Longer balance transfer offer or shorter offer with rewards: Which is the better strategy for you?

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Whenever you’re considering a new credit card, chances are, you’ve got a very specific goal for your finances. Sometimes, it might be earning a generous welcome bonus. Other times, it could be getting a low-to-no interest introductory APR offering or racking up credit card rewards.

If you’ve ever weighed a rewards card with a short 0 percent APR period against a card with no rewards and a longer balance transfer period, you might wonder what’s best. On the one hand, you can earn some pretty generous rewards, especially if the card offers a welcome bonus and ongoing opportunities to earn cash back.

If card perks and benefits are added, like cellphone protection or travel insurance, it can sweeten the pot. However, if you are tackling high-interest debt, a longer balance transfer offer could save you hundreds or even thousands of dollars over time.

In this piece, we’ll take a look at different scenarios that justify a balance transfer card with a longer 0 percent APR offer versus a rewards card with a shorter one, along with the pros and cons of each type of card.

What is the difference between a balance transfer and a rewards card?

Balance transfer credit cards

A balance transfer card’s main feature is that it offers a low-to-no interest for either purchases, balance transfers or both for a limited time. In most cases, the introductory rate is 0 percent for a term anywhere between six months and 18 months, although some cards are now offering up to 21 months at 0 percent APR.

If you are carrying debt on a credit card with a higher interest rate, being able to transfer the balance to another card with a 0 percent APR means you can save a substantial amount of money on interest.

For instance, if you had a $5,000 credit card balance with an 18 percent APR and a $125 minimum monthly payment, you’d pay $6,923.12 in interest over more than 20 years.

However, if you could transfer that $5,000 balance to a card with a 0 percent APR offer for 6 months, you’d pay a balance transfer fee of $150 (assuming the standard 3 percent transfer fee). And if you kept your minimum payments the same, you’d only pay $1,467.31 in interest and fees—a $5,456 savings.

As you can see, a balance transfer offer can be really helpful when trying to tackle high-interest debt. But, in most cases, these cards will have little in the way of rewards and card perks.

Rewards credit cards

A rewards card offers some type of reward based on how much you use it. In many cases, you can earn rewards with a welcome bonus, which typically requires you to spend a certain amount of money on the card in a specific period of time. Then, you may be able to earn ongoing rewards in the form of cash back, points or miles. Nowadays, many credit cards offer both rewards and a welcome bonus.

For the most part, rewards cards are not designed to help you pay off high-interest debt, but rather to maximize earnings on ongoing spending. But in some cases, you can find both rewards and a 0 percent introductory offer on the same card. .

For instance, cards like the Chase Freedom Flex℠, Citi Custom Cash℠ Card, and the Bank of America® Customized Cash Rewards credit card offer a welcome bonus, ongoing rewards and introductory APRs. On the flip side, these introductory periods tend to be much shorter than those on cards specifically designed for that purpose.

In addition to rewards, some cards offer perks and benefits that can have quite a bit of value. For instance, The Platinum Card® from American Express offers up to $1,400 in various statement credits that include a laundry list of card benefits like:

  • Up to $100 application fee credit for Global Entry or TSA PreCheck (every four years)
  • Up to $179 in Clear membership statement credits by paying with your card (annually)
  • Up to $200 in airline fee credits (annually) for incidentals with a select airline
  • Up to $200 in credits for prepaid hotel bookings at Fine Hotels + Resorts or The Hotel Collection properties via American Express Travel (annually)
  • Up to $200 in Uber Cash for rides and delivery ($15 per month, plus an extra $20 in December, available to basic cardmembers only)
  • Up to $240 each year in digital entertainment credits (up to $20 in total statement credits per month) toward Peacock, Audible, SiriusXM and The New York Times subscriptions (enrollment required)
  • Up to $300 in Equinox fitness membership credits per year (up to $25 per month) toward in-club or digital membership fees, including Equinox All Access, Destination, E by Equinox or Equinox+ (enrollment required)
  • Up to $100 for Saks Fifth Avenue purchases annually ($50 for January through June and $50 for July through December)
  • $100 credit on qualifying hotel purchases (per two-plus consecutive night stays with a brand in The Hotel Collection)
  • Up to $155 (plus applicable taxes) per year in Walmart+ monthly membership credits ($12.95 plus applicable taxes), available each month your Walmart+ monthly membership is paid with your card
  • $300 credit for each eligible SoulCycle At-Home bike purchase using your card through Amex’s provided link

Now, this is probably one of the most extreme examples of card benefits, but it’s here to show you that the right rewards card could bring quite a bit of value to the table. It’s something to keep in mind as you weigh out your credit card rewards and balance transfer options.

