In a previous post, I discussed a credit card mail offer that came with cash advance and balance transfer checks. Here, I will discuss these tempting deals.
First off, there is a huge difference between a balance transfer check and a cash advance check. Most balance transfer checks offer a 0% APR for up to 1 year, then charge a standard interest rate around 15%. Cash advance checks, however, tend to charge a much higher interest rate once the introductory period ends, generally somewhere in the low to mid 20% range.
A second issue with balance transfer checks and cash advance checks are the fees. Most balance transfer offers online charge a 3% balance transfer fee with a maximum fee of $75. This means that a $10,000 balance transfer will cost $75. Balance transfer and cash advance checks often do not cap the fee, meaning the same balance transfer or cash advance would cost $300.
A final issue I’ve discussed before related to balance transfer checks you get for a credit card you currently have a balance on. The checks you receive in the mail may offer a 0% APR for 1 year, but if you already have a balance, your payments will go towards reducing the balance being charged no interest, not the high interest balance you already have on the card.
What do I do with cash advance and balance transfer checks? I put them in the shredder. If you want to transfer a high interest balance and save money with a 0% interest rate, your best bet is to apply for a new credit card that offers a 0% interest rate on balance transfers. You can compare current 0% APR balance transfers on this site and apply online for instant approval.
