Take advantage of some balance transfer credit card offers. Some credit cards combine a balance transfer feature with attractive terms, such as 0 percent APR for 18 months, with the ability to earn rewards points, generally when you make additional purchases. You typically do not earn rewards points on the balance transfer itself, but some cards offer that deal as well. These cards are ideal for people who intend to use the balance transfer as a tool to get rid of their credit card debt and then earn rewards points for cash or merchandise later.
The best way to use a rewards credit card to get the most benefit from it is to pay the balance at the end of each month. That way, you pay no interest and can reap the full benefits the rewards balance transfer credit card offers. Paying interest on the credit card negates some or all the benefits you might receive. For example, if you spend $20,000 over the course of a year with a cash back rewards card that offers you 1 percent cash back on purchases, you earn $200 at the end of the year. But if you were paying interest on credit card debt each month, you can easily pay more than $200 at the end of the year.
If you do carry a balance and want to make the most of a rewards card, look for one that offers 0 percent APR on balance transfers along with 0 percent APR on all your purchases. Those terms won’t last forever, though; deals last for only an introductory period. The longer the introductory period the better, so look for a card that offers the introductory rate in the 14- to 18-month range.
The Discover it Card, at the time of this writing, offered a great deal: 0 percent APR on balance transfers for 18 months and 0 percent APR on new purchases for 6 months. The APR changes to a variable rate between 10.99 percent and 22.99 percent after the introductory period.
Travel rewards cards typically offer some of the best rewards points deals, according to the Travel Channel. The Miles & More World MasterCard lets you earn 10,000 award miles with a balance transfer and 15,000 award miles with your first purchase. It offers a 0 percent APR on purchases and balance transfers for 12 months. You must pay a $59 annual fee for this card and a 3 percent balance transfer fee.
The best way to combine a balance transfer card with a rewards card would be to divide the balance transfer amount by the introductory period. (With the Discover it Card example, the figure would be 18.) Then you can determine what your monthly payments need to be to pay the balance off before the higher interest rate kicks in. Once you pay off your balance, continue to pay it off for new purchases each month. That way, it shouldn’t matter to you what the interest rate becomes after the introductory period because you won’t be paying interest, but you will still earn rewards points that could go toward restaurants, movies, furniture, gas, groceries, airline tickets or cash.
You typically need a good credit score to get a card that offers the best deals. The lowest credit score you can have to qualify for the Discover it Card, for example, is 702, according to Credit Karma. The way to get a good credit score is to pay your bills on time and to use only a small portion of the credit that is available to you, typically no more than 30 percent. Consider this when making a balance transfer because balance transfers lower credit scores sometimes if the transfer raises your credit utilization score too much. It might take you some time to raise your credit score, but once you do and once you pay off your credit card debt, you can have credit cards working for you.
All rewards cards have different requirements. Here’s what to look for when comparing features:
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