You typically only earn rewards on purchases.
There are many credit cards that offer rewards for spending, but you likely won’t get any points for a balance transfer. This is because balance transfer transactions are different from purchases.
Even if you want that 0% intro APR balance transfer offer with a rewards card, consider if you can make it worth the transfer — and if purchase rewards are something to focus on.
Does a balance transfer count as a payment?
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?
Very rarely, yes. Barclays has been known to offer rewards with balance transfers on occasion.
At the time of writing, you can earn rewards on balance transfers made with the Wyndham Rewards® Visa® Card. The first use of the card for a purchase or balance transfer will earn 15,000 points. A similar offer is available for the Carnival® World Mastercard®.
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:
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Annual fee.
Reward credit cards typically have annual fees ranging from $90 to $450 or more. So, in most cases, this cost would cancel out the value of the points right away.
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Balance transfer fee.
Depending on the card, you could pay a one-time processing fee worth 3% to 5% of the debt. That would be an extra $300 to $500 on a $10,000 balance transfer, meaning you’d likely pay more than you’d earn from reward points.
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Balance transfer interest charges.
Even if a card has no interest for 12 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 50,000 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
If you really want to get points and a balance transfer, these are the key factors to consider:
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What can you get with the bonus points?
Check out the rewards or frequent flyer program to figure out the value of the bonus points. Sometimes these offers can be worth hundreds of dollars, although it depends on how you use them.
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What are the bonus point spending requirements?
Look at how much you need to spend and how long you have to meet this requirement. Is it reasonable considering your existing balance?
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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.
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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.
Bottom Line
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.
