1% cashback vs. transferring monthly CC balances and keeping money in savings

Alex9384

I'm just wondering if there's any flaw in my thinking that rather than spending my money immediately (Chase debit card) and get 1%  back, I accumulate monthly spending on one of my credit cards and then balance transfer it to another card with 0% for 18 or 22 months. There is a fee of 2.4% for 18 months which equals to 1.6% annual loss. The other BT card has 1.99% fee for 22 months 0%, which equals to 1.085% annual loss (fee). So I will lose some money on BT fees, but at the same time I can earn over 5% on the money I saved by using CCs instead of Chase debit card. Even if I keep money just in Tandem easy access, that's still earning over 4%. Some money need to go towards monthly CC repayments (slightly over minimum), but even after BT fees, net return will be still higher than just 1% cashback on Chase. Good or bad idea?

Brie

It's classic use of a BT.  I've done it a number of times when the fees were less than what I'd be charged on my flexible mortgage so paying the 2% (or whatever) fee to save 4% on a mortgage. Net gain to me of 2%. 

Check if any of your cards allow a money transfer (usually a higher fee) that would allow you to and make it worthwhile to get the Chase 1%.

MrFrugalFever

What you’re describing is effectively stoozing. What you gain will very much determine on how much you intend to stooze….which will be determined by your credit limit and spending. Don’t be tempted to spend frivolously just to reach the desired stooze amount, that is not good.

You also don’t want to be paying interest or that will wipe out any gains so unless you have the intention of spending several thousand in the course of just over a month then I can’t see how you’re going to make that much in interest.

I see chase cashback is capped at £15pm….

grumbler

Alex9384 said:

I'm just wondering if there's any flaw in my thinking that rather than spending my money immediately (Chase debit card) and get 1%  back, I accumulate monthly spending on one of my credit cards and then balance transfer it to another card with 0% for 18 or 22 months. There is a fee of 2.4% for 18 months which equals to 1.6% annual loss. The other BT card has 1.99% fee for 22 months 0%, which equals to 1.085% annual loss (fee). So I will lose some money on BT fees, but at the same time I can earn over 5% on the money I saved by using CCs instead of Chase debit card. Even if I keep money just in Tandem easy access, that's still earning over 4%. Some money need to go towards monthly CC repayments (slightly over minimum), but even after BT fees, net return will be still higher than just 1% cashback on Chase. Good or bad idea?

Unless your monthly spending is really big, you gain very little. If you keep transferring balances every month, you pay the same fee for shrinking 0% term.
A new card with 0% on spending can be more profitable as there are no fees.

born_again

The only flaw, as many found out during Covid. Was that balance transfer options dried up.

A simple, but less profitable way is a cash back CC. Spend on that. Each purchase you make transfer that amount from your bank account to a savings acc (round up to whole £) 
Use that to pay CC in full at end of month.