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Question about a credit card balance transfer..

S

SeductivePig

Senior member
So I have this credit card with a $15,000 credit limit. Right now there's a balance of $7000 on it, at 0% interest.

I'm in no hurry to pay this off as I have other higher interest debt like my student loan - however, the 0% promo rate expires next month.

They just gave me an offer for another 0% balance transfer for 12 months, and even sent me a balance transfer check.

SO my question is, if I do a balance transfer check for $7000 and take it to another checking account, can I use that $7000 to pay off the $7000 whose interest rate is expiring?

I'm wondering if the credit card company would catch onto that; my understanding is that they will take the minimum payment and apply it to the new 0% promo debt, and apply the rest of it to the high interest rate debt. Is that correct?

As far is I know, they have to apply excess payments to the higher interest rate debt per law.
 
crazypraveen said:
So I have this credit card with a $15,000 credit limit. Right now there's a balance of $7000 on it, at 0% interest.

I'm in no hurry to pay this off as I have other higher interest debt like my student loan - however, the 0% promo rate expires next month.

They just gave me an offer for another 0% balance transfer for 12 months, and even sent me a balance transfer check.

SO my question is, if I do a balance transfer check for $7000 and take it to another checking account, can I use that $7000 to pay off the $7000 whose interest rate is expiring?

I'm wondering if the credit card company would catch onto that; my understanding is that they will take the minimum payment and apply it to the new 0% promo debt, and apply the rest of it to the high interest rate debt. Is that correct?

As far is I know, they have to apply excess payments to the higher interest rate debt per law.
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Yes, you can do that. There is a charge though for cashing the check. Something like 5% of total or something. Either way, the CC company is getting cash 😉
 
DesiPower said:
Why don't you call and ask them if they will just transfer-extend the balance?
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I doubt they would do this. Not sure if this is even possible.. but would save me the time of cashing the check.

Zstream said:
Yes, you can do that. There is a charge though for cashing the check. Something like 5% of total or something. Either way, the CC company is getting cash 😉
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Yea, it's 3% for my company. Not worried about that.
 
DesiPower said:
They could as they are getting the money (fees) anyways...
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Makes sense logically, but legally I think what I'm doing is considered illegal.. doubt they would go for it. Unless someone's done it before I'm not willing to risk asking and getting the balance transfer offer rescinded..
 
You'll have to read the fine print and/or call them.
0% promo rates might be for new debt only.
Your work around method might work and would not be illegal.

I would call them to see if they will extend your current account.
They likely will since you could simply cash the check and pay off your balance.

It's like returning merchandise to a store when the price drops.
They give you the credit because its easier than you returning and rebuying.
 
I see what you mean now, it's the same account. I don't know why it would be illegal though since they are charging you a fee. They probably just would not intentionally let you do it.
 
If you have 7k on 0% that's expiring and you take out another 7k to pay that off from the same card.

It will pay off the one you took out last before paying off the original balance.
If you want to do this you'll need to get another card and move it to another company.
 
isekii said:
If you have 7k on 0% that's expiring and you take out another 7k to pay that off from the same card.

It will pay off the one you took out last before paying off the original balance.
If you want to do this you'll need to get another card and move it to another company.
Click to expand...

I found this tidbit on their q&a page:

PAYMENT ALLOCATION: We apply payments and credits at our discretion, including in a manner most favorable or convenient for us. Each billing period, we will generally apply amounts you pay that exceed the minimum payment due to balances with higher APRs before balances with lower APRs as of the date we credit your payment.
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So this would mean they will pay off the 7k that is at a high interest rate first.. after the minimum payment goes to the 7k with 0%. Right?
 
crazypraveen said:
I found this tidbit on their q&a page:



So this would mean they will pay off the 7k that is at a high interest rate first.. after the minimum payment goes to the 7k with 0%. Right?
Click to expand...

The opposite.

What it means is that any payments you make will always be applied to the lowest interest rate items first before the highest. So, all you would actually be doing is getting 7k, then paying the 7k you just got back, being responsible for whatever BT fee (usually 2-5%), and then having to pay back the original 7k, which would by this time be out of the 0%, leaving you with 7k + the BT fee at your regular APR to pay off.

You can test this yourself with a small purchase of an item for $1 or so on a card you have 0% items on. The $1 will continue to cause you to pay interest until all of the rest of the lower interest items are paid off. This is why you never BT to a card that has any sort of balance on it, and you should never use a card after you BT to it (until it is paid off)

Their terminology says "generally," but also that they are always going to screw you to make the most money. I would recommend NOT attempting what you are thinking, and instead open a completely different card with a different company to balance transfer onto
 
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