Sounds good, right? Unfortunately, the devil is in the details when it comes to balance transfers or “convenience” checks. While having the ability to write yourself a check for any amount might sound ideal, doing so means taking on more debt. Worse, balance transfer checks tend to tack on fees that make borrowing this money especially expensive. Keep reading to learn more about how they work and the pitfalls to avoid. [This article was first published on The Simple Dollar in 2020. It was updated in March 2022.] However, if you read all the details, you might find a nasty surprise. Where some balance transfers may be fee-free, others charge a balance transfer fee of up to 5% of your transferred balance upfront. If you write yourself a check for $5,000, for example, you’ll owe up to an additional $250 on top of the money you borrowed. In certain cases, the checks you’ll receive in the mail don’t come with a 0% APR offer at all. They may be disguised as helpful balance transfers or convenience checks, but they may actually just represent a cash advance. If you read the fine print on the offer, you may find you’re required to pay a cash advance fee of up to 5% to use your checks, and then pay a higher interest rate to boot. Worse, credit card checks meant for a cash advance don’t offer a grace period at all. If that’s the case, interest will begin accruing on your balance the moment you deposit the check in your account. “Under these promotions, consumers are often charged a fee to transfer a balance or make a purchase with their credit card in order to receive a promotional interest rate on that amount for a set period of time,” writes the CFPB. “While consumers pay no interest or a low-interest rate for balances subject to the promotion, any additional purchases consumers make with the credit card may incur interest charges right away.” This is why it’s crucial to read the fine print on any offer you’re considering. No matter what, you should remember that 0% APR offers won’t last forever and that every dollar you borrow must be repaid. In the case of cash advance checks, you’ll want to figure out exactly how much this loan will cost you. A lot of times, cash advances are incredibly expensive when you factor in upfront fees and ongoing interest charges. Also, consider other loan alternatives that might leave you in a better spot once you factor in all interest charges and fees. In some cases, a personal loan from a bank or credit union might offer a better interest rate and terms. If it’s a 0% balance transfer offer you’re after, you might do better signing up for a new balance transfer credit card with minimal fees and zero-interest for the first year or more. It’s at least worth checking whether the offer you received in the mail is as good as other options out there. As always, you should compare offers, fees, and interest rates to find the best option for your needs.
