First, let's take a closer look at how credit card balance transfers work. When you transfer a balance from one credit card to another, you're essentially moving the debt from one account to another. The new credit card issuer pays off the old balance, and you owe the new issuer instead. Balance transfers can be a smart move if you're carrying high-interest debt, as they can allow you to save money on interest and pay down your debt faster.
However, as we mentioned earlier, you cannot earn points on credit card balance transfers in most cases. Credit card companies generally do not offer rewards or points for balance transfers, as they're viewed as a way to save money on interest rather than earn rewards. However, there are some exceptions to this rule.
One exception is promotional offers. Some credit card issuers offer rewards or bonuses for balance transfers, such as a sign-up bonus, cashback, or points. These promotions may come with a time limit, so it's essential to read the terms and conditions carefully. If you're considering a balance transfer, it's worth researching different credit card issuers to see if they're offering any promotional rewards for balance transfers.
Another exception to the rule is using a rewards credit card with a 0% introductory APR offer for balance transfers. In this scenario, you can transfer your balance to the new card and pay no interest for a certain period, usually 12 to 18 months. During this time, you can earn rewards on new purchases made with the card. However, it's crucial to pay off the balance in full before the promotional period ends to avoid high-interest rates.
Now, let's talk about how credit card balance transfers can impact your credit score. When you apply for a new credit card, the issuer will pull your credit report, which can temporarily lower your score. Additionally, opening a new credit card can lower the average age of your credit accounts, which can also lower your score. However, as you pay down your balance and make on-time payments, your credit score should recover.
It's also worth noting that some credit card issuers may charge a balance transfer fee. This fee is typically a percentage of the balance being transferred, and it can range from 3% to 5%. While the fee may seem steep, it's often still worth paying if it means saving money on interest in the long run.
Here are some popular balance transfer credit cards that offer favorable terms and benefits:
Chase Slate Edge®: Make moves toward your credit goals with 0% intro APR for 18 months on purchases and balance transfers. A variable APR of 20.24%–28.99% on balance transfers and purchases after the introductory period ends. A balance transfer fee applies.
Citi Simplicity® Card: 0% Intro APR for 12 months on purchases from the date of account opening and 0% Intro APR for 21 months on balance transfers from the date of the first transfer. After that, the variable APR will be 18.99% - 29.74%, based on your creditworthiness. Plus enjoy no annual fee
Discover it® Balance Transfer: 0% Intro APR† for 15 months on balance transfers and purchases. 3% Intro fee on balances transferred by September 10, 2023. Then 16.99% to 27.99% Standard Variable Purchase APR and up to 5% fee for future balance transfers will apply.. It also has no annual fee and provides access to your FICO® Credit Score.
BankAmericard® Credit Card: 0% Intro APR† for 21 billing cycles for purchases, and for any balance transfers made in the first 60 days of opening your account. After the intro APR offer ends, a Variable APR that's currently 15.99% - 25.99% will apply. A 3% fee applies to all balance transfers. It has no annual fee and offers additional benefits like access to your FICO® Score and fraud protection.
American Express® Cash Magnet® Card: 0% intro APR on purchases and balance transfers for 15 months from the date of account opening, then a variable APR, 18.99% to 29.99%. $0 Buy Now, Pay Later intro Plan It fees on plans created during the first 15 months from the date of account opening. Plans created after that will have a fixed monthly plan fee up to 1.33% of each purchase amount moved into a plan based on the plan duration, the APR that would otherwise apply to the purchase and other factors.
When considering a balance transfer card, be sure to check the terms and conditions, including the length of the introductory period, balance transfer fees (if any), ongoing APR after the intro period, and other potential benefits that align with your financial goals and spending habits.
In conclusion, credit card balance transfers can be an excellent way to save money on interest and pay down your debt faster. While you cannot earn points on credit card balance transfers in most cases, there are some exceptions to the rule, such as promotional offers and rewards credit cards with 0% introductory APR offers for balance transfers. It's important to read the terms and conditions carefully and consider how a balance transfer will impact your credit score before making any decisions. With careful planning and management, a balance transfer can be a valuable tool in your financial arsenal.
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered as financial advice. It is always recommended to consult with a qualified financial advisor or contact your credit card issuer directly for personalized guidance on credit card hardship programs and their implications for your specific situation.