Low rate balance transfer checks and their evil twins – cash advance checks – are often wolves cloaked in sheep’s clothing.  Despite the credit crunch, these checks are still showing up in mailboxes frequently, offering consumers low or 0% rates for three months to a year.  However, balance transfer checks and cash advance checks pose a number of issues for consumers that can prove quite costly.  This, of course, is the reason banks send them to us.

What brought these nasty credit card tools to my attention today was a horror story posted by a recent visitor.  She used a 0% cash advance check to pay down some high interest bills.  Unfortunately, the bank that mailed her the cash advance check decided to lower her credit limit before the check cleared.  This, in turn, caused her to bounce checks to two credit card companies and two utility companies, which will cause her interest rates to increase, cost her hundreds in bank fees, and may potentially damage her credit score. Continue Reading »

Here’s a nasty little credit card trick that gently treads the line between vulgarity and criminality: some credit cards that offer 0% APR balance transfers for 1 year also offer 0% rates for 3 months. That’s right: THREE MONTHS. In the past, this nasty trick was deeply buried in the fine print. Fortunately, the lawyers must have decided this was too dirty for even credit card companies, and is now clearly disclosed by the perpetrators.

This is the basic deal. The credit card advertises a 0% APR on purchases and balance transfers for 1 year. Individuals that have very good and excellent credit are granted the promoted 0% rate. That’s great for them. But what about those with average credit. They get the second tier offer, which is 0% for 3 months on just balance transfers.

As unfair as this practice is, the dirtiest trick in this process is the enticement to transfer balances. Let’s say you don’t have the greatest credit and you’re looking to transfer a balance from a credit card with a 15% interest rate. You apply for one these cards and, while completing the application, opt to transfer $2000. First, you get charged a 3% balance transfer fee. That will cost you $60. Then, after a lovely 3 months, you find yourself getting charged the same exact interest rate you had on your old credit card. In the end, you might end up saving $20. But in worst case scenarios, you could get slapped with a higher interest rate on your new card than you had with your previous card. If that happens, your money saving balance transfer will actually cost you money.

Fortunately, avoiding this balance transfer trick is fairly simple. Just review the terms on the online application and make sure there is only one introductory rate offer.

You can review offers and apply online for a 0% APR balance transfer on this site. Just remember: READ THE FINE PRINT.