What are Balance Transfer Checks?
Balance transfer checks are a type of convenience check that is offered by credit card companies. They are checks that you can use to transfer balances from other credit cards or loans to your new credit card account. You can use them to pay off high-interest credit card debt, consolidate multiple credit card balances, or to pay off other types of loans with higher interest rates.
Balance transfer checks typically have a lower interest rate than your current credit card, often with a promotional period of 12 to 18 months where the interest rate is 0% or very low. This means that you won't have to pay interest on your transferred balance during this promotional period. After the promotional period ends, the interest rate on the transferred balance will typically increase to the standard rate for the credit card.
How do Balance Transfer Checks work?
Using balance transfer checks is fairly straightforward. Once you receive the checks, you can use them to pay off your existing credit card balances or loans. You simply fill out the check for the amount you want to transfer, and then send it to the company that issued the check. The company will then process the check and transfer the balance to your new credit card account.
It's important to remember that balance transfer checks usually come with a balance transfer fee, which is a percentage of the amount being transferred. This fee can range from 3% to 5% of the transferred balance. So, if you're transferring a balance of $10,000, you could be charged a balance transfer fee of $300 to $500.
Also, it's important to read the terms and conditions carefully before using balance transfer checks. Make sure you understand the promotional period, the interest rate after the promotional period ends, and any other fees associated with the credit card. You should also make sure you can afford to make the minimum monthly payments on the transferred balance to avoid any penalty fees or charges.
Advantages of Balance Transfer Checks
There are several advantages to using balance transfer checks to pay off your credit card debt. Here are a few:
Lower Interest Rates: Balance transfer checks usually come with lower interest rates than your current credit card, which means you'll pay less interest on your transferred balance.
Consolidate Debt: You can use balance transfer checks to consolidate multiple credit card balances or other types of loans into one monthly payment. This can make it easier to manage your debt and reduce the stress of multiple payments.
Save Money: Using balance transfer checks can save you money in the long run by reducing the amount of interest you pay on your debt.
Disadvantages of Balance Transfer Checks
While there are advantages to using balance transfer checks, there are also some disadvantages to consider. Here are a few:
Balance Transfer Fees: As mentioned earlier, balance transfer checks come with a balance transfer fee, which can be costly.
Credit Score: Opening a new credit card account and transferring a balance can have an impact on your credit score. It's important to consider this before using balance transfer checks.
Limited Time Offer: The promotional period for balance transfer checks is usually limited to 12 to 18 months. After this period, the interest rate on your transferred balance will increase to the standard rate for the credit card.
Here are a few credit cards that are known for their balance transfer offers:
Citi Simplicity® Card
Take advantage of a 0% intro rate on credit card purchases and balance transfers when you open an account. Plus, enjoy no late fees, no penalty rate, and no annual fee - ever. 0% Intro APR for 12 months on purchases from the date of account opening. After that, the variable APR will be 18.99% - 29.74%, based on your creditworthiness. 0% Intro APR for 21 months on balance transfers from the date of first transfer. After that, the variable APR will be 18.99% - 29.74%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
Discover it® Balance Transfer
0% Intro APR† for 15 months on balance transfers and purchases. 3% Intro fee on balances transferred by September 10, 2023. Then 16.99% to 27.99% Standard Variable Purchase APR and up to 5% fee for future balance transfers will apply.
American Express EveryDay® Credit Card
0% intro APR on purchases and balance transfers for 15 months from the date of account opening, then a variable APR, 17.99% to 28.99%.
In conclusion, understanding balance transfer checks is crucial for anyone looking to reduce their credit card debt and save money on interest charges. While balance transfer checks can offer several benefits, including lower interest rates and debt consolidation, it's essential to consider the potential drawbacks, such as fees and temporary low-interest rates. Before using a balance transfer check, be sure to read the fine print, understand all of the fees, and make sure you can manage the payments on the new credit card. With careful planning and consideration, a balance transfer check can be a useful tool for improving your financial situation.