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I’ve recently been getting a whole spat of ‘free balance transfer’ and ‘free cash advance’ checks in the mail from my banks and credit cards. These checks are becoming as common as the credit card offers that spawn them, and are an enticement to ‘use it now!’ on your credit card limits.

First Glance

Most of these check advances are identical to your run-of-the-mill checks, doing their best to masquerade as a harmless banking item everyone is already used to. It’s really a good disguise, and it fools a lot of people into thinking that they’re as easy to use as a normal check. Not So!!

It’s true, you can use them everywhere you would normally use a check, there are some differences.

• You can’t use them to pay down another credit card from the same company.
• You can’t use them without incurring some kind of fee for use.
• If you use them for cash advances, THERE IS NO ‘FLOAT’. You start accruing interest as soon as the check is presented. This means you lose the normal 25-30 days of grace with normal credit card use.

The Fine Print

The reason that the banks are pushing these cash advance and balance transfer checks is because they make INSTANT MONEY on these transactions. Normally they get a 3% fee immediately, usually up to a certain amount, or more recently, on the entire balance used.

The trap is that many people don’t take into consideration the fine print about this and transfer balances that, when including this amount, go over their credit limit. The bank is more than happy to go ahead and make the transfer, just as they’re happy to then charge you a ~$35 overlimit fee and change your interest rate to the default rate (for going over the limit).

Before you go out and cash those checks, it’s a GREAT idea to carefully read the fine print on the checks. No two offers are ever quite the same, even from the same bank. Terms change, fees change, and there’s lots of things that can trigger the dreaded Universal Default, so tread carefully.

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