"Blank checks" from Chase - what's the catch?

[Anonymous]

I have also used these before.

It's all well and good to say 'ditch these, only use the ones that do BTs for no fee' but the reality is that those no fee BTs are not very common.

It's a pretty straightforward math calculation to decide if this BT with it's fee is worth it to you or not. 

I use an excel spreadsheet to help me make my decision and as stated above, it frequently comes down to how long you will take advantage of the promo rate.  If it's a short time, either because you plan to pay it off or because it's only a 6 month teaser (as many of these are now), that BT fee may not be worthwhile.

On the other hand, if you are going to be able to keep the rate for longer than that, you can make some serious headway on paying down debt that way.  I have some money parked on a Discover Card from a BT (with fee) and I love that every month, only $11 of my payment goes to interest and all the rest to kill that debt!

These can be useful, they can stink - it's all in the math!

[gpie00001]

Thanks everyone for the feedback! These forums are the best. Any-who, just to help make sure I'm thinking correctly, here's a bit more info on my situation. Right now, I have $0 on my Chase card, with an 8.99% rate. I'm looking at building myself a new computer and am looking to spend around $600-700. If I use one of the "0% fixed APR" (that lasts till 10/2009), pay it off before or by 10/2009, then I'm better off than just putting it on the card up front, right? Assuming I pay it back by October, it would be paying the 3% fee, vs my normal 8.99% APR. Anything else I'm forgetting?

[Creditaddict]

sounds about right to me

[GregB]

When you do a 3% fee BT, you owe the BT amount and the 3% fee immediately. If it is actually 0% and the total amount is paid before the end of the promo period, then 3% is the total interest paid.

If you charge the same amount to your card then you have a period before your interest starts to accrue. You then are paying that interest rate on the balance, which is declining as you make payments. You get one to almost two months interest free depending on the cycle date of your card and how many days you have to pay the statement balance. You then pay interest on the remaining balance. I think it will work out to be around 4% total interest paid. A small amount of extra interest that also means you can use the card for normal use.

I've done lots of BTs and it gets to be difficult to justify when paying a BT without a limit.

BTW, I have also had companies charge me a "minimum interest fee" on a zero interest card.

Message Edited by GregB on 04-14-2009 07:12 PM

[Anonymous]

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@Anonymous wrote:

The catch is the BT / Cash Advance fees:  3%.

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I think I said exactly that in my post right above yours. And again I say NOT a "catch".

Message Edited by VEEnVEGAS on 04-15-2009 04:09 PM

[Anonymous]

I only referenced the word "catch" to connect with the language of the OP.  And the BT fee can be a sort of catch if the user does not "catch" the fee in the fine print, only seeing the APR, or if the user is thinking PIF.  The intro/teaser APR is always very prominently displayed....the fee is not.

If PIF or even within a couple months, then use the card as normal purchas, which has no fee.  Then if you PIF, you have the grace period and thus no interest or fee.  If you are going to pay in 2 or possibly 3 months, unless your APR is above 18%, then using the card as a normal purchase is cheaper or as cheap (18% is 1.5% per month on the balance and in 2 months you pay less than 3%).

I do use these checks at times, when I have a warranted purpose, as I stated.  But the rules of credit apply to these checks as they do to any credit use......don't spend because of rates.  Spend on what is within your means, that you can pay off or within the specified time, unless it is a planned credit expense that is budgeted.

Regardless of the rate, fees, etc.  "I want" does not translate into "I should" my opinion anyway. 

Message Edited by txjohn on 04-15-2009 06:16 AM

[Anonymous]

I've done a few BTs (3 in 2 years), and in my enormous experience, many CCCs (including Chase, if I recall correctly) simply add that 3% to your balance, so if you BT $1000, $1000 goes to the other CC, and your Chase card has a balance of $1030.  So they CHARGE that 3% up front, but you don't have to PAY it up front.  Basically, they let you finance it.  But your first payment would wipe out most of it anyway.

But yes, 8.99% APR is only 4.49% for 6 months, which is smaller than 5.99% (the 2.99% promo rate plus 3% transaction fee).

Chase sends these checks to me all the time.  Having recently (6 months ago) completed a BT of $11.5K with Chase which had it's 3% transation fee capped at $99 (at 3.99% for the life of the balance), I ALWAYS look at that part of the checks.  Since that BT, even on my Citibank and BofA cards, I have seen no caps.