Do Balance Transfers Count as Purchases?

Do Balance Transfers Count as Purchases?

April 18, 2018         Written By Bill Hardekopf

You may have received an offer in the mail or even done some research about balance transfer credit cards. These cards, which generally offer a low or 0% introductory APR, allow you to transfer a balance from a card that may have a higher interest rate. If you can create a plan for paying off the debt within the introductory period, you can save a significant amount of money on interest by making this balance transfer.

If your balance transfer credit card also offers rewards, you may be eager to take advantage of these rewards and are wondering if balance transfers count as a purchase. Unfortunately, most cards do not count balance transfers as purchases.

Let’s look at an example. The Capital One Quicksilver Cash Rewards card offers 1.5% cash back on all purchases, and an introductory rate of 0% for the first nine months on purchases and balance transfers. If you spend $500 within the first three months of opening your account, you will receive a $150 cash bonus. However, balance transfers do not count as a purchase, which means you will not earn 1.5% back on amount you have transferred, since the transfer will not count toward the $500 spending bonus.

Should You Transfer Your Balances?

Knowing that balance transfers will not count as purchases—is it still a good idea to open one of these credit cards? It depends on your situation.

Before applying for a credit card, determine how long the introductory period lasts. The Citi Double Cash card offers 0% APR on balance transfers for the first 18 months. If you can make a plan to pay off your debt within that time frame, you can save a tremendous amount on interest costs, especially when you consider the average APR is nearly 17%.

Even though your credit card may offer a low introductory interest rate, you will still need to pay a balance transfer fee. This fee can range from 3% to 5% of the total amount transferred. Bankrate offers a calculator to help determine whether the balance transfer will save you money in the long run.

Let’s say you have a balance of $5,000. You have been approved for the Citi Double Cash card, and you can afford to pay $275 per month toward your debt, which means you should be able to pay off the balance within the introductory period. With this card, you will pay a 3% or $150 fee to transfer your balance. If you do not transfer the balance, you will pay over $800 in interest and it will take nearly two years to pay off the debt. In situations like this, you are smarter to transfer your balance.

Other Considerations

Opening a balance transfer credit card may improve your credit score. The second most important factor in determining your score is your debt utilization, or debt-to-available credit ratio. You want to use no more than 30% of your available credit. Opening a new card will give you access to more credit, which means you are using a smaller percentage of the credit available to you. Thus, your score will increase.

It is important to develop a plan to pay off your debt. Make a budget and cut unnecessary expenses. The more funds you can devote to paying down your debt, the better off you will be in the long run.

The information contained within this article was accurate as of April 18, 2018. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Bill Hardekopf

Bill Hardekopf is the CEO of and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
View all posts by Bill Hardekopf
Top Features : Earn cash back twice. 1% when you buy plus 1% as you pay; 0% APR for 18 months on balance transfers
Top Features : 1.5% cash back on all purchases; $150 bonus after spending $500 in first 3 months
Top Features : 0% APR for 21 months on Balance Transfers and 12 months on Purchases; no annual fee, late fee or penalty rate
Top Features : Long intro APR period especially for balance transfers; No annual fee
Top Features : No Annual Fee, Bonus Offer, Cash Back
Top Features : No annual fee; 3% cash back on dining & entertainment; 2% on groceries; $150 cash bonus after spending $500 in first 3 months