My credit union is offering a credit card promotion,

  • 2% cash back on balance transfers
  • No balance transfer/cash advance fees

I currently have ~$13k in savings/CDs earning 1%-1.1%. Is there a downside to using ~$10k to:

  1. using the balance transfer to prepay other bills,
  2. immediately paying off the credit card, and
  3. using the money I would use to pay bills to rebuild up savings?

Since I have the liquid assets it seems like free money (at ~2% APY), am I missing something?

  • Be aware that some balance transfer offers really and truly are for paying off balances on other credit cards only and transferring the amount due to your own card, while other transfer offers allow you to pay for other things, including taxes, with "checks" that they send you in the mail. Governmental agencies usually tack on a a fee, usually a few percent of the amount if you pay by credit card, but no fees if you pay by "check". Also, usually, you are charged interest on the cash advance from the day it posts, (in addition to the initial fee which is being waived in the situation here) – Dilip Sarwate Feb 7 '16 at 20:40
  • @DilipSarwate It's a check and they said I could use it for any bill. And I have the cash on hand to pay off the balance immediately. – user1543042 Feb 8 '16 at 17:53
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    The only part I'm suspicious of is "Transfer balances to an MSGCU credit card and get 2% cash back, up to $500 maximum". There's nothing in there about cash advances. If they allow it, deposit the check to your bank and then pay them back immediately to get free money. Citibank did this once (ages ago), and I took advantage of it, and came out ahead. Obviously, their goal is to charge interest on the balance transfer (which would start immediately, no grace period), but it looks like their terms allow you to avoid that. – user1731 Feb 9 '16 at 18:15
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    I agree with barrycarter; there is nothing about getting the 2% for the use of checks, only the balance transfers. So, read the fine print very very carefully. – Dilip Sarwate Feb 9 '16 at 20:16

As long as the fine print permits this, it's a quick 2%. Be careful that your credit score may drop momentarily if you use the credit and for that cycle have high utilization.

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