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Why You Should Avoid Airline Credit Card Balance Transfers

Airline Credit Cards, Credit Cards
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airline card balance transfer

Many airline credit cards offer extra miles if you transfer your balance. In addition to your signup bonus, you’ll often get 1 mile per $1 that you transfer over to the card, up to a preset limit. But is this really a good idea, or is it just airlines and banks trying to swindle you? You’ll never guess the answer.

How do the transfer programs work?

Almost all airline credit cards have the traditional signup bonus: X number of miles after your first purchase or after spending a certain amount of money. However, some credit cards will give you an additional mile for every dollar of existing credit card debt that you transfer to your new card. Once you shift your credit card balance, the miles go into your account as they normally do.

The math never works out

The downside – and this isn’t very well advertised on the cards’ websites – is that you have to pay a balance transfer fee for every dollar that you transfer – usually 3-4%. This means that if you value your miles at 1 cent per point, you’re effectively paying a 2-3% fee on every dollar you transfer. Hardly free money at that point.

Moreover, some of the cards don’t have a 0% balance transfer promotion, and the ones that do usually don’t offer the longest ones. You’re far better off with a balance transfer credit card: Not only do you start off losing money, but the shorter 0% periods mean you’re less likely to pay off your debt before the higher rates kick in.

What are alternatives to airline credit card transfers?

Instead, you should be looking for something that either:

  • Has no balance transfer fee, or
  • Has a long 0% introductory APR period

Coincidentally, there is a credit card that has both: The Chase Slate® waives balance transfer fees for the first 60 days after you open the account and offers 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 15.99% - 24.74% Variable APR. Even if you don’t pay it off during the 0% period, you’ll save a lot on the transfer fee.

If you need a longer 0% period, consider the Citi Simplicity® Card - No Late Fees Ever, which offers 0% on Purchases and Balance Transfers for 21 months, and then the ongoing APR of 14.99% - 24.99% Variable APR. Its ongoing rates are lower than the airline cards’. If you’re looking to consolidate your credit card debt, look for a low interest card, not an airline one.