Balance Transfer Checks
archive
Posted: Wed Jan 12, 2005 10:55 pm
Post subject: Balance Transfer Checks
Blake
Date: 8/15/2000 3:18 am CDT
I was wondering what you thought about these recent offers of balance
transfers where you can choose to fill out the check and deposit it in
your bank and then use the cash to pay off your balances:
"You can deposit one of the enclosed Balance Transfer Checks into your
bank account and use the cash to pay any type of credit card bill
(including bills from gasoline or department store cards.)"
The offer is also without a time limit:
"Here's a unique opportunity to pay off high-rate credit cards with a
5.9% APR until the balance you transfer is paid in full. . . . You can
transfer any amount up to your available credit line."
QUESTIONS:
1. Ok, if a money market account is paying 6.1% APR, how is the card
company making any money if the low rate is in effect until the balance
is paid off?
2. If you deposit the amount into your bank account and can borrow up to
your credit limit, does it matter if you even have outstanding balances
to pay off? Could you just pay off other credit card bills as they come
due? The language doesn't say "use the cash NOW to pay off any type of
credit card bill (what about future bills?). Do the companies know or
even care what you actually do with the money? What's to stop you from
paying off a student loan with an increasing variable interest rate?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
archive
Posted: Wed Jan 12, 2005 10:56 pm
Post subject: Balance Transfer Checks
Doug
Date: 8/15/2000 5:18 pm CDT
I have seen 8.9 and 9.9 lifetime transfers as you are talking about, I HAVE NEVER SEEN A 5.9% OFFER WITHOUT IT BEING A 5 MONTH TO 1 YEAR. What bank or banks is that offer? There are many many great temporary deals that you are talking about to be taken advantage. Like I said earlier they usually have an expiration on those. If you truly have a 5.9% Lifetime Deal, TAKE IT. Also many 1.9% - 7.9% temporary offers.
archive
Posted: Wed Jan 12, 2005 10:56 pm
Post subject: Balance Transfer Checks
dave
Date: 8/15/2000 6:10 pm CDT
blake-
i don't think the banks care what you do with balance transfer money. as a practical matter, why should they care? if you pay down other cards and then charge against them, it amounts to the same thing as the bank giving you the money in the first place. (although this is not a good idea and i don't recommend it if you are really trying to save money). when i recently opened an account with citibank which is offering a 2.9 rate on balance transfers for nine months, i asked for two transfers on the application and then received the card. when i found out what the credit line was, i called customer service and asked them to make two more transfers. she said that i could have citibank pay the creditors directly or she would send me a check to deposit in my bank account so i could do it myself. since there is a fee for each transfer, i saved money by having her send the money to me instead of the creditors. had i known this before i applied, i could have saved even more by not requesting transfers with the application.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
archive
Posted: Wed Jan 12, 2005 10:57 pm
Post subject: Balance Transfer Checks
Eugene Skorodinsky
Date: 8/16/2000 4:56 am CDT
Blake, this thing with low-APR balance transfers also puzzled me a couple of months ago, when Citibank offered me a card with 1.9% APR for, I think, 9 months. My other bank pays me 6.5% on money market account, so it really was weird. Now, after I took that transfer and then another one, at 2.9% APR, this whole thing does not look so attractive to me. Consider this:
(1) Read the agreement carefully. The bank can jack up your rates for various reasons: if it's your default under any other CC, and you are pretty sure this won't happen to you, that's fine. But if it says "for any reasons", keep in mind that if they do raise your APR, you might not even notice untill the next statement, or even later.
(2) Another thing to look for in the agreement is "balance transfer fee" which can bite a good deal of your not-yet-even-taken profits.
(3) If you charge anything on the card from which you took the balance transfer offer, or if you have a purchase balance on it at the time of the balance transfer, there's a good chance you are paying more than that super-low APR because APR for purchases is usually much higher. AND all your payments or credits go toward higher APR balance until lower APR balance is paid in full.
(4) What if you don't have the money to pay the balance back in full once that low APR expires? Your profits on this deal will be eaten by higher APR sooner than you can say "average daily balance including new purchases".
(5) If you are thinking about investing the "transfered" check (that might seem like a step ahead of MMAs with their 6.#%), think again. Investing is normally done for the long term, and when the low APR expires after several months, your portfolio might be low, and you will have to sell, thus suffering losses.
(6) If you pay some of your bills from your credit card automatically every month (which usually is a smart thing to do), and you hop from one transfer offer to another, you might have a trouble of re-submitting your debit authorization forms (or whatever they are called) with every single merchant, and that increases risk of mistake and your wasted time (which is also wasted money).
(7) You might lower your credit score by taking all those balance transfers, because you max up your cards, have more cards than you need, and are recognized by potential creditors as "credit hopper" which all lowers your chance of getting a good deal when you really need it.
My conclusion: a couple hundred extra bucks (that is if you get them) is just not worth the hassle, the time and the piece of mind.
