Key takeaways

  • When choosing a balance transfer card, you may find yourself choosing between a card that offers a longer introductory APR window and one that comes with a shorter intro period, but offers additional rewards on everyday spending.
  • If you have a high debt balance to pay off, balance transfer cards with longer zero-percent APR offers of up to 21 months is often a good choice.
  • On the other hand, if you have a smaller amount of debt to pay off and would prefer a card that offers long-term value in the form of cash back, points or miles, a rewards card with a shorter intro offer may be best for you.

When you’re considering a new credit card, chances are you have a specific financial goal in mind. It might be earning a generous welcome bonus, getting a low-to-no interest introductory APR or earning statement credits.

If you’re weighing a rewards credit card with a short-term 0 percent APR against a card with no rewards and a longer intro period, you might need help determining which is the better option for you. On the one hand, a generous rewards structure adds to a card’s long-term value, especially if it offers a welcome bonus. However, if you’re tackling high-interest debt, a longer zero-interest period could save you hundreds or even thousands of dollars over time — even if it doesn’t come with the same rewards value.

Let’s take a look at different scenarios that justify a balance transfer credit card with a longer-term 0 percent APR offer compared to a rewards card with a shorter introductory period.

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

Balance transfer credit cards

A balance transfer credit card typically offers a low-to-no interest period on balance transfers (and, in some cases, purchases). This introductory rate is usually limited to a term between six months and 21 months.

If you’re carrying debt on a credit card with a higher interest rate, transferring the balance to a 0 percent APR credit card means you can save a substantial amount of money on interest. In this way, a balance transfer offer can be helpful in tackling high-interest debt. But in most cases, the longer the offer, the less the card features in terms of ongoing rewards and perks.

Rewards credit cards

Alternatively, a rewards credit card offers ongoing rewards in the form of cash back, points or miles. Many rewards cards today offer both rewards and a welcome bonus (also known as a sign-up or introductory 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 Bank of America® Customized Cash Rewards credit card offer a welcome bonus, ongoing rewards and introductory APRs on both purchases and balance transfers.

On the flip side, these introductory periods tend to be shorter than those on cards specifically designed for balance transfers.

Should I choose a balance transfer card or rewards card?

If you’re paying significant, high-interest credit card debt, your main priority should be paying off that balance and avoiding interest charges for as long as possible. Often, interest charges are unnecessary costs that will eat into your earnings or the value of your added 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 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 to avoid interest and fees.

However, there are times when it makes sense to take advantage of rewards — particularly if you don’t need an exceptionally-long period of time to pay off your debt (in most cases, anything longer than 15 months) and you’re interested in a card with solid long-term value.

All of that said, you may still be wondering what you stand to gain in both scenarios, so let’s take a look at two credit cards with balance transfer offers from the same issuer.

Wells Fargo Reflect vs. Wells Fargo Active Cash

The Wells Fargo Reflect® Card offers no rewards or welcome bonus but instead has a 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers (when made within 120 days of account opening). The card also charges a 5 percent balance transfer (minimum $5) and a variable APR of 18.24 percent, 24.74 percent or 29.99 percent after the introductory period.

The Wells Fargo Active Cash® Card, on the other hand, offers an unlimited 2 percent cash rewards on purchases, plus a $200 cash rewards welcome bonus after spending $500 within your first three months. It also offers a 0 percent intro APR for 15 months from account opening on purchases and qualifying balance transfers (followed by a variable APR of 20.24 percent, 25.24 percent or 29.99 percent). This card charges an intro 3 percent balance transfer fee ($5 minimum) on transfers made in the first 120 days, after which the fee bumps to 5 percent.

To see the difference in practice, let’s look at an example where you transfer a $5,000 balance to either the Wells Fargo Reflect or the Active Cash.

When to use a long balance transfer period

If you transfer your debt to the Reflect within the first 120 days, you’re looking at a total balance of $5,250 (including the balance transfer fee). If you make on-time payments each month, you’ll need to pay just $250 a month for 21 months in order to wipe out your debt.

If you instead transfer your debt to the Active Cash within the first 120 days, your total balance (including the balance transfer fee) would be $5,150. With the card’s intro offer, you’ll need to pay just over $343 per month for 15 months to pay off your credit card debt.

If the monthly payment needed to eliminate your debt during the introductory period is your primary driver for signing up for a new card, choosing one with a long balance transfer period ensures you meet your goals without putting too much strain on your budget.

When to use a shorter balance transfer period with rewards

Now, suppose you can fit the $343 monthly payment into your budget, but that you also want the ability to earn cash back from the additional spending you plan to run through the card.

In this case, the Active Cash offers you the opportunity to earn a total of 2 percent cash rewards on your spending, as well as any future purchases you make after your debt has been paid off. As a result, the card has more long-term value to you by allowing you to earn rewards without having to apply for a new card.

Of course, it’s worth noting that, if you aren’t able to pay for your new purchases each month while still tackling your transferred balance, any interest you run up could negate these benefits in the first place. It’s important to be thoughtful about both your spending habits and current budget when choosing the right balance transfer card.

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 the potential for a welcome bonus and ongoing rewards, you could get more value from a rewards card with a slightly shorter intro offer — but only if you can pay your new purchases off in full.

Need help determining which option is right for you? Read through Bankrate’s list of the best balance transfer credit cards for additional guidance, and be sure to weigh the pros and cons of each before applying.

The information about the Chase Freedom Flex has been collected independently by Bankrate. The card details have not been reviewed or approved by the issuer.