(UPDATE April 24, 2008) While not technically balance transfer rewards, a new card from CitiBank that provides a 0% APR on balance transfers and purchases for 6 months offers a rewards promotion where new cardmembers earn 5,000 Thank You points for making a $50 purchase and another 6,000 points for electing to get paperless statements. The 11,000 points, if used for giftcards, could be worth about $100. For more on this offer, click here.
Original Story: Because visitors of Smart Balance Transfers tend to be credit card savvy, we frequently get questions about whether balance transfers earn rewards. Unfortunately, the answer to this question is no. Credit card companies, as a rule, don’t offer balance transfer rewards, as rewards programs are based on spending, which earns them money.
Basically, credit card companies earn money when purchase transactions are made, plus on interest and fees. When consumers make purchases, the merchant pays a transaction fee to the issuer. In addition to this fee, credit card companies count on consumers carrying balances that earn them interest. Because 0% balance transfers don’t rack up merchant fees, or interest, credit card companies simply do not offer balance transfer rewards. And, as the credit markets remain tighten, they’re not particularly interested in offering 0% balance transfers to all but the most worthy consumers.
Now, while its not possible to earn balance transfer rewards, consumers that plan on using a balance transfer credit card for new purchases in the future may want to consider the card’s rewards program when choosing a card. However, this shouldn’t be the deciding factor, as securing a 0% APR for a full year should be the priority.
(You can compare 0% APR balance transfer credit cards in the appropriate section of this website and apply online for approval.)
A big issue with balance transfer rewards is that the best rewards credit cards tend not to offer 0% rates for a year. On top of that, many of the best rewards deals no longer exist. Two years ago, a number of credit cards offered 5% cashback on gas and grocery purchases. However, smart credit card users gamed the system, using their cards only in places that earned them the most cashback and paying their bills in full. This made many rewards programs big money losers and led to the beginning of the continuing decline in reward program quality. While it is still possible to get a card that offers 5% cashback rewards on certain purchases, this card no longer offers low rates on balance transfers.
Ultimately, balance transfer rewards are limited to the amount of money you save on interest during the course of the introductory period. This, however, is nothing to whine about. A 0% balance transfer can save a person hundreds of dollars over the course of a year. While it won’t rack up frequent flyer miles, the cash in your pocket can get you on any flight you want (and with no blackout dates!)
For more information on balance transfer credit cards, please see the appropriate section of this website using the navigation on your left.
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March 24th, 2009 at 10:30 am
While this article on balance transfer rewards focused on earning rewards on a balance transfer, there are a few credit cards where you can earn some bonus rewards while enjoying a 0% APR. However, there are a few catches. The particular card I’m refencing is the Discover Miles card, which offers 1,000 bonus miles for the first 12 months of cardmembership when you make a purchase.
However, there are a few catches. First, at present, this card only offers a 0% APR on balance transfers and purchases for 6 months. If you know you will be able to repay your balance in this time, it may be worth considering, as you can make small purchases once a month to get the bonus miles.
Nevertheless, getting a 0% for only 6 months instead of a year is a steep price to pay to get a few thousand airline miles. As I mentioned above, its better to use the money you save with a 0% APR for a year to buy yourself a plance ticket.