0% balance transfer... question?

[Jen D]

I got a Citibank Upromise card. I called to activate it and they reminded me there was a 0% interest rate on balance transfers for 12 months with no balance transfer fee. I hadn't planned to do this but it occurred to me that there was a small debt I could put on, save me a few bucks. I said I'd think about it and call them back with the account numbers. She said, or I could just sent you a check. I said, you mean blank checks to write to the creditors? No, she said, you tell me the amount and then you deposit the check in your personal account and pay them off yourself.

Is this common? Never seen balance transfers done this way. Seems like a recipe for disaster!

 

[tlbwriter]

I occasionally get "purchase checks" from Capital One that provide both options - they give me blank checks from Capital One made out to me that I can deposit in my account, and blank checks from me that I can send to a creditor. I just shred 'em. When I do a balance transfer, I give the account numbers to the new credit card issuer. But I don't see why doing it the other way would be a recipe for disaster.

 

[Jen D]

Well, what's to stop someone from not paying the creditors and just taking a no-interest loan? Do you have to even prove the creditors exist? It just seems set up for system abuse... I mean of course you have to pay it off no matter what within 12 months or get socked with finance charges.

 

[tlbwriter]

Well, what's to stop someone from not paying the creditors and just taking a no-interest loan?

Nothing, I suppose. I doubt they care. They know most people will carry the balance beyond the grace period, and as long as they do that, it doesn't matter where they spent the money.

 

[janette]

I get checks often and you can usually write them for cash. Yes they are giving you 12mths at 0% for whatever you chose to use it for.

Use caution if you plan to use the card for anything else. Most offers have a transaction fee but it is rarely above $50. The drawback is usually that any purchases made are at a higher interest rate but the payments are applied to the lower / special interest rate first. If you use the card for anything except the cash advance / balance transfer it could end up costing more than leaving the balance where it is.

 

[shades]

It doesn't matter if they deposit the money in your account and you write personal checks to pay off the debt - or, if you do the usual balance transfer (have the credit card co. send the check to pay off the other credit card) - the result will be the same - as long as you write a check and pay off that balance;o) For some, this is a BAD idea because they can have a ton of "not really disposable income" setting in their checking account and decide to go on a big Disney vacation rather than pay off the debt. For those who are less disciplined - it would be best to tell the credit card co. that they prefer for them to mail the checks;o)

 

[JulieEck]

I've done balance transfers both ways. The key is to know what, if any, fees there are and to not use the card for anything else until that balance is GONE! I've never had a problem with any of the methods I've used - straight to the credit card, check to credit card or check cashed to me. The problems people will run into is using it for purchases too and then interest adds up because your payments go toward the 0% balance and none to the purchases. Also, there are some offers out there that require you to make a purchase in order to get a low interest deal. Crazy! Just be careful. I do have the Citi Upromise card and now use it for all of my day to day purchases. It gets paid in full every month and they contribute money to my Upromise account. You do have one of those already, don't you? I actually got a large amount of contribution for November because I paid my property taxes using the credit card, then turned around and made a payment to the card from my savings account for my escrow stuff. My tax bill was $1,471 so they contributed $14.71 to my Upromise account! I'm trying to come up with what other monthly bills can I charge to get more!

 

[CajunDixie]

She said, or I could just sent you a check. I said, you mean blank checks to write to the creditors? No, she said, you tell me the amount and then you deposit the check in your personal account and pay them off yourself.

Many people on the creditboards would suggest you get the check made out to yourself and deposit it in your checking for whatever your credit limit is currently. As soon as it clears turn around and send the whole amount back (less for you specifically to pay the small debt) as a payment to your credit card. This supposedly helps your FICO/credit rating because you have used your credit and have kept the utilization low by paying it back quickly. Ideal utilization is keeping balances below 30% of the available credit.

 

[Jen D]

Thanks guys. I just wanted to see if there was some sort of catch I was missing. What threw me is that while the promotion is advertised as 0% balance transfer rate for 12 months you can also basically take the option of a 0% cash advance although they don't describe it as such (the cash advance rate is its usual high amount.) There is no transaction fee or requirement to use the card regularly.

The debt I am moving will be paid off by February, I'm only saving a little bit by moving it to the 0% interest card but hey, any money not paid in interest is money in my pocket. I'm just going to put the Upromise card away until that debt is paid off in February and then I'll use it for the Upromise bonuses.

Thanks for all the input.

 

[Jen D]

Many people on the creditboards would suggest you get the check made out to yourself and deposit it in your checking for whatever your credit limit is currently. As soon as it clears turn around and send the whole amount back (less for you specifically to pay the small debt) as a payment to your credit card. This supposedly helps your FICO/credit rating because you have used your credit and have kept the utilization low by paying it back quickly. Ideal utilization is keeping balances below 30% of the available credit.

Interesting. Thanks for the tip!

 

[disneysteve]

Many people on the creditboards would suggest you get the check made out to yourself and deposit it in your checking for whatever your credit limit is currently. As soon as it clears turn around and send the whole amount back

Even better. Deposit the check in an interest bearing account and keep it there until the payment is due. I used to do this with my AOL Visa every other month until they changed the cash advance rules. I made hundreds of dollars doing nothing more than transferring money back and forth.

 

[Chicago526]

I have a Citibank card with a 0% interest on balance transfers for one year, I just aplied for it and have never used it (haven't activated yet either). The credit limit they gave me is much less than what I want to transfer. If I call Citibank and tell them the amount I want to transfer, do you think they'd raise my limit to accomadate the higher balance? I have good credit so that wouldn't factor in, I wouldn't think.