Do Balance Transfers Earn Points Or Miles?

Do Balance Transfers Earn Points Or Miles?

April 9, 2020         Written By Travis Short

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There are a few reasons you may be looking for a balance transfer credit card. If you have a debt on a credit card that has a high-interest rate, applying for a card that has a 0% introductory balance transfer offer could help you save money on interest charges while you pay down your debt faster than you would have otherwise. In addition, balance transfers give you the opportunity to consolidate your debt from multiple credit cards. This will reduce the number of payments you have to make each month, and lower the hassle and stress of doing so. Also, having a limited time offer of interest-free financing can create a powerful incentive to pay off your debt before interest starts to accrue. And when you pay down your debt, your credit score may improve as your debt to available credit ratio falls. Your debt to available credit ratio is one of the most important factors in determining your credit score. Along with these benefits, you may be wondering if you can earn rewards or miles when you transfer your balance to a new card.

Do Balance Transfers Earn Rewards, Points or Miles?

The answer is typically no. In order to understand why you first need to know what types of transactions qualify for earning points or miles. Depending on the card, rewards can be earned when you use your card to make certain purchases. Some cards offer cash back, point rewards, or miles for your purchases and may even reward extra for spending you do in certain categories such as travel, gas, groceries, and dining. Balance transfers are not considered purchases, which is why they don’t typically earn you any rewards or miles. There may be a small handful of cards that will offer special promotions that will earn you rewards when you transfer your balance to them but a lot of the time any rewards you earned would be offset by the balance transfer fee.

Costs Associated with Making a Balance Transfer

When looking to get a balance transfer card you need to take a look at a few things including the ongoing APR, after any 0% Introductory period expires, the annual fee and the associated balance transfer fees. 

Many balance transfer credit cards will offer an introductory 0% APR on your balance transfer for a specific period of time, typically anywhere from six to 21 months. The longer the introductory period the longer you have to pay the balance before the ongoing APR will apply. At the end of your introductory period, any remaining balance you have on the card will then begin accruing interest. If you think you will have a hard time paying off the full balance by the end of the intro period you need to be mindful of the ongoing APR, making sure you are comfortable with the rate before applying. You should also be aware that some balance transfer cards only have an introductory offer for balance transfers. This means that you may not get the same 0% interest that you do on your balance transfers on any new purchases you make on the card, they may begin accruing interest during the first billing cycle.

Not every card has an annual fee but some do and you should keep that in mind when looking for a balance transfer card. Be sure that any benefit you get in transferring your balance to your new card will not be erased by an annual fee. Chances are you can find a good balance transfer card that offers a $0 Annual fee.

Transferring your balance can come at a cost, typically around 3-5% of the total amount you are moving over, this is called the balance transfer fee. You want to make sure the amount you’ll be saving in interest charges on the new card is greater than the balance transfer fee. Usually, you will only be able to transfer a certain percentage of your credit line on your new card. For instance, if your credit line is $10,000 on your new card you may only be able to transfer up to 75% of your credit line, or $7,500 to your new card. One thing to note, some credit cards build the 3-5% transfer fee into your 75% max so you’ll have to read the terms and conditions of the card so you know how much you can transfer.

Just because balance transfer cards don’t typically offer you rewards or miles for your transfers doesn’t mean your card will not offer rewards for purchases you make on the card. Many cards with a balance transfer option offer sign up bonuses and even rewards. If you decide to get a card to complete a balance transfer that offers rewards for spending make sure that you don’t overspend on your card. If you are transferring the max that the card will allow, you may already be close to hitting your credit limit. Credit issuers typically like to see that your credit utilization is relatively low, below 30% of your credit line. This means if you have a credit line of $10,000 you typically don’t want to have a balance of over $3,000 because you may be seen as a financial liability to the lenders and it could lower your score. Along with keeping your eye on your credit utilization, you need to be sure you don’t make a purchase that would put you above your credit limit or your transaction may be declined.

Should I Apply for a Balance Transfer Card?

There are a few self-assessment questions to ask when considering applying for a balance transfer card.

How much am I wanting to transfer to my new card?

Remember to keep in mind that you may be limited in the amount that you can transfer to your new card. Depending on the amount that you are looking to transfer you may not be able to move it all to your new card. The bank also reserves the right to deny your transfer, if they decide you are not creditworthy of the amount you request.

Do I plan on making purchases on my new card?

If you are looking to make purchases you’ll want to look for a card that offers rewards for your purchases. Some issuers even have 0% intro offers for balance transfers and purchases, so if you’re planning on making purchases on this card, look for a card that includes both. Remember that balance transfers are not considered purchases and will not earn rewards or miles for your account. If you are not concerned about earning rewards look for a card that has the longest 0% introductory period you can find for balance transfer, typically around 21 months. Also remember to be mindful of your credit utilization on your card, if it’s already high after your balance transfer you may want to hold off on making purchases until you’ve paid your balance down.

Is my credit good enough to qualify for a balance transfer card?

Most of the time you’ll need good credit in order to qualify for a balance transfer card. If you currently have a card that offers a free monthly credit score, take a look at it to see if you have good credit. If you apply and are denied for the card it could negatively impact your score, making it harder to get approved later.

When do I plan to have my debt paid off?

Having a plan to pay off your debt is the best way to go into a balance transfer, especially once you know how long your 0% introductory period will be. If you transfer your balance and don’t have a plan to pay it off you may be on the hook for interest charges if you still have a balance once your intro period expires. A good rule of thumb in creating a plan to pay off your debt is to not spend any more on the card. Adding to your debt when you are trying to pay it off can make it difficult to achieve your goal of paying the balance off.

Do the savings associated with my balance transfer outweigh the costs of having the card?

Again, make sure you understand all the costs associated with your balance transfer and the card in general. There are ways to calculate how much you’ll save by completing a balance transfer, make sure you’ll save money by completing a balance transfer. Review the terms and conditions of the card before applying so you know what to expect if you are approved.

If you can answer those questions for yourself you should have a pretty good idea of whether or not you should apply for a balance transfer card. You’ll also have a better understanding of the type of benefits that you are looking for in a card, such as rewards for spending.

What is important to keep in mind when looking for a balance transfer card is that your main goal should be to reduce your interest cost. Find a card that fits your needs and has a 0% intro period that you believe you can pay off your balance within. Be sure to take into account every aspect of the card and not just the balance transfer offer. There are many benefits offered by cards and each card is unique in the benefits offered. Look at your needs as a whole and find a card that fits them best. If you are looking to make a transfer but would also like to earn rewards for spending, find a card that offers you the ability to do both.

One final thing to keep in mind about balance transfer offers. You need to make sure your monthly payments are made on time, every time. A single late payment can negate your entire intro offer. Late payments are also reported to credit agencies and can lower your credit score.



The information contained within this article was accurate as of April 9, 2020. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


travis

About Travis Short

Travis Short is the Brand Coordinator at LowCards.com. He works with credit card issuers and our editorial team to make sure the credit cards you see on LowCards.com are compliant and represented correctly. He received his bachelor's in Marketing from the University of Arkansas in 2015 and has been on the LowCards.com team for the last two years. Travis can be reached at tshort@icommissions.com.
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