Credit card companies sometimes issue blank money order checks to allow their customers to transfer amounts owed on rival credit cards to their accounts. Wire checks can help you pay off your credit card debt, but they don't always offer the same benefits as wire credit cards.
However, not all credit card issuers offer balance transfer checks. For example, if you want a bank transfer check from Chase Credit, you can apply online or by phone. However, if you want to transfer funds from Capital One, you're out of luck.
Let's take a closer look at how balance transfer checks work, how to apply, and whether it's a good idea to use them to pay off debt.
How does referral checking work? A balance transfer check works like a balance transfer credit card. Both allow you to transfer funds from one credit account to another. In either case, you cannot transfer more than your prepaid debit card limit.
This means that the funds you transfer to a credit card cannot exceed the total credit limit on that card. Rather than transferring money directly online, write a credit card check so you can withdraw the balance from another card.
Consider this example: Credit card A comes with a free balance transfer check. You decide to use one of the balance transfer checks to pay off your current credit card balance of $1,000 on Credit Card B.
You take a balance transfer check for $1,000 and use it to pay Card B. The gist is that Card B's balance is cleared - but Card A's balance has increased by $1,000 (plus any associated account transfer fees) because you just borrowed $1,000 from Card A using a balance transfer check to pay off Card B.
Here's how a balance transfer check can help you consolidate debt and manage your credit card balance. If credit card A offers a lower interest rate than credit card B, transferring the balance to credit card A can save you a lot on interest charges.
Take the time to do the math with our credit card balance transfer calculator to determine how long it will take you to pay off your debt.
Considerations Before Using a Balance Remittance Check Bank transfer checks and bank transfer credit cards usually have bank transfer fees associated with them. This means you pay a fee for each transferred balance, usually as a percentage of the transferred balance.
Most money transfer credit cards charge a 3% to 5% fee, which means you'll be charged $30 to $50 for every $1,000 you transfer. Balance transfer fees can be much higher for balance transfer checks than for balance transfer cards, so be sure to check the fees section of your credit card agreement before using it.
Another reason to read the fine print before using a balance transfer check is to find out your APR on a balance transfer and see if you can benefit from the introductory APR promotion.
While the best bank transfer credit cards offer 0% APR on bank transfers for a year or more, not all bank transfer checks offer the same benefits. If your balance transfer check does not include the 0% APR induction period, you will begin paying interest immediately after the balance transfer.
You should also make sure it's a balance transfer check and not a convenience check that you can use to get cash from your credit card. While you can use cash advances to pay off credit card debt, convenience checks often come with high APRs and substantial cash advance fees. Knowing the difference between a balance transfer check and a convenience check can help you avoid costly mistakes.
Which issuers offer balance transfer checks? Each credit card issuer has its own method of issuing wire checks. Some credit card issuers, such as B. Citi may pre-send wire checks to eligible cardholders.
Other issuers may allow you to request a wire check. For example, if you want a Chase credit card debit check, you can request a check online or by phone. Bank of America offers wire checks, but they seem to treat them the same way they would treat cash advances.
In some cases, issuers may not offer balance remittance checks at all. Neither Capital One nor American Express currently offer checks for funds transfers, although both issuers continue to allow cardholders to make online funds transfers.
If you are interested in receiving balance transfer checks, it is best to contact your card issuer to confirm that these checks are currently offered and to see if you are eligible.
Is using a balance transfer check right for you?
If your balance transfer checking offers benefits comparable to today's best balance transfer credit cards, it might be a good idea to use it to consolidate debt and pay off old balances.
On the other hand, bank transfer checks with high bank transfer fees and a high APR are rarely the best option—especially since you likely have many bank transfer credit cards that offer lower fees and better terms.
Alternatives to Balance Transfers
Balance transfer checks aren't the only way you can pay off your credit card debt. If you are not interested in paying off your debt using a wire check or prepaid card, you may want to consider other popular debt settlement methods such as:
B. The Snowball Method or Avalanche Method. You can also pay off your credit cards with a low-interest personal loan, or work with a credit counselor to learn how to budget, consolidate debt, and more.
Need more debt advice? Use Bankrate's credit card debt resources to discover tools to help you manage your debt, including our debt repayment calculator, advice on whether to seek debt settlement, and tips on how to repair your credit.