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Dear Mr. Biker,

First, I must congratulate you and thank you for all the help you are giving all of us who are being taken advantage of by almost all credit cards out there.

I am having a difficult problem with my wife trying to help see how reliable your information is--and I would like your advice on this "fantastic" offer made to her by the CapitalOne mentioned above and make sure that they aren't trying to "cheat her out of our hard earned money.

This is the offer, my wife may use up to 5 checks they sent, starting with a $2,400.00 and four (4) other blank checks to consolidate higher-interest-rate cards or loans. There is a 3% processing fee for each transfer (max. of $50.00 per transaction). They tell her to use these checks to save with the long-term 2.99% fixed APR today. She wants to use one of these checks to pay off my Orchard Bank account that is approximately $1,400.00. Her current available credit amount she has in her CapitalOne card is approximately $3,000.00. Do you think this is a good idea to consolidate my Orchard Bank account? That's now charging me 19.9% on my purchase balance and 21.9% on a $550.00 cash-out withdrawal I made last year for my business trip?

Please help me enlighten and educate my wife regarding credit cards.

Regards,
Oscar

Oscar,

Thanks so much for your kind words about DebtSmart!

The offer you have will definitely help you save money! However there is a DebtSmart® way to do the transfers.

You mentioned the 3%, but not more than $50, per-transaction fee for each check. To avoid multiple fees you should write the check out to yourself, deposit it into your checking account, and write checks from your checking account to pay off other accounts. I know you only mentioned the Orchard Bank account, but I just wanted to pass along that tip in case you need more cash. You don't want to write two checks and get hit with two fees.

That said, and assuming that the 2.99% fixed means fixed until the balance is paid, then this deal saves you money. Also, be sure that you don't have any balance on the CapitalOne card before you make the transfers. Otherwise your payments would go to the low rate (2.99%) and effectively lock in the other balance at some higher rate.

Here are the details of your savings given the following conditions: 

Note: Don't be late paying CapitalOne! They probably have a penalty rate for being late that is worse than Orchard Bank's current rate!

Regards, 
Scott

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