Does a Balance Transfer Count as Spending?
Navigate credit card spending definitions. Understand why balance transfers and various other transactions don't count towards rewards or bonus requirements.
Understanding Credit Card Spending
Credit card issuers define “eligible spending” as transactions that qualify for earning rewards, meeting sign-up bonus requirements, or fulfilling other promotional offers. These qualifying purchases typically involve transactions where you acquire goods or services from a merchant. Examples include everyday retail purchases, online shopping, and bill payments made directly with your credit card. The specific terms and conditions outlining what constitutes eligible spending are established by each individual card issuer.
For instance, swiping your card at a store for groceries or using it to pay for streaming services generally counts as eligible spending. These types of transactions form the basis upon which rewards points, cashback, or progress towards spending bonuses are typically calculated.
Balance Transfers and Spending Requirements
A balance transfer allows you to move existing debt from one credit account to another, often to consolidate debt or benefit from a lower introductory interest rate. Despite involving your credit card, balance transfers do not count as eligible spending for purposes of earning rewards, meeting sign-up bonus thresholds, or fulfilling other promotional spending requirements. Card issuers view these transactions differently from direct purchases of goods or services.
The fundamental reason for this exclusion is that a balance transfer represents a shift of existing debt, not a new acquisition of an item or service. This action does not generate new commerce or provide a profit margin for the card issuer in the same way a retail purchase does, which is why it is typically excluded from spending-based incentives. The primary benefit of a balance transfer is financial management, such as reducing interest costs.
Other Non-Qualifying Transactions
Beyond balance transfers, several other types of credit card activity typically do not count as eligible spending for rewards or bonus purposes. Cash advances, which provide immediate cash, are considered a loan and incur fees, usually between 3% and 5% of the amount, along with higher interest rates. Similarly, convenience checks, often provided by card issuers for accessing your credit line, function like cash advances. These transactions are designed for accessing funds, not for purchasing goods or services.
Credit card fees, such as annual fees, late payment fees, and balance transfer fees, do not contribute to eligible spending. These are charges for card usage or specific services, not purchases. Interest charges accrued on your balance are another common exclusion, as they represent the cost of borrowing, not a new purchase. Some quasi-cash transactions, like purchasing gift cards in large quantities or gambling transactions, may be excluded because they can be easily converted back to cash, circumventing the intent of spending-based rewards programs.