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If you’re paying down the balance on a credit card over time, the interest costs can be astronomical! While it’s always best to pay your balance in full each month, at some point, you may end up in a situation where you need some extra time—especially after the holidays. The common-sense solution is to move your high-interest balance to a card with a 0% balance transfer offer.
In today’s post, we’re going to try to talk you out of that plan by sharing a strategy where you can get the same 0% intro APR rate, without the huge fees and other restrictions that come with balance transfers.
Why Balance Transfers Aren't a Great Option
There are four key reasons why balance transfers aren't the best way to cut your interest expenses:
- The Balance Transfer Fee — Most credit cards charge between 3-5% to transfer a balance. If you need to pay off a $6,000 balance over time, the initial fee will take $180-300 out of your pocket.
- No Rewards Earned on the Transfer — Even if you transfer a balance to a rewards card that earns points or cashback on purchases, the amount transferred won't earn any rewards.
- No Signup Bonus — Most cards with balance transfer offers don't come with a signup bonus. As far as the bank is concerned, the 0% introductory APR is the new cardmember offer. Even if there is a welcome offer, it's usually not a good idea to make purchases with a card that has a transferred balance at an introductory APR.
- Transfers to the Same Bank Aren't Allowed — You can't transfer a balance between cards from the same issuer. If you're carrying a balance on a Chase credit card, Chase balance transfer options are off the table.
If you do want to explore a traditional balance transfer, the Citi® Double Cash Card is a great place to start. You can see our roundup of the top balance transfer offers here. But first, check out the strategy below to see if it could work for you.
Save on Interest, Earn Rewards, and Skip the Fees
Fortunately, there is a great strategy that will solve all four of the problems above. You can get an extended 0% intro APR period, earn rewards on each purchase, earn a signup bonus, and you can even open a new card issued by the same bank where you currently hold the high-interest balance.
The solution is to take advantage of a 0% introductory APR on purchases and use your normal monthly budget to pay off the high-interest balance. Here’s how it works:
- Rather than applying for a balance transfer card, apply for a card featuring a 0% intro APR offer on purchases
- Charge all your monthly expenses to the 0% intro APR card for the first 2-3 months, keeping in mind the minimum spend required to reach the signup bonus
- Use the money in your normal monthly budget to pay down the high-interest credit card debt while making minimum payments on the new card.
- Pay down the intro 0% APR card over the 12-15 month introductory period
For example, let’s say you are carrying a $6,000 debt on a high-interest credit card. If you transfer that balance, a 3% to 5% fee would cost you $180-300.
Instead, you can apply for a card with a 0% intro APR on purchases—like the Chase Freedom Unlimited® or Blue Cash Everyday® Card from American Express (Rates & Fees). Place all of your monthly expenses on the new card to earn the welcome offer. Then, use the cash you would typically put aside for monthly expenses to pay down the $6,000 credit card debt.
- INTRO OFFER: Earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back!
- Enjoy 6.5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 3% on all other purchases (on up to $20,000 spent in the first year).
- After your first year or $20,000 spent, enjoy 5% cash back on Chase travel purchased through Ultimate Rewards®, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
- No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 20.49% - 29.24%.
- No annual fee - You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, real-time alerts, and more.
- Member FDIC
- Earn 5% on travel purchased through Chase
- Earn 3% on dining at restaurants
- Earn 3% on drugstore purchases
- Earn 1.5% on all purchases
Provided your monthly expenses are in the range of $2,000 to $2,500 per month, over the initial 2-3 months you’ve effectively transferred your $6,000 high-interest balance to a 0% intro APR offer without paying a balance transfer fee. Plus, you’ve earned a welcome offer and additional points in the process.
- Earn a $200 statement credit after you spend $2,000 in purchases on your new Card within the first 6 months.
- No Annual Fee.
- Balance Transfer is back! Enjoy 0% intro APR on purchases and balance transfers for 15 months from the date of account opening. After that, 19.24% to 29.99% variable APR.
- 3% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases, then 1%.
