Using credit card checks to pay off another CC?

[Kate and Pete]

DH and I have been working desperately to get out of debt for the past year and a half. So far, we've paid off two cars (about $10000 total) and two credit cards (another 8,000 or so...). However, we STILL have more credit cards to pay off. And while we're doing the "snowball," it just seems like we're having a tough time getting ahead. Last fall I had to replace the engine in my car (4,000) and DH's car needed some work (another 1,500). We have paid all that off, but this summer we had to buy a new lawn mower (riding - $1500) and our dog has to have a brace made for his leg - $800. At this rate, I feel like we're never going to get rid of the rest of our debt. It's so frustrating.

So, to the question - today I got checks from one of my CC companies - interest free for one year, up to $5,500. I could write one check and pay off one of our remaining three cards (which has a 21% interest rate!!) and then work on paying down THAT loan (at 0%). I'd make it a priority to pay off the check first, so I'm not worried about interest on that after a year (and, even so, the interest would only be 13%...).

Does this seem like a good idea?? There's something that's telling me not to do it...but part of me that thinks it might work...any guidance would be great.

 

[tarheel618]

I think so, you have a almost a year of interest free. However, I am sure there is a charge for transferring the balance. Is it possible for you to have the balance paid off in a year?

 

[PatMcDuck]

I have done it. Sometimes they don't like it when you use one card to pay off another, when they are with the same bank. But you can usually write the check to cash, deposit in your own account, then pay off whatever you want after it clears. (maybe I am confusing the restriction with balance transfers, now that I think about it)

We recently up cards for various reasons to about $10,000 and I paid them off by using checks from an AT&T CC. (that I NEVER use). 0% interest for 15 months. Now I am paying that off, about $1000/month now. But at least it is interest free.

 

[jessica52877]

When I first met DH he had over $20,000 in debt and I did this 3 or 4 different times with checks in my name for my cards. Yes, there was a fee but we saved tons with me doing that vs paying the interest on his cards. It took less then 2 years to pay everything off and no interest ever paid. You have to know that you will follow through otherwise it could backfire.

 

[punkin]

Back in the day I used to do this with interest free, fee free transfers all the time. At one point, I think I had over $50K in balance transfers on 0% cards while the money was in high yield savings making a profit.

However, since most cards started charging transfer fees and high yield nowadays is 1%, there is no longer an upside to doing this.

OP, I think if you are disciplined enough to pay this off within the interest free period, you will save significant money. If you are not disciplined, just forget it - you will get in over your head.

 

[DisneyAndRedSox]

This is how I paid off CC debt about 12 years ago. I got from Chase 2.9% for the life of the transfer plus transfer fee. I broke even on the transfer fee on the first month since I was paying little interest. Best thing I ever did!

 

[MrsPete]

DH and I have been working desperately to get out of debt for the past year and a half. So far, we've paid off two cars (about $10000 total) and two credit cards (another 8,000 or so...). However, we STILL have more credit cards to pay off. And while we're doing the "snowball," it just seems like we're having a tough time getting ahead. Last fall I had to replace the engine in my car (4,000) and DH's car needed some work (another 1,500). We have paid all that off, but this summer we had to buy a new lawn mower (riding - $1500) and our dog has to have a brace made for his leg - $800. At this rate, I feel like we're never going to get rid of the rest of our debt. It's so frustrating.

So, to the question - today I got checks from one of my CC companies - interest free for one year, up to $5,500. I could write one check and pay off one of our remaining three cards (which has a 21% interest rate!!) and then work on paying down THAT loan (at 0%). I'd make it a priority to pay off the check first, so I'm not worried about interest on that after a year (and, even so, the interest would only be 13%...).

Does this seem like a good idea?? There's something that's telling me not to do it...but part of me that thinks it might work...any guidance would be great.

I was ready to say no -- there's no point in moving debt from one place to another. 'Til I read that you're paying 21% on the card in question. Two questions I'd ask:

1. Once the grace period ends, what is the interest rate for the new card? Be sure it's not more than 21%. I know, I know, you're going to pay it off before the grace period ends -- but that's what everyone expects to do, but that's the company's game: Enough people don't manage to do this that it's worthwhile to them.
2. Is there a transfer fee? That could wipe out any savings.

 

[disneychrista]

Be carefull most of the time the "checks" will a high fee to use. The "transfer" might be interest free, but you have to pay a fee to use them.

 

[mantaz]

I have never seen a check with a fee. Now if you write the check to yourself and put it in the bank, it's different than doing a transfer. The interest starts immediately on cash and usually 0% on transfers with a 3-4% transfer fee. Look at the fee total versus what you are currently paying in interest. I think transferring in a good idea. It will save you money in the long run.

 

[arihillfarm]

At 21% interest on the other card, I would have done it yesterday, then ditched (ie, closed) that 21% interest account once it was paid off. Just check the fee for the balance transfer (most are around 3% of the total transferred) and that the regular interest rate doesn't accrue for the 12 months that you have 0% interest on the entire balance if it's not paid in full by the end of the promotional period. In other words, you should only be hit with the 13% interest on any amount remaining when the 12 months are up, not the entire amount transferred.

-Astrid

 

[dhardawa]

Does the credit card that sent you the checks have a balance on it already? If so, make sure when you are paying toward it, it is going against what you want. My sister did this once and everything she paid went toward the 0% interest charge so the regular balance was sitting there building up huge interest and she couldn't put a penny toward the regular balance until the 0% interest one was paid in full.

Also, make sure they don't view the checks like a cash advance and charge you cash advance fees and interest.

 

[Green Tea]

I have never seen a check with a fee. Now if you write the check to yourself and put it in the bank, it's different than doing a transfer. The interest starts immediately on cash and usually 0% on transfers with a 3-4% transfer fee. Look at the fee total versus what you are currently paying in interest. I think transferring in a good idea. It will save you money in the long run.

Bank of America checks always have a 3% fee, I think.

 

[Kate and Pete]

Thank you all! When I get home, I'm going to check about fees and such. If there are no (major) fees, it sounds like this might be a viable idea! (Oh, and thanks for the hint about paying it off and what balance the $ goes to...I will have to check on that, too...)

 

[mantaz]

Bank of America checks always have a 3% fee, I think.

Ahhh, another reason why I don't like Bank of America. They are always out to get your money one way or the other. I haven't had an account with them since they took over Nations Bank over 10 years ago.

 

[jgates]

I get them in the mail all the time. Don't just slam BOA - Chase, Frontier CC (that's a different company too), Elan, etc., all have a 3% fee & I have seen 4% on some of them - the better the longer term then the higher the % of original transaction.

I have done it at times. I still have one with about $3800 on it from extra college money we needed. But it was around $16,500 so it's great now & will be paid off this fall.

Just check that fee - if it is around 3%, then you are still way better off than the other CC's. Make sure you are still paying at LEAST as much as you are on the other three cards towards this card so you know you are definitely gaining ground.

 

[VeeHam]

OP, if the transfer fee is less than the interest you would have paid (at 21%) then it might be a good idea. Also, do you guys have any savings? If you stashed away a couple thousand, when something happens, you'll have some cash there to cover it and not have to use a card. DH and I have been doing a form of Dave Ramsey teachings and it is helping us a lot.