Moving Funds: Credit Card To Checking Account
In my last post I discussed the errors that credit card companies make. Mistakes typically fall into one of three categories:
- something that should happen doesn’t
- wrong information is generated by software
- the wrong thing happens
But an agent can also be misinformed and tell a customer that something can be done, when it can’t.
One example of this kind of “agent error” happens when a customer is told he can do a “balance transfer” over the phone and that he can transfer funds from his credit card (take out a loan on his credit card) and have those funds deposited into his checking account.
The agent may think this is possible because 1) the term “balance transfer” is now being used for transactions other than just transferring a debt balance from one card to another and 2) balance transfers are conducted over the phone.
But if a customer connects with an ill-informed agent who attempts to do a “balance transfer” of funds into that customer’s checking account then, although the agent will go through all the motions, the money will never transfer. This can have unfortunate consequences.
Thinking that money will be available, the customer may write checks against his checking account only to have them bounce and incur steep insufficient funds charges.
So – if you want to transfer money (essentially take out a loan) from your credit card account and get that money deposited into your checking account, understand that this cannot be transacted through an agent.
If you want to use a “balance transfer” to get funds into your checking account, these are the ways to do it:
- A balance transfer can be transacted with a “convenience” check. Convenience checks are those blank checks your credit card company sends you, from time to time, to induce you to run up debt. In this case the customer needs only to make the convenience check out in his own name and then deposit the check into his checking account.
One caution: call your credit card company and make sure that the convenience check that you are about to make out will apply against the balance transfer segment of your credit card account, or the segment with the lowest interest. (There are always three segments to every account: purchase, cash advance, and balance transfer, and it’s common for each to have a different interest rate.)
- If a convenience check is not available, the customer can request that a “direct” check for the desired amount be made out in his own name. The check will be mailed to him. He can then deposit that check into his checking account. Again, make sure the check is being drawn against the correct segment of your account.
- If the customer has a bank-issued credit card account that is associated or linked to his checking account, as many bank-based credit cards are, one other scenario is possible.
Let’s say the customer has a checking account and credit card with XYZ Bank, and the accounts are linked. He maintains a zero balance on his XYZ card because the interest rate on that account is 18.9%.Let’s say that he has another credit card with the Super Duper Credit Card Company and he is sent a 0% promotional offer on balance transfers. (Cash advances are 24.9%.)
He can get money from that card into his checking account at the 0% balance transfer rate by doing this: He would call Super Duper and do an agent-assisted balance transfer from his Super Duper credit card account into his XYZ credit card account. Then, assuming he has on-line banking with XYZ Bank and can transfer funds around between his linked accounts, he would transfer the CREDIT on his XYZ card to his checking account.
So, if the amount he borrowed from Super Duper were $5,000.00, then he would have a $5,000.00 DEBT on his Super Duper credit card account and a $5,000.00 CREDIT on his XYZ credit card account. Again, that credit could be moved if his accounts at the bank were linked so he would move the $5,000.00 credit into his checking account and achieve the end result he wanted.
The only thing he would have to get straight is this: the transfer payee number he would have to use for the transaction to go through would have to be his ZYZ credit card number, NOT his XYZ checking account number.
Because, no matter what anyone tells you, you cannot do an over-the-phone balance transfer in which you take out a loan against your credit card in order to transfer money from your credit card to your checking account.