- 3% Cash Back on U.S. online retail purchases, on up to $6,000 per year, then 1%.
- 3% Cash Back at U.S. gas stations, on up to $6,000 per year in purchases, then 1%.
- Get $7 back each month after using your Blue Cash Everyday Card to spend $12.99 or more each month on an eligible subscription to The Disney Bundle, which includes Disney+, Hulu, and ESPN+. Enrollment required.
- Terms Apply.
- Rates & Fees
- 3% Cash Back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%)
- 3% Cash Back at U.S. gas stations (on up to $6,000 per year in purchases, then 1%)
- 3% Cash Back with U.S. online retailers (on up to $6,000 per year in purchases, then 1%)
- 1% back on other purchases
- Cash back is issued as a statement credit.
Best 0% Intro APR Cards for Purchases
Below, you’ll find a few of our favorite personal and business cards featuring 0% intro APR periods on purchases. Each card listed provides a generous welcome offer (particularly the two Chase Ink Business cards) and provides a decent return on everyday spending, helping you to maximize this strategy.
If a longer intro APR period is a higher priority than earning rewards or a signup bonus, you can find some additional options with an intro period of up to 18 months in our post on the best current 0% purchase APR offers.
| CREDIT CARD | 0% INTRO APR PERIOD | REG APR | WELCOME OFFER | ANNUAL FEE |
|---|---|---|---|---|
| Capital One VentureOne Rewards Credit Card | 15 months | 19.99% - 29.99% - Variable | 20,000 Miles once you spend $500 on purchases within 3 months from account opening | $0 |
| Chase Freedom Unlimited® | 15 months | 20.49% - 29.24% - Variable | Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back. That's 6.5% on travel purchased through Chase Ultimate Rewards®, 4.5% on dining and drugstores, and 3% on all other purchases. | $0 |
| Blue Cash Everyday® Card from American Express | 15 months | 19.24% - 29.99% - Variable (Rates & Fees) | Earn a $200 statement credit after you spend $2,000 in purchases on your new Card within the first 6 months. | $0 (Rates & Fees) |
| Blue Cash Preferred® Card from American Express | 12 months | 19.24% - 29.99% - Variable (Rates & Fees) | Earn a $250 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months. | $0 intro annual fee for the first year, then $95. (Rates & Fees) |
| Capital One SavorOne Cash Rewards Credit Card | 15 months | 19.99% - 29.99% - Variable | Earn $200 Cash Back after you spend $500 on purchases within 3 months from account opening | $0 |
| Capital One Quicksilver Cash Rewards Credit Card | 15 months | 19.99% - 29.99% - (Variable) | Earn One-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening | $0 |
| Ink Business Unlimited® Credit Card | 12 months | 18.49% - 24.49% - Variable | Earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening. | $0 |
| Ink Business Cash® Credit Card | 12 months | 18.49% - 24.49% - Variable | Earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening | $0 |
Potential Drawbacks
The main challenge with this strategy is that it may take some time to fully transition your outstanding balance to the new card offering 0% APR on purchases. If your normal monthly budget is only $500, it probably doesn't make sense to slowly pay down a large balance in $500 increments—by the time you execute the process, you may be close to the end of your intro 0% purchase APR period.
It's also worth noting that you'll still be paying interest on the original credit card for the first few months. In most cases, you'll still come out far ahead, but you should run the math for your situation before you decide. Don't forget to consider the value of the points or cash earned from spending and the welcome offer before comparing it with the balance transfer fee.
How to Evaluate Intro Purchase vs. Balance Transfer Costs
Here's some quick math for the example above with a $6,000 balance which you expect to pay down in $2,000 increments over three months:
If you assume a 20% annual interest rate on the high-balance card, you can approximate the monthly interest by dividing the rate by 12. In this case, we get 1.66% monthly.
- Month 1: You'll pay interest on $6,000 ~$100
- Month 2: You'll pay interest on $4,000 ~$67
- Month 3: You'll pay interest on $2,000 ~$33
Total interest costs here are ~$200
If you opt for a balance transfer offer with a 3% fee, you'd pay $180 to move your balance.
