Do I Earn Points on a Balance Transfer?
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Reader Questions are answered twice a week by TPG Senior Points & Miles Contributor Ethan Steinberg.
While we normally focus on credit card sign-up bonuses in terms of the number of points or cash value they offer, many people also look for cards that offer 0% promotional interest rates. TPG reader Carla wants to know if she can earn points on a balance transfer …
I just opened the Chase Freedom card with a 0% intro APR rate. If I transfer my balance from my Chase Sapphire Reserve, will I earn points on it?TPG READER CARLA
Before we dive into Carla’s question, it’s important to address the elephant in the room. The first commandment of travel rewards is not to carry a balance, as your interest payments will quickly dwarf the value of any free travel you may get. Most credit cards have sky-high interest rates, and even those with 0% introductory APRs jump very high after the promo period ends.
That being said, a 0% APR offer could be appealing if you need to make a large purchase and want the flexibility to pay over time. And if you currently have revolving balances on one or more of your credit cards, transferring them to a 0% APR card can be a great way to buy time to pay your balance down without racking up more interest. Just be sure to pay them off in full before the end of the promotional period.
Since Carla asked about the Chase Freedom, let’s use it as an example — though note that this answer applies to every travel rewards credit card out there. This card is one part of TPG Editor Nick Ewen’s perfect Chase quartet, and it’s currently offering new applicants the chance to earn a $150 bonus (or 15,000 Ultimate Rewards points if you can combine it with another Chase card) after you spend $500 on purchases in your first three months from account opening. It’s also offering a 0% intro APR for 15 months on purchases and balance transfers (then a variable APR of 14.99% – 23.74% applies).
However, if you dig into the terms and conditions for how this card earns points, you’ll see the following two exclusions:
- Balance transfers do not count towards your spending for your welcome bonus.
- Balance transfers do not earn cash back rewards or points.
If you think about it, this makes sense for two reasons. First of all, if Carla is transferring a balance from her Chase Sapphire Reserve, that means she already earned points from making the purchase on her Sapphire and there’s no reason she should be able to double dip. Second, you need to think about why card issuers reward your spending with points in the first place. They do so to incentivize you to swipe your credit card, which allows them to collect a swipe or “interchange” fee. Carla isn’t making any new purchases with this balance transfer, so Chase isn’t collecting any new revenue. Hence, it won’t award her additional points.
Leveraging a balance transfer to a 0% APR card can be a great way to clean up your financial situation, but don’t expect to receive any additional rewards on it. Nearly every credit card out there explicitly states that balance transfers don’t count toward your welcome bonus, and they don’t earn points the way a normal purchase would. Remember that you already earned rewards on whatever card you used to make the initial purchase, so you can’t double dip now.
Featured photo by Westend61 / Getty Images
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