A friend told me that they heard that continually doing balance
transfers from one credit card to another can negatively affect my
credit rating and that they also heard that there is a limit to how
many balance transfers I can do. However, they did not know what
that limit is. I've read in at least one of your books that you are
constantly doing balance transfers to whatever is the best offer
available at the time.
Is there a limit on how many balance transfers
I can do in a year, or even my lifetime? Do specific credit card companies have
their own limits? Will the balance transfers hurt my credit rating if I am
paying down my credit cards and even paying off others during this process?
I would have the worst credit rating
on earth and also have far exceeded my limit of balance transfers if
what you heard was true! Actually, one could argue that the exact
opposite is the case which is, the more balance transfers you do,
the more active you look on your credit report, and the more banks
will attempt to get you to transfer your balances to them!
the more I transfer my balances,
the more direct mail I receive from banks asking me to transfer my
balances. And when I do transfer my balance from card "A"
to card "B," within two weeks, I receive a new transfer
offer from "A" asking me to come back!
As far as limits are concerned,
you'll only be limited by the market, i.e., by the credit offers
that are available to you personally. If banks want your business,
they'll need to come up with a good offer. That's how you have to think
of it. It's possible that certain companies may have a policy
about transfer limits, but I've never heard of such a limit. Based
on my daily snail-mail, I doubt there is any limit.
The only possible time that you could
have any trouble with doing balance transfers and your credit report
is when you're opening new lines of credit to do those transfers and
simultaneously applying for another loan, like a mortgage. The
mortgage bank may not like seeing all your open lines of credit
because, from their perspective, you are risky since you could
possibly get into trouble if you spend that available credit. But here
too can be many exceptions.
For example, when I purchased my house I
had $24,000 in credit card debt on about 24 credit cards, and the
bank approved the mortgage without a single question because I have
never been late paying on any account.
The biggest mistake you can ever make
is being late. Once you start to pay late, that's when you'll have
problems with transfer options and interest rates and everything to
do with your financial life.