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People who are looking for a card that offers them the best of both worlds by being able to manage their debt while gaining points in the process can now find this in balance transfer cards that have partnered with reward programs. There are a few considerations that you need to keep in mind when using a balance transfer card for reward cards and this is what you need to know.
What is a balance transfer card?
A balance transfer card is a credit card that usually comes with a 0% interest rate and can be used to consolidate debt at a low rate. This card is usually effective for people who want to better manage their debt. However, it is important to remember that Balance transfer cards come with an introductory rate that can range anywhere from 3 months up to 24 months before reverting back to the cash advance rate. Using the introductory period can be most beneficial before it reverts back to a higher interest rate.
How can you gain rewards on a balance transfer card?
There are a couple of balance transfer credit cards that have partnered up with reward programs that can help cardholders to gain points while they swipe. Most reward cards generally require that you make an eligible purchase on the card in order to start gaining points. Checking the card requirements can help you know which purchases will help to bring you to your goal of gaining points.
The pros
- Save on debt. You can consolidate your debt at a low rate when you transfer to the card.
- Save money and gain points. Not only will you be managing your debt more effectively but you can also gain points in the process to use later.
- Get access to benefits. Depending on the type of card you have and the reward program, you will be able to get access to a range of benefits such as complimentary travel insurance, concierge services, and potential flight upgrades.
The Cons
- The high-interest rate. The 0% interest rate only applies to your transferred debt which means if you use the card for purchases you will attract a high-interest rate.
- Could increase debt. Being a point chaser when you already have debt that needs to be taken care of may not be ideal.
- The value of reward points. You will need to spend money to earn reward points that may not even have a strong point rate. Keep in mind that this card comes with an annual fee that you need to consider before using the card.
You may be disappointed if you were hoping to gain points by using your balance transfer card to pay for your debt as there are no credit cards in Australia that offer rewards on balance transfer debt. If you compare whether it will be worth to use a balance transfer for reward points you will soon find that it comes with a high price that isn’t worth it as it could affect your repayments on the card.
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