Can you transfer a balance from a cash back credit card?
Quick insights
- You can move balances from a cash back account to a balance transfer card to consolidate debt and potentially lower your interest expenses.
- While the transfer itself does not typically earn you new rewards, any rewards you have already earned will usually stay in your original account.
- Consolidating high-interest debt into a single manageable payment may help you pay down your balances faster.
Cash back credit cards can provide helpful rewards, but if you’re reaching a large balance, one option might be to transfer your accumulated debt to a balance transfer credit card. Let’s learn more below.
Is it possible to transfer a balance from a cash back card?
The short answer is yes; you can move a balance from a cash back account to a new balance transfer card. This process can be done regardless of whether the original card offers cash back rewards or points. By initiating a balance transfer, you are using a new credit card to pay off your old debt, potentially allowing you to manage the repayment under more favorable terms.
Financial institutions may allow these transfers as long as the receiving account is with a different bank. This move can be particularly helpful if your daily spending card has a high annual percentage rate (APR), which may be the case for credit cards that offer rewards. Swapping a higher rate for a lower introductory APR could help you make progress on paying off your debt by reducing your interest costs for a limited period of time.
Common steps to initiate a balance transfer
The process of moving your debt can typically be completed by following a few steps:
- Researching cards: Consider looking for a product that offers a low introductory APR for 12 months or more to give yourself ample time to pay down your principal. Comparing transfer fees between different providers can also help you land more cost-effective terms.
- Providing account info: Enter the exact digits of your original account and the specific dollar amount you wish to move during the application process. Many financial institutions allow you to add these details later through your online dashboard if you prefer to wait for approval first.
- Verifying the payoff: You may want to wait for your new bank to send the funds to your original lender, which could take several business days to reach completion. You may want to continue making at least the minimum payments on your old account in the meantime.
- Confirming old balances: Consider regularly reviewing the original account to see if any residual interest charges were added during the processing window. You remain responsible for any amounts left behind.
Balance transfer fees and limitations to consider
When initiating a balance transfer, you may want to be mindful of the transaction costs and credit limit caps that may apply to your new account. These may include:
- Transfer fees: Lenders may charge a fee for balance transfers, typically based on a percentage of the total amount being shifted to your new card or a minimum fee, whichever is greater. This one-time cost is added to your new balance immediately and should be factored into your overall debt repayment strategy.
- Credit limits: You generally cannot move an amount that exceeds the total credit line granted. If your existing debt is higher than your new limit, you may need to prioritize moving your highest-interest balances first.
- Issuer restrictions: Banks typically prohibit moving debt between two of their own branded products to prevent debt cycling. To successfully transfer a balance from cash back credit card accounts, you could need to select an issuer that is different from your current one.
- Promotional windows: Low-interest offers might require you to initiate your transfers within a specific window after account opening to qualify for the promotional rate. Missing this deadline could result in your balance being subject to the standard variable APR.
Eligible credit cards for consolidation
Some balance transfer and interest-relief cards are designed to accept debt from a range of rewards accounts. The specific eligibility for a move depends on your individual creditworthiness and the policies of the bank.
You may wish to consider products that provide a pairing of a low-interest window with ongoing shopping or travel rewards. This combination could allow a cardmember to continue using the account for daily needs once the initial debt is successfully paid. Cards with no annual fee and extended introductory periods can also be an option for those focused strictly on repayment. You may want to review the cardmember agreement to confirm that these options are accepted before you apply.
The bottom line
You can move your debt from a cash back account to a new card to consolidate your payments and take advantage of a low introductory APR. While the move will typically not earn you new rewards on the shifted amount, the potential for interest savings can make it a useful choice. Applying for a card with more favorable terms and staying consistent with your monthly payments, can help you take a steps towards an improved credit profile.
