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Kelly Anne SmithEditor
Kelly Anne has over six years of experience with reporting and editing in the personal finance space. Her work has been featured in national publications including Reader's Digest, CNBC and Forbes. She has a background in business education and a master's degree in international communication studies.
Kelly Anne Smith
Kelly Anne SmithEditor
Kelly Anne has over six years of experience with reporting and editing in the personal finance space. Her work has been featured in national publications including Reader's Digest, CNBC and Forbes. She has a background in business education and a master's degree in international communication studies.
Editor
Dylan Pearleditor
Over a decade of editorial experience across a number of publications and more than 60 countries visited have given Dylan Pearl a wealth of travel knowledge, and the tools to effectively communicate that knowledge to others. Dylan has made it his mission to see as much of the world as possible, and strives to give everyone the tools to get out and do the same with simple, actionable information.
Fact Checked
Dylan Pearl
Dylan Pearleditor
Over a decade of editorial experience across a number of publications and more than 60 countries visited have given Dylan Pearl a wealth of travel knowledge, and the tools to effectively communicate that knowledge to others. Dylan has made it his mission to see as much of the world as possible, and strives to give everyone the tools to get out and do the same with simple, actionable information.
editor
Fact Checked
Updated: Feb 7, 2024, 6:53am
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
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Table of Contents
- Transferring Balances Won’t Lose or Earn Rewards
- Should You Close Your Card After Transferring its Balance?
- What Happens to Your Points if You Close a Card?
- Bottom Line
Show more
Balance transfer cards are a great way to get a handle on debt. By transferring a balance from one card to another, usually one with a generous introductory 0% interest period on balance transfers, you can save thousands in interest while paying off your debt.
But when credit card rewards are involved, you might have questions about what exactly will happen during the balance transfer process. Will you lose your rewards? If you’re transferring a balance to a new rewards card, will you earn them?
Featured Partner Offer
Discover it® Balance Transfer
On Discover's Website
4.3
Forbes Advisor created additional star ratings so that you can see the best card for specific needs. This card shines for this use, but overall the star ratings may differ when compared to other cards.
On Discover's Website
Up to 5% Reward Rate
Earn 5% cash back on everyday purchases at different places each quarter like grocery stores, restaurants, gas stations, and more,Read More
Welcome Bonus
Cashback Match™
Annual Fee
$0
Regular APR
17.24% - 28.24% Variable APR
Credit Score
Excellent/Good(700 - 749)
Editorial Review
With an extended intro APR runway on balance transfers, this card is a solid choice if you need to pay down a higher-interest card.
Pros & Cons
- Intro APR rate on both purchases and balance transfers
- Earns rewards, which many balance transfer cards don’t offer
- Cashback match for first year’s earnings
- Discover isn’t as widely accepted internationally as other cards
- Other cards may offer a longer balance transfer repayment period
Card Details
- INTRO OFFER: Unlimited Cashback Match for all new cardmembers – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
- Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.
- Redeem your rewards for cash at any time.
- Your account may not always be eligible for balance transfers. Balance transfer eligibility is determined at Discover’s discretion.
- Discover could help you reduce exposure of your personal information online by helping you remove it from select people-search sites that could sell your data. It’s free, activate with the mobile app.
- No annual fee.
- Terms and conditions apply.
INTRO OFFER: Unlimited Cashback Match for all new cardmembers – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
Credit Score ranges are based on FICO® credit scoring. This is just one scoring method and a credit card issuer may use another method when considering your application. These are provided as guidelines only and approval is not guaranteed.
Transferring Balances Won’t Lose or Earn Rewards
The good news: A balance transfer typically doesn’t affect rewards you’ve already earned.
If you’re considering transferring a balance from arewards card, you might be worried about losing your rewards points. However, balance transfers are generally treated as a payment from your new creditor (the balance transfer card) to your old card. So, you won’t lose any rewards earned.
The bad news: If you’re thinking of opening a rewards card and transferring an existing balance to earn a giant welcome offer, you’re out of luck—most cards don’t allow this.