If you look at the Blue Cash Everyday intro offer, you'll earn $200 back in statement credits after you spend $2,000 in purchases on your new Card within the first 6 months. That means the minimum rewards you'll earn, without factoring in extra cashback earned via bonus categories, will be $260 ($200+$60).
Final Thoughts
There is a widespread view that balance transfer cards are the most efficient method of paying down unwanted debt on a high-interest credit card. However, if you are comfortable putting in a little extra work, a card with a 0% intro APR on purchases can do the same job without the transfer fees—and you can earn a boatload of rewards in the process.
For rates and fees of the cards mentioned in this post, please visit the following links: Blue Cash Everyday® Card from American Express (Rates & Fees), and Blue Cash Preferred® Card from American Express (Rates & Fees)
The comments on this page are not provided, reviewed, or otherwise approved by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
Concept has been around for a long time, was hoping for something new.
Solid advice. I think one thing most of us can agree on, is that if you can’t manage money, you shouldn’t be in the miles/points game. You’ll lose in the end. Info like this helps everyone though. Thanks.
I’m on board with Brad here. Don’t carry a balance. Just pay your card each month and if you can’t don’t buy things!
Useful strategy if you do find yourself with a balance. I’m doing something similar with redemptions. So as not to book through the Chase portal, I buy my tickets directly from the airline with the Sapphire Reserve. I then use “pay yourself back” for a similar amount of purchases to get the 1.5 cent redemption amount. That way I’m not limited to the airfares in the portal but I still get the same value from the points. (And get status which is why I don’t exchange my Chase points for airline miles.)
My strategy is to never have a balance on my credit card or pay it right away. I’ve never had to pay interest to date.
I would only carry a balance for an emergency, not a vacation. Even then, that’s why I have savings.
Novel strategy. I’m dubious about the suggestion that you might count the card welcome bonus and points earned as an offset to the residual interest costs associated with the 0% APR purchase strategy, as if these benefits are only attainable through that strategy but not as an “add on” to the 0% balance transfer strategy.
In other words, if one takes advantage of a 0% balance transfer, the option to open a new account that features the welcome bonus and points earned through diversion of $6000 spending to the new card is still on the table. It’s not like this is only an option afforded should you also take advantage of the 0% purchase strategy.
I’d only count the bonus and points as an offset to interest charges under the 0% APR purchase strategy if they couldn’t be earned otherwise. That’s not the case here.
This is a good roundabout way of getting a zero interest loan from the credit card company and getting rewards in the process.
That’s a really great strategy to keep cash in your accounts longer and earn more loyalty points more often.
Thank you for that valuable information. I never thought of that strategy before.
Sometimes it is necessary or more practical to carry a balance, particularly in uncertain financial times like these, if you even REMOTELY think you might lose your job, you have anything uncertain that may happen. Say you have an unexpected surgery come up, your portion of uncovered bill is $9,000. You could take it from emergency fund…but 3 people have been laid off at your company and you’re one of the older employees with a higher salary (i.e., most likely to be laid off or let go these days) and you have a pregnant wife who may not be able to go back to work right away because of complications she’s having with her pregnancy. Should you hold the cash? Maybe it would be a good idea. One thing I’ve learned over many years of self employment was that you never know what the future holds and the best laid plans can go to hell in a handbasket overnight. I once lost a $1,000,000+ contract in 24 hours when my customer who had the multi-million dollar contract had 3 of his employees have accidents on a jobsite in a 24 hour period. Nothing I did could have changed it but it taught me a valuable lesson about not counting on things until you have the check in the bank. Sometimes the peace of mind is worth a little juggling and having that extra cash in bank and taking the free time to pay the zero interest credit card…just my two cents worth.
Good idea, but better to never carry a balance
Exactly. That’s the better way to earn more sign-up bonuses actually.
Balance transfer fee is sometimes the deal breaker for BT even with 0% APR
Exactly. But, this article is explaining how it’s possible to avoid that balance transfer fee by getting a 0% APR via a different route.