Typically balance transfers don’t count as payments. When you make a balance transfer, it’s usually counted as its own type of transaction or as a cash advance.
Rewards are usually earned on payments — and since balance transfers aren’t classified as payments, they’re not likely to earn rewards.
Can you earn points on a balance transfer?
Not likely. Credit card providers rarely offer rewards for shifting your debt from one card to another. However, you may still be able to enjoy promotional offers that give you cash back rewards or bonus points towards a rewards program simply for becoming a card holder.
Although it may seem similar to earning rewards points on a balance transfer, the key difference is that you’re rewarded for opening a new credit account, not for putting a balance on your card. Keep your eye out for cards with attractive introductory offers such as air miles bonus points, high cash back rates and credits you can redeem for free meals and entertainment.
Compare balance transfer credit cards
Consider opening a rewards card that has a balance transfer offer. This will allow you to keep earning rewards long after you’ve completed the balance transfer.
Is it worth earning points on a balance transfer?
Not really. Even if you could earn a point for each dollar transferred, you’d have to transfer at least $10,000 of your debt just to redeem your points for a $100 gift card.
You should also factor in the following costs and risks:
Reward credit cards typically have annual fees ranging from $70 to $500 or more. So, in most cases, this cost would cancel out the value of the points right away.
Balance transfer fee.
Depending on the card, you could pay a one-time processing fee worth 1% to 3% of the debt. That would be an extra $100 to $300 on a $10,000 balance transfer, meaning you’d likely pay more than you’d earn from reward points.
Balance transfer interest charges.
Even if a card has no interest for 6 months, if you transfer enough debt to get value from the points, you probably wouldn’t be able to pay it off during the introductory period.
Any debt remaining after that time would be charged interest at the standard rate for your card, which is usually between 16% and 22%.
Basically, if you have existing credit card debt you want to pay off, you’re usually better off getting a 0% intro APR balance transfer credit card. You can focus on paying down your debt without worrying about points and save as much money on interest as possible.
Once you’ve paid off your debt, you could consider getting a card that earns points for your everyday spending. Just remember that these cards offer the most value when you pay your balance in full each month.
What about credit cards that offer 0% intro APRs on balance transfers and introductory bonus points?
Some credit cards offer new customers both introductory 0% APR balance transfers and bonus points. But to get the bonus points, you usually need to spend a specific amount on new purchases when you first get the card.
For example, a card might offer 40,000 bonus points if you make $3,000 worth of eligible purchases in the first three months.
If you’ve already transferred your older debt to the card, meeting this spending requirement adds to your balance. Plus, new purchases are charged interest at the purchase rate for that card, which could be as high as 22% APR.
How to decide if it’s worth getting a credit card with bonus points and an intro APR
Look at how much you need to spend and how long you have to meet this requirement. Is it reasonable considering your existing balance?
Can you pay off your debt during the balance transfer promotional period?
Consider how long you’ll get the promotional balance transfer rate based on the size of your debt.
Can you afford to pay off both your balance transfer and the debt from any bonus-point spending?
When you use a credit card for both a balance transfer and new purchases, you’ll likely have different interest rates for each part of the balance.
When this happens, any payments you make will automatically go towards paying off the debt with the highest interest rate, usually your new purchases. If you can’t afford to pay off all your debt during the introductory period, you could end up paying more later on.
Ultimately, you’ll need to evaluate whether a rewards program or a balance transfer card is best for your situation. If you have a large amount of debt you’re paying back at high-interest rates, a balance transfer card is likely the best solution for you.
However, if your debt isn’t that high, but you spend a lot on everyday purchases or travel a good deal, a cashback or travel rewards card could help you score in a huge way.
Frequently asked questions
Because rewards cards generally have higher interest rates, it’s in your best interest to pay off your balance each month. Otherwise, the interest will likely cancel out any rewards.
This could actually be a good idea if you’ve managed to amass more debt than you meant to on your rewards card and haven’t been able to pay it down quickly enough.
Rewards cards can rack up quite a bit of interest, and the low introductory rate of most balance transfer cards could help to save money, as long as you pay down the debt within the introductory period. Both cards will likely have to be from different providers, however, as most credit card issuers will only allow balance transfers with another provider.
If your goal is to significantly reduce your debt, it’s not a good idea unless you’re sure you can pay off the rewards card each month and the balance transfer amount within the introductory period. Ultimately, though, you probably should just stick with the balance transfer card if you use it to pay off your rewards card, at least until the balance transfer amount is paid off.
Jeremy is finder's Global Head of Publishing & Editorial. Jeremy has been with finder since the very beginning and is part of the founding team working closely with Fred and Frank to build finder.com into the comparison network it is today.
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