If you have a credit card, you probably receive credit card balance transfer offers in the mail from time to time in what look like personal checks. People usually do one of three things with these blank checks: they automatically toss them in the trash, they use the checks without looking at the terms, or they use the checks after careful consideration. Balance transfer checks, one of the options available when you want to do a balance transfer, can benefit you, but typically only if you are in the third group.
You first need to make sure you are using a balance transfer check instead of a cash advance check with this particular type of credit card balance transfer offer. Although the checks look alike, they are for very different needs and come with different terms. Tip: balance transfer terms are more favorable.
People generally use cash advance checks when they need immediate cash. Using one of these checks is similar to taking out a payday loan: you pay a lot of money for getting fast cash. People use balance transfer checks to transfer credit card debt they have on a high-interest credit card to a card with terms that are more favorable.
Cash advance checks usually come with a higher interest rate than what you are already paying on your credit card, and the interest starts accruing from the day you take out the cash advance. This differs from when you use your credit card. In that case, you get a month’s grace period before interest starts accumulating. In addition, your credit card issuer might charge you an upfront fee, usually a certain percentage of the amount of the check you write. Cash advance checks are not about getting you a better deal; they are about providing emergency cash.
Balance transfer checks are different. They offer better terms than your old card so that you will transfer the balance. It’s important to check the balance transfer check terms to ensure you will be getting a better deal. There are typically fees involved when you use a balance transfer check that could be 3 percent to 5 percent of the transfer amount. The interest rate, however, should be significantly lower for a certain introductory period, such as 12 months. The interest rate on some balance transfer checks could be as low as 0 percent APR for a limited time, which would be no shorter than 6 months and could be up to 18 months, occasionally even longer.
Credit card balance transfer offers, such as balance transfer checks, provide convenience. You simply need to use them. But you might not be getting the best deal out there. For that, you need to shop around. Credit card issuers usually offer better deals to new customers in the hopes of landing a new, loyal customer. If you are already a customer, you might get a good deal offer, but it might not be the best deal out there. Search the balance transfer credit cards on offer if you have the time to ensure you get the best deal.
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