at SoFi.com/card/rewards.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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