Understanding the impact of balance transfers on reward points

Transferring balances between credit cards may be a helpful strategy for paying off credit card debt. This is particularly true if a balance on a card with a high interest rate can be transferred to a card with a low or 0% APR balance transfer offer.

For instance, a balance transfer might come from a rewards credit card, which may have a high interest rate. Or the transfer could be going to a rewards card with a promotional interest rate for new cardholders. In either case, balance transfers generally don’t affect the card’s rewards unless the account is being closed.

Read on to learn about what may happen to points when balances are transferred between rewards credit cards.

Do balance transfers count towards points?

Generally, balance transfers don't count towards reward points, nor will points be gained on a card if a balance is being transferred to it. Cardholders can only earn rewards on eligible purchases they make with a rewards credit card. However, a rewards credit card generally won’t lose points if a balance is transferred off of it. Terms may vary depending on the card and card issuer, so be sure to review any disclosures or agreements before making a decision.

Other types of purchases along the lines of cash exchanges may also be excluded from receiving reward points, such as buying foreign currencies, money orders, and other cash-like products. Cash advances also generally won’t earn any rewards.

How balance transfers may influence rewards

Transferring a balance from or to a rewards card won’t affect the account’s rewards directly. However, closing a credit card after transferring its balance can. Exactly how the rewards could be impacted — from getting a form of reimbursement to losing the points entirely — depends on the type of rewards card and the card issuer’s policies.

With airline and hotel credit cards, the miles and points accumulate in the card's travel loyalty program. Closing the card typically won’t affect the rewards balance if the loyalty account is still open. However, the miles or points might expire if the loyalty account is inactive for too long, which could happen if an individual no longer has the airline or hotel card or doesn’t travel frequently. Learn more about travel points on credit cards.

With cash back credit cards and rewards cards that are part of the card issuer’s rewards program, the rewards accumulate within the credit card account. The card issuers might give cardholders a grace period to use the rewards after closing a card or automatically redeem the remaining rewards when an account is closed and send the cardholder a check.

But with some cards, the cardholder may lose all the rewards when the card is closed. In that case, the cardholder may want to look for ways to redeem the rewards first.

Do balance transfer cards offer other rewards?

Credit cards that offer balance transfers may not impact reward points, but they may have other benefits. For instance, a credit card that has a promotional interest rate could be a good choice for moving balances over to help a cardholder save on interest and monthly payments, as well as pay down balances faster.

Promotional interest rates can be found on many rewards cards that also offer cash back, points, and miles. So not only would the cardholder be paying less interest after a balance transfer but also gaining rewards for other eligible purchases.

Be sure to review the terms of any promotional offer carefully before using a card for balance transfers and purchases. When making the decision to transfer a balance, the interest rate and rewards perks should be beneficial to a cardholder's financial situation and lifestyle.

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