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 Jan 12, 2005 10:55 pm
Post subject: Balance Transfer Checks
Blake
Date: 8/15/2000 3:18 am CDT
I was wondering what you thought about these recent offers of balance
transfers where you can choose to fill out the check and deposit it in
your bank and then use the cash to pay off your balances:
"You can deposit one of the enclosed Balance Transfer Checks into your
bank account and use the cash to pay any type of credit card bill
(including bills from gasoline or department store cards.)"
The offer is also without a time limit:
"Here's a unique opportunity to pay off high-rate credit cards with a
5.9% APR until the balance you transfer is paid in full. . . . You can
transfer any amount up to your available credit line."
QUESTIONS:
1. Ok, if a money market account is paying 6.1% APR, how is the card
company making any money if the low rate is in effect until the balance
is paid off?
2. If you deposit the amount into your bank account and can borrow up to
your credit limit, does it matter if you even have outstanding balances
to pay off? Could you just pay off other credit card bills as they come
due? The language doesn't say "use the cash NOW to pay off any type of
credit card bill (what about future bills?). Do the companies know or
even care what you actually do with the money? What's to stop you from
paying off a student loan with an increasing variable interest rate?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
archive
Posted: Wed Jan 12, 2005 10:56 pm
Post subject: Balance Transfer Checks
Doug
Date: 8/15/2000 5:18 pm CDT
I have seen 8.9 and 9.9 lifetime transfers as you are talking about, I HAVE NEVER SEEN A 5.9% OFFER WITHOUT IT BEING A 5 MONTH TO 1 YEAR. What bank or banks is that offer? There are many many great temporary deals that you are talking about to be taken advantage. Like I said earlier they usually have an expiration on those. If you truly have a 5.9% Lifetime Deal, TAKE IT. Also many 1.9% - 7.9% temporary offers.
archive
Posted: Wed Jan 12, 2005 10:56 pm
Post subject: Balance Transfer Checks
dave
Date: 8/15/2000 6:10 pm CDT
blake-
i don't think the banks care what you do with balance transfer money. as a practical matter, why should they care? if you pay down other cards and then charge against them, it amounts to the same thing as the bank giving you the money in the first place. (although this is not a good idea and i don't recommend it if you are really trying to save money). when i recently opened an account with citibank which is offering a 2.9 rate on balance transfers for nine months, i asked for two transfers on the application and then received the card. when i found out what the credit line was, i called customer service and asked them to make two more transfers. she said that i could have citibank pay the creditors directly or she would send me a check to deposit in my bank account so i could do it myself. since there is a fee for each transfer, i saved money by having her send the money to me instead of the creditors. had i known this before i applied, i could have saved even more by not requesting transfers with the application.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
archive
Posted: Wed Jan 12, 2005 10:57 pm
Post subject: Balance Transfer Checks
Eugene Skorodinsky
Date: 8/16/2000 4:56 am CDT
Blake, this thing with low-APR balance transfers also puzzled me a couple of months ago, when Citibank offered me a card with 1.9% APR for, I think, 9 months. My other bank pays me 6.5% on money market account, so it really was weird. Now, after I took that transfer and then another one, at 2.9% APR, this whole thing does not look so attractive to me. Consider this:
(1) Read the agreement carefully. The bank can jack up your rates for various reasons: if it's your default under any other CC, and you are pretty sure this won't happen to you, that's fine. But if it says "for any reasons", keep in mind that if they do raise your APR, you might not even notice untill the next statement, or even later.
(2) Another thing to look for in the agreement is "balance transfer fee" which can bite a good deal of your not-yet-even-taken profits.
(3) If you charge anything on the card from which you took the balance transfer offer, or if you have a purchase balance on it at the time of the balance transfer, there's a good chance you are paying more than that super-low APR because APR for purchases is usually much higher. AND all your payments or credits go toward higher APR balance until lower APR balance is paid in full.
(4) What if you don't have the money to pay the balance back in full once that low APR expires? Your profits on this deal will be eaten by higher APR sooner than you can say "average daily balance including new purchases".
(5) If you are thinking about investing the "transfered" check (that might seem like a step ahead of MMAs with their 6.#%), think again. Investing is normally done for the long term, and when the low APR expires after several months, your portfolio might be low, and you will have to sell, thus suffering losses.
(6) If you pay some of your bills from your credit card automatically every month (which usually is a smart thing to do), and you hop from one transfer offer to another, you might have a trouble of re-submitting your debit authorization forms (or whatever they are called) with every single merchant, and that increases risk of mistake and your wasted time (which is also wasted money).
(7) You might lower your credit score by taking all those balance transfers, because you max up your cards, have more cards than you need, and are recognized by potential creditors as "credit hopper" which all lowers your chance of getting a good deal when you really need it.
My conclusion: a couple hundred extra bucks (that is if you get them) is just not worth the hassle, the time and the piece of mind.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
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