Scott

First of all, your site is great! I received a blank check from my credit card company that can be used for either cash or purchases. It is a low 3.99 percent rate for life of the loan. The balance on my credit card has a variable 8.99 percent rate. Would I be able to write a check out for the balance on the credit card, deposit it in my checking account, and then turn around and send a personal check to the credit card company for the balance total thus lowering the rate from 8.99 percent to the 3.99 percent? Thanks in advance.

MW

Thanks for your comments about DebtSmart.com! Glad to hear that you like it!

Banks aggressively promote low-rate transfer offers like the 3.99 percent check you received. The reason is because they want you to start using them again. Banks spend a considerable amount of their marketing dollars to get you as a customer, and they need to turn a profit from your activity. If you haven’t used your accounts for a short period, then it’s a sure bet that you will receive decent transfer offers on all your credit card accounts.

In fact, the best transfer offers are typically from your existing credit cards. That’s because you have an established relationship with that bank. New banks vying for your business might present good offers initially; however, they usually include fine-print legalese that release them from delivering on their promises.

The offer you received sounds pretty nice: 3.99 percent for the life of the loan. Most of the time, you should be able to write the check to yourself, deposit to your checking account, and pay out as you please. Read all the fine print in your credit card offer to be sure that there are no catches. For example, it’s common for there to be balance transfer fees associated with this offer. In this case, probably something like 3% of the transfer amount with a $5 minimum and $50 maximum. These fees add to the cost of your transfer, but if you're working with a substantial amount of money, it will be worthwhile.

If there are transfer fees, call the bank and ask if they will waive these fees if you do the transfer by phone. I have had this experience before where phone transfers had no fees. It’s worth the call.

Otherwise, you are in good shape to use that check as you wish. Go ahead and transfer your balance and reduce your rate with other cards with rates greater than 3.99 percent, but sending the check to the same bank won't make sense. That's because you would simply be paying off the balance you just created by depositing the check! The 3.99 percent offer is for the life of the loan. Once you send your personal check payment back to the bank, you will pay off that 3.99 percent balance (owe nothing at 3.99 percent) and be left with your original balance at the original rate, thereby accomplishing nothing but wasting your time.