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Our newbie question of the week comes from TPG reader Cee, who sent a message on Facebook to ask about credit card rewards:
“Is it ever advisable to pay one credit card with another credit card just for the sake of earning points?”
Many award travelers have daydreamed about the perpetual point machine: a device that would let you charge money from your credit card directly into your own bank account, earning rewards in the process. While some people have actually developed strategies that come close, it remains the unicorn of the points and miles world. Cee’s idea makes sense on the surface, but there are two critical reasons why it wouldn’t work and why this strategy would be much more likely to cost you money than to give you any sort of return.
Paying one card with another is known as a balance transfer. While there are plenty of rewards cards that offer low interest rates or even an introductory 0% APR on balance transfers, I don’t know of any cards that earn rewards on those transactions. You can easily pay one card with another, but I wouldn’t expect to get any points or miles out of it.
Furthermore, balance transfers tend to incur sizable fees (usually around 3%-5% of the amount transferred). Even if you could earn rewards, you’d be losing any value you gained to fees and interest and would probably come out behind in the end.
Balance transfers can definitely help if you’re looking to consolidate debt or lower interest rates, and there are rewards cards that offer good deals on balance transfers. For example, Chase Slate offers a 0% introductory APR for the first 15 months and waives balance transfer fees for the first 60 days. However, these cards generally don’t offer the best sign-up bonuses or lucrative benefits.
Chase Sapphire Preferred® Card
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||16.24%-23.24% Variable||Introductory Annual Fee of $0 the first year, then $95||0%||Excellent Credit|