TPG reader question: Can I earn points and miles on a balance transfer to my new credit card?
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Editor’s note: This article is part of a weekly column to answer your credit card, points and miles and general travel questions. If you would like to ask us a question, tweet us at @thepointsguyuk, message us on Facebook or email us at email@example.com.
Credit cards come with various offers to attract applicants. These can range from a big welcome bonus of points and miles for spending a certain amount in your first, say, 90 days of holding the card. There could also be a lower introductory interest rate.
A popular offer for new cards is a balance transfer. You might be considering a new card because of a welcome bonus but have an existing balance on an existing card. If both cards come with an annual fee you might be too keen on paying annual fees for both cards. The new card issuer may offer you a balance transfer offer where you can move the balance owing from your existing card to your new card, close your existing card and just pay off the balance on your new card, as well as enjoy the benefits of a new card like the welcome bonus or travel perks.
This brings us to this week’s TPG reader question of the week.
Can points be acquired through transferring a balance from another card, or is it only on actual purchases?James, TPG Lounge Member
Unfortunately, the short answer is no, you can’t earn points and miles on balance transfers. You will also not earn points and miles on the cost of any annual fees, interest charges on new purchases, or any balance transfer fees. You will only earn points and miles on purchases you make on the new card.
Balance transfer offers can be extremely generous, even if you are not earning any points and miles on the transfer. Some cards offer a balance transfer offer for 12+ months at no cost, meaning you have a full year to pay off that existing balance without paying any interest. If you’re moving this from a card with, say a 20% p.a. interest rate, you can save big while reducing your debt.
Related: How credit and credit scores work
Many cards will offer an extended interest period on your balance transfer provided you pay a balance transfer fee, which might be 3% of the balance you and transferring. If the balance you are looking to transfer is, say £5,000, then paying a £150 fee to do a balance transfer might seem like a lot of money.
However, if you are saving 20% interest on moving that balance then you are going to come out well in front.
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