How They Work

• A balance transfer check works in much the same way as a regular check. You write it out to anyone that you want, and the credit card company pays it. The amount that you write it for is then added to your account balance on your credit card. This can be an easy way to pay off all of your other credit cards and credit accounts. You simply fill out one for each account, mail it to the proper creditor and then all of your balances are transferred to the new card.
  
  

Special Offers

• When transfer checks are offered, credit card companies frequently offer special terms along with them. They tell you that you can transfer all of your balances over to the new card for a very low introductory interest rate. Some credit cards even offer a zero percent interest rate as an incentive. This introductory rate usually has a time limit on it of 12 to 18 months. After that, the balance transfers are charged at the regular credit card interest rate.
  
  

Risks

• While this type of check can be convenient, it also is a bit risky. Since it is so easy to get access to money, you might be tempted to buy things that you do not need. You might transfer the balances from your credit cards over to the new card and then rack up new balances on your old credit cards. This strategy requires some discipline to make it work. Otherwise, you can find yourself deeper in debt and paying much more interest.
  
  

Alternative Uses

• Even though this device is designed to entice you to transfer your balances from other credit cards to a new credit card, you can use them for other purposes as well. You can technically write these checks to anyone, including yourself. For example, you could write a check to yourself and deposit the amount into a high-yield savings account. Then you can withdraw the money before the introductory interest rate changes and pay back the loan. Some people even use these checks to finance large purchases at low interest rates.