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I was assured there would be no fee involved. I'm pretty sure they are sick of me being a deadbeat and doing whatever possible to catch me in a debt trap.
I was assured there would be no fee involved. I'm pretty sure they are sick of me being a deadbeat and doing whatever possible to catch me in a debt trap.
Read the fine prints. I have never ever see a zero fee.
I was assured there would be no fee involved. I'm pretty sure they are sick of me being a deadbeat and doing whatever possible to catch me in a debt trap.
Every one that I have ever got has a page with big box labeled Interest Rate and Fee Information, received with the check. That will tell you what the fee is.
There is another "trick" with these checks. There is a "zero" interest rate for a time, but if you ever use the card, that interest rate is not zero. The next time you get a bill for that card, whatever you pay on it applies to the "zero" rate debt and the other 15% or 18% debt just sits there.
Let's say you take a $10,000 loan out by filling out the blank check.
Then you charge $1,000 to buy something and your rate is 15%.
After four months, if you just paid enough to pay the interest plus $500 of the balance, you would still owe $9,000 of which $1,000 is costing you 15% and $8,000 at 0%. It doesn't matter what you do, you will always owe the $1,000 and always pay 15% on it until you finish paying off the check.
If you have the discipline not to use the card for anything and only use it to pay off 15% or so debt, it can work over the course of a year to save you a few hundred dollars per $10k or so.
Most people don't play the game correctly and the credit card makes their 3% up front plus interest and the 3% from regular charges. Some, maybe a lot, make a late payment and probably have to cough up a bunch of fees and penalties and end the interest break on their money.
I would say that there is no investment that you can make that would make using one these checks worth your while. Even if you had a "zero" interest check that you could write for a million dollars, there would be nothing that would make it worth your while. Even if you could get a stock that paid a safe 7% dividend and stayed in it a year, the possibility of screwing something up makes it not worth doing.
I could see using one of those checks to make a house ready for sale or something of the like.
They must get used a lot because I keep getting them month after month.
There is another "trick" with these checks. There is a "zero" interest rate for a time, but if you ever use the card, that interest rate is not zero. The next time you get a bill for that card, whatever you pay on it applies to the "zero" rate debt and the other 15% or 18% debt just sits there.
Let's say you take a $10,000 loan out by filling out the blank check.
Then you charge $1,000 to buy something and your rate is 15%.
After four months, if you just paid enough to pay the interest plus $500 of the balance, you would still owe $9,000 of which $1,000 is costing you 15% and $8,000 at 0%. It doesn't matter what you do, you will always owe the $1,000 and always pay 15% on it until you finish paying off the check.
If you have the discipline not to use the card for anything and only use it to pay off 15% or so debt, it can work over the course of a year to save you a few hundred dollars per $10k or so.
Most people don't play the game correctly and the credit card makes their 3% up front plus interest and the 3% from regular charges. Some, maybe a lot, make a late payment and probably have to cough up a bunch of fees and penalties and end the interest break on their money.
I would say that there is no investment that you can make that would make using one these checks worth your while. Even if you had a "zero" interest check that you could write for a million dollars, there would be nothing that would make it worth your while. Even if you could get a stock that paid a safe 7% dividend and stayed in it a year, the possibility of screwing something up makes it not worth doing.
I could see using one of those checks to make a house ready for sale or something of the like.
They must get used a lot because I keep getting them month after month.
All of this is correct. Once you cash the check, it will be useless for anything other than servicing the debt. Any new or recurring purchases will incur high APR, and any payments you make will go towards the zero interest balance first. The 18% keeps growing, and you will not be able to pay it off until you pay back the entire loan.
There is also usually a 3% fee that you pay up front. If your check is worth $10,000, you are down $300 before you even start. Also, you may have to zero-out any existing balance to avoid APR being assessed to that as well. The bottom line: These checks are poison pills. DON'T DO IT.
Those checks are not great for all circumstances, but they do sometimes have their uses. I just moved $11,000 from a card with an expiring 0% to another card that I usually never use with 0% until October 2017 and a 2% fee. I could have paid off the balance, but decided to take advantage of the cheap money loan and use the $ in a different way. For me it works and is not a poison pill.
Also, you may have to zero-out any existing balance to avoid APR being assessed to that as well.
Ow! ow! ow! I forgot that. Usually people have an existing balance. The new "zero" percent loan keeps what would have disappeared alive like a money-sucking zombie.
I tend to just use two credit cards for airline miles. The rest have zero balances. ( I like the Lay-Z boy chair in the sky ( whilst I watch the rest of you work your way back to steerage )).
Read the fine prints. I have never ever see a zero fee.
I get them offered occasionally from cards I have a long relationship with. It's zero fee for using the checks and small percentage for balance transfer but with a $60 cap on the transfer fees. It's very cheap money for a short time period. Often they are for 6 months, never for more than a year.
I don't generally use them, but I did use a 2% interest, no fee, 2 year offer one time, because it just happened to work for me at that time. I generally just shred the offers.
You know darn good and well, OP, that the banks aren't making those offers unless they are making money on them. If you have extremely good self-discipline and complete understand the offer and all of its terms, they can sometimes be used to advantage.
I just don't think that there is any place 100% safe to park that money short term that would return enough to make the effort worth your time. Really low interest rates aren't even worth messing around with unless you are dealing in large volume. If you must park 5 million dollars somewhere safe for 6 months, 2% return is better than nothing. Getting 2% on $10,000 for 6 months, isn't worth the cost of gas to drive to the bank. That would be about $50, and there aren't many places right now to earn 2% short term that is 100% safe.
If it is not 100% safe, my advice is to never gamble with borrowed money. Never gamble with money that you can't afford to lose.
Last edited by oregonwoodsmoke; 05-10-2016 at 09:54 AM..
I've got credit cards from three banks and they all send me checks every three months or so.
Are you saying you never get these?
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