How does a balance transfer work on a cash-back reward credit card?
I have a rather large expense coming up (~$6,000), & I would like to know how a balance transfer will affect my personal situation. I pay all my cards in-full, but with this large expense coming up, I would like to execute my first balance transfer, without having to empty my Savings account.
Game plan:
- Use my 2% cash-back card to pay for the $6,000 purchase. ($120 cash back)
- Transfer the balance to another cash back card offering 2.99% for the life of the transfer.
- Take $3,000 out of my savings & pay down 50% of the balance.
- Make large monthly payments on the balance for 3-6 months, until I have paid it off.
My problem is this: The card I am transferring the balance to, is my favorite & most used card. Offering 5% cash on gas, 5% airline, 2% grocery, & 1.25% everywhere else. I would like to continue using the card after I transfer the balance.
My question is this: If I continue to use my card, & pay off NEW purchases of gas & grocery in-full, will I be assessed the regular finance charge APR of 13.99% because my balance is not “$0″ at the end of the month?
My ideas are these:
1. If my assumption above is correct, I can continue to use the card & paying off the new balance without penalty. As long as I continue making the minimum payments on the balance transfer side of the statement as well.
Example: $3,000 balance @ 2.99% with a minimum payment of 2% of the balance. 2% of balance = $60 + ~$7.50 in interest = $67.50. New gas & grocery purchases = $500. If I make a MINIMUM payment of $567.50, I will not be assessed any interest @ 13.99%, only the $7.50 on my 2.99% transfer, correct?
2 If my assumption above is NOT correct, I would have to pay down the balance transfer card to $0, transfer the balance, & not use it at ALL until the balance transfer was paid off. This way the only interest I would pay would be the 2.99%, correct?
Like I said, I’m a newbie to balance transfers, so if there are other options or if my ideas are way off, please feel free to enlighten me
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