For example, the Chase Sapphire Preferred® Card currently offers new customers the ability to earn 60,000 bonus points after spending $4,000 on purchases in the first 3 months from account opening. You might think about transferring over some lingering debt and earning the points, but it’s wishful thinking. The offer details specifically state that qualifying purchases for the bonus points “do not include balance transfers.”
If you’re unsure you’ll hit the minimum card spend to earn a welcome offer, consider using your card for everything—grocery store trips, coffee, dining out and basically anything else you can charge to the card. You can also make rental payments with credit cards through third-party processing platforms like Plastiq. Keep in mind these platforms will cost you extra in fees. More importantly, you should never put more on a card than you can pay every month, no matter the size of the bonus you earn. If you overextend yourself and end up paying interest charges, you’ll negate the value of any rewards earned.
Should You Close Your Card After Transferring its Balance?
If you’re considering closing a credit card after transferring its balance, there are a few things to take into consideration.
Length of credit history makes up 15% of your FICO credit score. Additionally, closing a credit card will cause your credit utilization—the ratio of how much debt you carry compared to your overall credit limit—to rise. By closing a card, you’ll be reducing your overall available credit, meaning the percentage of your credit being used will be increased. Credit Utilization makes up 30% of your FICO Score, so this can negatively affect your credit score if your balance transfer card’s limit is smaller than the closed card’s limit.
Consider this example:
- You have three credit cards with $5,000 limits each, totaling a $15,000 overall credit limit. Your rewards card has a $2,000 balance and is the only card you carry a balance on. Your credit utilization is about 13%.
- You end up transferring the rewards card balance to a balance transfer card with a $2,000 limit, and you close the rewards card. Your new overall credit limit is $12,000, and your overall credit utilization increases to about 17%.
- If you have debt sitting on another card, your credit utilization will increase even more. For example, you end up transferring the rewards card balance to a balance transfer card with a $2,000 limit, and you close the rewards card but have an additional $1,000 balance on another card. Your new overall credit limit is $12,000 but your credit utilization limit increases to 25%.
It’s recommended to keep your credit utilization below 30%. Balance transfers may help pay down your debt, but if you aren’t careful, your credit score could seriously tank during the process.
It’s also important to take note of how the FICO scoring models evolve and change. Instead of looking at a snapshot of a consumer’s debt each month, overall debt levels over time are taken into consideration while calculating a credit score. If you’re planning on doing a balance transfer to hack away at debt, not taking on new debt is a crucial part of the strategy. Do whatever is necessary to avoid continuing to swipe away with your card.
What Happens to Your Points if You Close a Card?
If you choose to close a rewards card after completing a balance transfer, the type of card you have and whether you have other cards with the same bank will determine what happens to your points.
Any points earned with a general rewards program not used or transferred to a partner program (for example, transferring your Chase Ultimate Rewards® to United MileagePlus rewards) might be forfeited, meaning you’ll be unable to access them once the account is closed. You can transfer rewards points directly to an eligible partner program of your choice, usually from the card’s website.
However, if you have multiple credit cards that earn the same type of points, you’re not out of luck. For example, if you have a Chase Freedom Flex℠* and a Chase Sapphire Preferred® Card, you can transfer your Ultimate Rewards earnings from the Freedom Flex card to the Sapphire Preferred before closing your Freedom Flex account. However, not all cards allow these kinds of transfers, so it’s essential to make sure you understand the fine print before transferring your rewards.
Airline cards and hotel cards are a bit different. Since these cards are tied directly to specific loyalty accounts, the miles or points earned are automatically moved to the airline or hotel account. Typically, the card network sends the partner program information about how many miles were earned each month. Since the miles or points are sitting in the loyalty program, and not a rewards portal, you won’t lose any of them if you end up closing the card account. However, the airline or hotel point expiration policy will apply.
Bottom Line
Overall, balance transfers are a smart way to save while paying off debt, especially when they offer long 0% interest promotional periods. But if you’re transferring a balance from a rewards card and you plan on eventually closing that account, you’ll want to make sure you have a strategy for what to do with your points.
Find the Best Balance Transfer Credit Cards Of 2024
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*The information for the following card(s) has been collected independently by Forbes Advisor: Chase Freedom Flex℠. The card details on this page have not been reviewed or provided by the card issuer.
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