Credit Card Balance Transfer Question
Author: Guest
Posted: Wed May 19, 2004 4:51 pm
Post subject: Credit Card Balance Transfer Question
Is it a good idea to balance transfer to your bank account first with BT(Discover) CC checks(not cash adv checks) and then pay off a CC? What about tax issues with the amount going into and out of your bank account? Also should I pay off the whole amount or leave a small balance on the higher interest CC?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: Ira
Posted: Thu May 20, 2004 4:21 am
Post subject: Credit Card Balance Transfer Question
In no particulr order, I don't know of any tax issues regarding credit card spending or making payments. A very long time ago credit card interest used to be tax deductable, but them days is gone forever.
My advice is to pay the entire amount if you can. This will immediately stop any finance charges. Let's say you have a $5,000.00 balance and you pay off $4,999.00. The month following the pay down you'll get hit with a finance charge based on your average daily balances. If you had paid the extra dollar there would be no finance charge at all.
With regard to balance transfer checks vs. telephone or on-line transfers, it depends on the rules of the issuing bank. Some charge a higher fee for one or the other. Check with your bank.
Also, some banks prohibit a balance transfer from going into your checking account. In theory a "balance" transfer is to transfer the existing balance on one card to another, and some banks stick to that definition. There's no particular advantage to doing a two step transfer (credit card to checking account to credit card).
Author: Polonius
Posted: Thu May 20, 2004 11:23 am
Post subject: Credit Card Balance Transfer Question
Ira's completely right (as usual ).
But just to add a bit to speak to your concerns, be sure to keep accurate records of the transfers so that if you are audited you can show the source of the money you're depositing. There are no tax issues--but if you have no records and can't explain unusual deposits, you could be accused of not reporting income. So you must be ready to produce proof that it was a transfer.
You have to be real careful about BT checks used as deposits. There's a lot of fine print and confusing language in the offers. Some offers tell you to use the checks anywhere checks are accepted--but the fine print says that if they're not used to pay a credit card balance then they're regarded as cash advances at the usual cash advance rate and fee. Be VERY careful.
If you can use the checks as you say, one advantage of depositing a check in your own account is that you incur one balance transfer fee (if there is a fee), and you can then dole out payments to several cards without additional transaction fees.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Wed May 19, 2004 4:51 pm
Post subject: Credit Card Balance Transfer Question
Is it a good idea to balance transfer to your bank account first with BT(Discover) CC checks(not cash adv checks) and then pay off a CC? What about tax issues with the amount going into and out of your bank account? Also should I pay off the whole amount or leave a small balance on the higher interest CC?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: Ira
Posted: Thu May 20, 2004 4:21 am
Post subject: Credit Card Balance Transfer Question
In no particulr order, I don't know of any tax issues regarding credit card spending or making payments. A very long time ago credit card interest used to be tax deductable, but them days is gone forever.
My advice is to pay the entire amount if you can. This will immediately stop any finance charges. Let's say you have a $5,000.00 balance and you pay off $4,999.00. The month following the pay down you'll get hit with a finance charge based on your average daily balances. If you had paid the extra dollar there would be no finance charge at all.
With regard to balance transfer checks vs. telephone or on-line transfers, it depends on the rules of the issuing bank. Some charge a higher fee for one or the other. Check with your bank.
Also, some banks prohibit a balance transfer from going into your checking account. In theory a "balance" transfer is to transfer the existing balance on one card to another, and some banks stick to that definition. There's no particular advantage to doing a two step transfer (credit card to checking account to credit card).
Author: Polonius
Posted: Thu May 20, 2004 11:23 am
Post subject: Credit Card Balance Transfer Question
Ira's completely right (as usual ).
But just to add a bit to speak to your concerns, be sure to keep accurate records of the transfers so that if you are audited you can show the source of the money you're depositing. There are no tax issues--but if you have no records and can't explain unusual deposits, you could be accused of not reporting income. So you must be ready to produce proof that it was a transfer.
You have to be real careful about BT checks used as deposits. There's a lot of fine print and confusing language in the offers. Some offers tell you to use the checks anywhere checks are accepted--but the fine print says that if they're not used to pay a credit card balance then they're regarded as cash advances at the usual cash advance rate and fee. Be VERY careful.
If you can use the checks as you say, one advantage of depositing a check in your own account is that you incur one balance transfer fee (if there is a fee), and you can then dole out payments to several cards without additional transaction fees.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 1:23 PM
0 Comments:
Post a Comment
<< Home