How to Transfer a Credit Card Line of Credit to a CD

By Contributing Writer

  • Overview

    A credit card line of credit is the amount of money a credit card issuer is willing to extend to the account holder. Occasionally, this bank will send the customer checks that work as any regular bank account check would. Instead of being linked to a checking account, the money from the checks will be deducted from your line of credit. These checks can be used to transfer a credit card line of credit to a CD.
    • Step 1

      Research CD rates. The interest rate on a CD will almost always be lower than what the credit card is charging unless there is a special interest rate available. Thus, it is important to earn a high interest on the CD to minimize any loss from transferring a credit card line of credit to a CD.
    • Step 2

      Read the terms of the credit card regarding cash advances or credit card issued checks. There may be an upfront fee in addition to interest charged. This upfront fee is commonly 3 percent, and it may further make the transfer not a good option. Cash Advances may be limited to a certain amount of the overall line of credit which would limit the amount that can be transferred to a CD with this method.

    • Step 3

      Open a CD account to transfer your line of credit into. Some banks allow you to have just a CD account. Others will require another account like a savings account. Either way, you will be required to fill out some legally required paperwork.
    • Step 4

      Write the credit card check for the amount of the credit card line transfer. You could also request a cash advance through the bank with the CD account.
    • Step 5

      Some institutions will not allow you to write a credit card check or take a cash advance directly into your CD. If this is the case, deposit the funds into another account like a checking or savings account. You can then transfer the funds from there to the CD.
    • Skill: Moderate
    • Tip: Transferring a debt line to an interest-earning account only makes sense if the interest rate being earned exceeds the rate being paid. This will usually only happen during a special offer of some sort.
    • Warning:
    • Upfront fees are common for both cash advances and credit card checks. Be sure to include the fee in your decision making process when determining if this strategy makes any sense for you.

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