What Are Balance Transfer Checks?

By Christine Lehman

  • Overview

    What Are Balance Transfer Checks?
    While many people attempt to pay off their credit card balances monthly, some are finding it increasingly difficult to do so. High interest payments and late fees can make an already high credit card balance grow even higher. Occasionally, balance transfer checks can be used to reduce monthly payments and make paying off a credit card balance easier.
  • Function

    Balance transfer checks are those blank checks that arrive in the mail with credit card offers. You can make them out to whomever you want to, either to make purchases or to pay off credit card debt. When using them to do a balance transfer, you simply use them to pay off your credit card balance from your old card. The amount of the check you write to pay off the old credit card balance will become your new balance on your new credit card.
  • Benefits

    Usually the balances incurred by using a balance transfer check will be much lower than the interest you are paying on your current credit card. Often times these companies offer a zero percent APR for a specified amount of time (usually from six months to one year). Using balance transfer checks, therefore, is a great way to lower your minimum monthly payment on your credit card debt.

  • Considerations

    You may or may not qualify to use balance transfer checks. They are generally reserved for individuals with a fair to good credit score. It is a good idea to call around to see whether you are qualified to use the checks before you begin to spend them.
  • Costs

    Credit cards offer these incentives to switch to their cards in the hopes you will not switch cards before the grace period has ended. This usually means you begin paying them hefty interest within a year or so of the balance transfer. There are often transaction fees associated with a balance transfer. These can be up to five percent of the balance transfer, although some companies cap these at a certain amount. These fees will usually appear on your first statement.
  • Prevention/Solution

    To reduce the amount of time you pay on your credit cards, always pay more than the minimum balance, even if it is only slightly more. By doing this, you will avoid paying interest on those few dollars per month, which can eventually add up.
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