Should I choose a balance transfer card or a rewards card?

That all depends on what your financial goals are at the time. If you are paying higher interest on a credit card, your main priority should be paying down that balance and minimizing the interest you are paying. Often, interest fees are unnecessary costs that will eat into the net benefits of your credit card rewards or benefits.

For instance, if you earn $600 in combined rewards from a credit card welcome bonus, ongoing rewards and credits in a given year, but end up paying $800 in interest fees on that same credit card, you’ve essentially lost $200. Ideally, you would use the credit card benefits and rewards but not carry a balance so as to avoid interest and fees.

However, there are times where it makes sense to take advantage of rewards—especially if you’ve got a penchant for travel. For instance, high-end travel credit cards like the Chase Sapphire Reserve® or the Citi Prestige® Card can offer generous rewards when you redeem them for travel-related spending. You can also earn more rewards on travel spend with these types of cards. Although they typically come with a hefty annual fee, if used correctly, you can justify this fee and maximize long-term value.

But does it make sense to opt for a rewards card with a shorter 0 percent APR offer or a longer balance transfer offer with no rewards?

Let’s compare what you stand to gain based on both scenarios. Here, we’ll take a look at two credit cards with balance transfer offers from the same issuer. The Wells Fargo Reflect℠ offers no rewards but instead has a 0 percent APR of up to 21 months, while the Wells Fargo Active Cash℠ offers 2 percent cash back on all purchases and 0 percent APR of up to 15 months. Neither card has an annual fee.

Let’s assume you have another card with a $5,000 balance, an 18 percent APR and a $125 per month minimum payment. If you do nothing and continue to make minimum payments on this card, it will take 22 years and 8 months to pay off, and the amount of interest paid over that time would be $6,923.12—more than double your original balance!

However, if you transfer this balance to the Wells Fargo Reflect card for the 21-month 0 percent APR period, it would only take 43 months to pay off with a total of $503.26 in interest and fees (including the 3 percent balance transfer fee).

With the Wells Fargo Active Cash card, you’d pay $794.84 in interest and fees and pay the balance off in 46 months.

(Note: In both scenarios, we assume your APR after the 0 percent introductory period would be 14.99 percent).

Wells Fargo Reflect℠ Wells Fargo Active Cash℠
Rewards rate N/A 2% on all purchases
Welcome offer N/A $200 bonus cash rewards after spending $1,000 in purchases within the first three months
Annual fee $0 $0
Balance transfer intro APR 0% intro APR for 15 months from account opening on qualifying balance transfers; 12.99%-24.99% variable thereafter 0% intro APR for up to 21 months from account opening on qualifying balance; transfers; 14.99%to 24.99% variable thereafter
Purchase intro APR 0% intro APR for up to 21 months from account opening; 12.99%-24.99% variable thereafter 0% for 15 months; 14.99%to 24.99% variable thereafter
Potential interest savings on a $5,000 balance transfer $6,420 $6,128

The kicker here is that while the Reflect card will save you more in interest, the Active Cash offers you the opportunity to earn 2 percent cash back on any new spending. Assuming you can pay off any new charges on the card in addition to your minimum payments, that cash back can make up the difference.

Still, if adding new purchases to your card will only run up your balance to more than you can pay off (in addition to current debt), the rewards are null.

All in all, we think those with a high balance to pay off are likely better off sticking to the longer balance transfer period. You’ll save more in interest in the long run, and you’ll avoid the temptation to rack up more debt.

That said, some people might be able to balance both debt repayment and new purchases while still paying their new balance in full. If that is the case, you might as well be earning rewards on that spending.

The bottom line

At first glance, it might seem that a longer balance transfer offer could be the way to go. However, when you factor in a welcome bonus, ongoing rewards and a balance transfer period (though slightly shorter), you can get more value from the rewards cards with all of those features—but only if you can pay your new purchases off in full while still making your debt payments.

In either scenario, weigh the pros and cons of each card, then choose the one that works for you. If you ever need help crunching the numbers on your credit card options, check out Bankrate’s financial calculators to help you choose the best credit card option based on real numbers and your specific financial situation.

Written by
Aja McClanahan
Personal Finance Writer
Aja McClanahan is an author, blogger and speaker on personal finance and entrepreneurship. Aja is the author of "How a Mother Should Talk About Money with Her Daughter."
Edited by
Senior Editor, Credit Card Product News