Little Trick On Avoiding BT fees

[Jazee]

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@AzCreditGuy wrote:

Ive done this with Cap 1 and actaully had the money deposited into my bank account. They are terrible though the interest starts right away with them

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That is standard. I know if know back that doesn't have that policy with cash advanced. As @Kforce points out if you pay the target card right away you incur a pretty insignificant interest charge.

[Anonymous]

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@Jazee wrote:

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@AzCreditGuy wrote:

Ive done this with Cap 1 and actaully had the money deposited into my bank account. They are terrible though the interest starts right away with them

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That is standard. I know if know back that doesn't have that policy with cash advanced. As @Kforce points out if you pay the target card right away you incur a pretty insignificant interest charge.

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I think what we (most of us!) don't get is what happens next....

You have CC1 with a balance you want to pay

You have CC2 which normally you would use for a BT to pay off CC1 but you do a cash advance instead.   Yes, a few days interest can accrue on CC2 before CC1 is paid off, but then you still have a CA on CC2 getting charged interest on a daily basis.  I guess if the APR for CA on CC2 is less than the normal interest on CC1 this might be a win.

[mgood]

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@Anonymous wrote:  I guess if the APR for CA on CC2 is less than the normal interest on CC1 this might be a win.

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That's what I've done, and what I meant when I said I'd done similar with PenFed. Paying off a higher interest card with a lower interest PenFed card, because they had no cash advance fees.

The slower method without cash advances or BTs would be to put all your spend on the lower interest card while putting all your spare change into paying off the higher interest card. Balance gets "transferred" over time.

[Kforce]

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@Jazee wrote:

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You misunderstood my post 

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Yes I did.

Still don't understand.

Very confused by what you are doing

[Kforce]

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@mgood wrote:

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@Anonymous wrote:  I guess if the APR for CA on CC2 is less than the normal interest on CC1 this might be a win.

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That's what I've done, and what I meant when I said I'd done similar with PenFed. Paying off a higher interest card with a lower interest PenFed card, because they had no cash advance fees.

The slower method without cash advances or BTs would be to put all your spend on the lower interest card while putting all your spare change into paying off the higher interest card. Balance gets "transferred" over time.

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This I understand, why !

[Jazee]

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@Anonymous wrote:

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@Jazee wrote:

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@AzCreditGuy wrote:

Ive done this with Cap 1 and actaully had the money deposited into my bank account. They are terrible though the interest starts right away with them

---

That is standard. I know if know back that doesn't have that policy with cash advanced. As @Kforce points out if you pay the target card right away you incur a pretty insignificant interest charge.

---

I think what we (most of us!) don't get is what happens next....

You have CC1 with a balance you want to pay

You have CC2 which normally you would use for a BT to pay off CC1 but you do a cash advance instead.   Yes, a few days interest can accrue on CC2 before CC1 is paid off, but then you still have a CA on CC2 getting charged interest on a daily basis.  I guess if the APR for CA on CC2 is less than the normal interest on CC1 this might be a win.

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Yes that is how a balance transfer always works whether you do a direct BT card to card and pay the BT fee or you do a cash advance on the target card you want to transfer to and just pay the other card manually with the cash. The key is the majority of banks also charge a cash advance fee so I'm that case this strategy doesn't work but some banks have a balance transfer fee but no cash advance fee. USAA is one example. 

[Spotsy]

I think the OP should mention the 'trick' is useful if you need to transfer a balance from a card, lets say a Synchrony card, that has an soon expiring promo purchase and the balance is going to back charge/accrue interest from date-of-purchase , you haven't paid it off in full, AND only need a few more months to pay it off....I can see this 'trick' being of use.  The interest rate on cash advances is so much higher then a BT rate with a fee...the 'trick' only makes sense in specific scenarios....not as a governing principal to avoid a BT fee. 

Even if the cash advance rate is only 18%, but a BT fee is 4% with the BT rate at 0% to 5%...it only benefits you use the 'trick' in a scenario mentioned above...else pay the BT fee and BT to the lower rate and keep paying it down asap. Overall this 'trick' is only useful for BTs that you simply need a couple to 4 months of the cash....definitely not long term. Also remember that cash-advances are a red flag to many issuers...may get an AA after the dusts settles.