How Balance Transfer Cards Work
A balance transfer credit card lets you move existing debt from one or more cards to a new card, often with a promotional 0% annual percentage rate (APR) for a set period. A typical offer includes an interest-free introductory period of 12 to 18 months, giving you time to pay down the balance without accruing interest on that transferred amount.
To qualify for a 0% balance transfer offer, you generally need good or excellent credit. After the promotional period ends, the introductory APR reverts to the card's regular interest rate, which applies to any remaining transferred balance and new purchases.
Balance transfers are not free: issuers typically charge a balance transfer fee, which is a small percentage of the transferred amount or a fixed dollar amount. The fee is added to your balance, so it's part of the total cost of moving the debt.
- Introductory APR is often 0% for 12–18 months on balance transfers.
- You generally need good or excellent credit to qualify for a 0% offer.
- Balance transfer fees typically range from 3% to 5% of the transferred amount, or a fixed dollar amount.
Sources: Federal Reserve Board
Rewards on Balance Transfer Cards: Possible but Limited
Some balance transfer cards also offer rewards programs. For example, a card might earn a flat rate of cash back on all purchases, or a higher rate in rotating bonus categories. These reward opportunities apply to new purchases you make with the card, not to the balance you transfer.
The balance transfer itself typically does not earn rewards. Even if a card has a strong rewards structure, the transfer amount is usually excluded from earning cash back, points, or miles. That means the main benefit of a balance transfer is the lower interest rate, not earning rewards on the debt you move.
When you compare cards, it's important to separate the two benefits: the balance transfer offer (introductory APR, fee, and length) and the rewards program (rates, categories, and caps). A card could be excellent at one but mediocre at the other.
- Rewards are earned on new purchases, not on the balance transferred.
- Flat-rate cash back (e.g., 1.5%) and rotating category bonuses (e.g., 5% on up to $1,500 per quarter) are common structures on rewards balance transfer cards.
- Balance transfer terms and rewards structures vary by card, so compare both features independently.
Sources: NerdWallet, Investopedia
Key Factors to Compare
When evaluating a balance transfer card that also offers rewards, start with the balance transfer terms because they directly affect the cost of your existing debt. Key factors include the length of the introductory APR period, the balance transfer fee, and the regular APR that will apply after the promo ends.
Then look at the rewards structure: Is it a flat rate on all purchases, or does it require activating rotating categories each quarter? Are there spending caps on bonus categories? What is the annual fee? A $0 annual fee is common on rewards balance transfer cards, but some premium cards charge one, which could offset the value of rewards.
Also check whether the card requires you to complete the balance transfer within a fixed period after opening the account. Missing that window means you lose the promotional rate, so it's a key part of the offer's fine print.
- Introductory APR length (e.g., 21 billing cycles on some cards)
- Balance transfer fee (often 3%–5% of the transferred amount)
- Regular APR after the promotional period
- Rewards rate and structure (flat vs. rotating categories, caps)
- Annual fee (often $0 on these cards)
- Deadline to complete the balance transfer after account opening
Sources: NerdWallet, Federal Reserve Board
When to Prioritize Rewards vs. Balance Transfer Savings
The decision hinges on how much you carry in debt and how much you spend on new purchases. If you have a large balance to transfer, the interest savings from a 0% intro APR likely outweigh any rewards you could earn, especially since the transfer itself doesn't earn rewards.
If your balance is small or you plan to pay off the transferred debt quickly, rewards may be more valuable. In that case, a card that earns a solid flat rate on all spending might be a better fit, even if its balance transfer fee is higher.
A key rule from the FDIC: if you do not pay your credit card balance in full each month, you may pay more in interest than you earn in rewards. This applies to balances you carry on any rewards card, not just balance transfers. Always compare the interest rate you're paying now with the rate you'll pay on the new card, including the regular APR after the promo ends.
- Large carried balance: prioritize a long 0% intro APR and low balance transfer fee.
- Small carried balance or quick payoff: rewards rate may matter more.
- If you tend to carry a balance, interest charges can eat up any rewards you earn.
Sources: FDIC, Federal Reserve Board
Top Considerations for Combined Use
If you already have a balance transfer card with rewards, make a plan for the promotional period. Know the exact date the 0% APR ends and have a payoff strategy before that date, because the regular APR will apply to any remaining balance.
Set up a payment schedule that clears the transferred balance by the end of the intro period. You can also use the card for new purchases to earn rewards, but be careful: if you don't pay the full statement balance, you'll incur interest on those purchases, which can quickly offset the rewards.
Track any balance transfer fees and factor them into your overall savings.
- Pay off the transferred balance before the intro APR ends.
- Use the card for new purchases only if you can pay the full balance each month.
- Calculate the fee as a dollar amount and compare it to the interest you would otherwise pay.
Sources: FDIC, Federal Reserve Board
Examples
Consider a card like a hypothetical flat-rate rewards card, which earns 1.5% cash back on all purchases and offers a 0% intro APR for balance transfers. It charges a 5% balance transfer fee and has no annual fee.
Another example is a rotating category cash back card that earns 5% cash back in bonus categories (on up to $1,500 per quarter) and 1% on everything else, with a 0% intro APR for balance transfers and no annual fee. This card can be valuable for new purchases in the bonus categories, but the transfer itself earns no rewards, so the main benefit is the interest-free period.
In both cases, the math depends on your debt amount, the intro period length, and the fee. Use the specific terms of the card you're considering to run your own numbers, and always verify current details on the issuer's official page.
- Flat-rate card example: 1.5% cash back on all purchases, 5% balance transfer fee, $0 annual fee.
- Rotating category card example: 5% cash back in rotating categories (up to $1,500 per quarter) and 1% on other purchases, $0 annual fee.
- The transfer itself rarely earns rewards, so the main benefit is the lower interest rate.
Sources: NerdWallet
Frequently asked questions
Do balance transfer cards usually earn rewards?
Some balance transfer cards do earn rewards on purchases, such as flat-rate cash back or cash back in rotating categories. However, the rewards typically apply to new purchases, not to the balance transferred. Cards that offer both benefits are available, but they are not universal, so you need to check the card's rewards structure and balance transfer terms together.
Sources: NerdWallet, InvestopediaWhat is a typical balance transfer fee?
A typical balance transfer fee is a percentage of the transferred amount, often 3% to 5%, or a fixed dollar amount. The fee is added to your balance, so it increases the total amount you owe.
Sources: Federal Reserve BoardCan I earn rewards on the balance transferred?
In most cases, no. Balance transfers themselves typically do not earn rewards. Rewards are earned on new purchases made with the card. Some issuers may exclude balance transfers from earning cash back, points, or miles. The primary benefit of a balance transfer is the lower interest rate, not rewards on the transferred amount.
Sources: InvestopediaHow do I decide between a rewards card and a balance transfer card?
Decide based on your financial situation. If you have a large balance to transfer, the interest savings from a 0% intro APR on a balance transfer card likely outweigh any rewards you could earn, especially since the transfer itself earns no rewards. If your balance is small or you plan to pay it off quickly, a rewards card with a competitive rate on purchases may be more valuable. Also consider the balance transfer fee and whether you can pay off the transferred balance before the intro period ends.
Sources: FDIC, Federal Reserve BoardSources
- Rewards Cards - Minimize the Pitfalls, Maximize the Benefits — FDIC
- Which Balance Transfer Credit Card Is Best for Me? - NerdWallet — NerdWallet
- Credit Card Balance Transfers: Save on Interest with Smart Moves — Investopedia
- Inferring Financial Sophistication: Evidence Using Credit Card Balance Transfers and the CARD Act — Federal Reserve Board