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

[gpie00001]

I received a letter from Chase today that said something to the effect of, "Because of your good credit on your Chase Visa card... have some blank checks!" It came with 4 blank checks that can written for amounts up to my CL. Two of them have 0% fixed APR till October, and the other two have a 2.99% fixed APR till April, 2011. There is also a fee of 3% of the amount of each transaction (which I think is the big catch to all of this?).

Has anyone else received this type of letter? Is this something I should avoid using? I have an 8.99% rate with Chase right now - it seems like I could use these on lower priced items and actually save on the interest.

Thanks for any help! 

[Anonymous]

These normally take money from the cash advance limit.  From reading my own fine print, there are several financing fees associated with these "free" checks.  Minimums usualy start at $10 per check and go up from there.  Each check might cost you in excess of $25, plus interest.  Gotta read the fine print.

I would simply use  a regular bank check, and throw these particular checks in the shredder / compost pile.

Dan

Message Edited by gbreadman on 04-14-2009 02:26 AM

[Anonymous]

I used to get these quite often from Wamu and just received some for 0% from Cap One. I've never seen any from Chase, but I can tell you there was never any "catch" to the ones I used. Of course there was a 3% transfer fee, but 3% APR is a great deal!

I just deposited them into my bank account and used them to pay off a higher interest credit card and once so that I could make a loan to a sister for an emergency.  No catch.

[Itsmeagain]

Here's the catch . . . . When you use the check, the amount is considered a Balance Transfer (BT).  IF you carry a balance other than the BT, your subsequent payments will all go toward the BT until it is paid off.  You'll find the details in your credit card agreement.  Something about how the payment will be applied to the lower interest balance before being applied to any higher interest balance.  Ergo, your regular purchase balance will continue to accrue the higher interest until the BT is paid. 

Personally, I have one cc that I keep just for BT's and never put any regular charges on it.

[Anonymous]

---

@Itsmeagain wrote:

Here's the catch . . . . When you use the check, the amount is considered a Balance Transfer (BT).  IF you carry a balance other than the BT, your subsequent payments will all go toward the BT until it is paid off.  You'll find the details in your credit card agreement.  Something about how the payment will be applied to the lower interest balance before being applied to any higher interest balance.  Ergo, your regular purchase balance will continue to accrue the higher interest until the BT is paid. 

Personally, I have one cc that I keep just for BT's and never put any regular charges on it.

---

Of course...but all BTs work that way. I guess I just assumed OP knew that. Guess I shouldn't have, my 45yr old friend didn't understand and got stuck with a couple of thousand behind a really large BT once because she didn't know.

[Anonymous]

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

If you use $1000, you pay $30 fee.  So, even though it is low APR, you get hit with an immediate fee.  If the APR is 2.99% and you pay it off in 1 year, you actually pay 5.99% (2.99 APR plus 3% fee).

Whenever I use checks, I use CapOne or "no fee" checks when I can.  I do use my BoA on occassion who charges the 3%, but I only do this when I have a warranted purpose.

Some cards do not provide cash or bt up to the CL (example:  5000 CL, but only 2000 Cash limit).  In that case, ususally these checks can only be used up to the cash limit....though BT sometimes is an exception.

If you plan to PIF, these are expensive if they carry the fee.  If you are transferring a balance, then it is the norm for fee, and you get to use the low APR.

I suggest using cards that provide no fee BT or advances if you can.  I like my Alliant CU card - No BT fee, no cash advance fees, etc.

[Itsmeagain]

You're absolutely right tx.  I forgot about the 3% - 4% transaction fee.  Good advice from someone who knows.

[itsjustmeibe]

I think the largest catch is the no cap on the fee. They keep dangling me because I have over $20k available credit. (I also owe them $20k on a 2.99 & 3.99 fixed for life). But no cap on $20k is like $600. Ouch!

Message Edited by itsjustmeibe on 04-14-2009 07:16 AM

[Anonymous]

Yep, they want that fee....but they don't want you to drag the pay off out on the teaser APR.  In my opinion, they hope you will take the bait....BT or use the checks....pay the fees, then pay off the balance in a semi short period of time.  If you pay off fairly quick....it was better for the CCC profit than normal purchase merchant discount fees they charge to the seller....with the teaser they got a bigger fee, some interest and then roll it over.

Message Edited by txjohn on 04-14-2009 08:14 AM

[Creditaddict]

even at the 3% fee... moving money from say 15% to 2.99, will take like 8 months to pay back the 3% at the new savings interest rate. you just have to do the math based on how long you feel it will take you to pay off rather it's worth it or not.  If your planning to pay the debt off in less than a year anyway then probably not worth it, but I have done it with a lot of debt and it's been WAY worth it for me!