Balance transfers are a great tool to use in order to pay off large amounts of debt. The intro 0% APR period offered by various balance transfer credit cards such as the Discover it Cash Back card makes it ideal for preventing interest from building up.
Apart from directly transferring debt balances, you can also balance transfer money to your checking account to use as cash. Let’s take a deeper dive into understanding the process as well as looking at the pros and cons of balance transferring from a Discover card to your checking account.
>>Related: How do balance transfer cards work?
How Does a Balance Transfer to a Checking Account Work?
When opening a new balance transfer card, customers typically move debt from previous credit cards to the new one. Sometimes this can be done by writing a check for that debt amount directly to the company. However, under the same logic, you can also write a check for that money amount to your own checking account, as long as the amount is within your credit line. From there, you can pay off the original debt with the funds in your account, and your new debt would be with the balance transfer card company.
>>Related: How do I balance transfer with Discover?
Balance Transfer Check Options
For Discover, you can see if balance transfer checks are viable for you by logging into your Discover account and looking for your balance transfer options. When considering balance transfer check options, you should consider the relationship between APR, initial transfer fees, and the promotion time duration. Typically, 0% APR would correspond with a higher transfer fee and a shorter time duration. If you wanted a longer time duration to pay off your debt, you would typically see a flipped situation: a small APR and 0% transfer fees. The faster you can pay off your debt, the better. However, always be confident that you have enough time in your promotional period; once the promotion ends, your APR will shoot up drastically.
Sometimes Discover, or whoever your credit card company is, will send you physical checks in the mail to use. If you are thinking about using these balance transfer checks for your personal checking account, consider the APR, initial transfer fee, and promotion time period, just like you would online.
Pros and Cons of Checking Account Balance Transfers
The major pros behind using a balance transfer for your checking account are the minimal APR promotional period and the access to immediate cash. By having a balance transfer to your checking account, you have a lot of flexibility to pay off debts or make other purchases. It is also possible to have the balance transfer build up interest for you in a savings account; however, it can be difficult to build up a significant amount before your promotional APR ends and you have to pay back your principal.
The major cons to consider are the high APR post-promotion and the high risks involved. If you fail to make a payment on time, Discover has the ability to revoke your promotional APR, and you could start paying a very high-interest rate immediately! Additionally, if you spend your checking account balance transfer on making purchases rather than paying off debt, you could come out of the promotional period with even more debt and interest to pay off than you did before. Always be wise with managing your payback period within the promotion time frame to prevent these major consequences.
The Important Difference Between Cash Advances and Balance Transfers
Cash advances are another way to move money into your checking account from your credit card. With cash advances, you can actually use your credit line to get cash directly from a bank or an ATM.
However, cash advances are very different from balance transfers because of the higher fees and interest. For example, in the case of the Discover it Cash Back card, you would likely pay a 5% transaction fee in addition to 24.99% APR that starts building the moment you get your cash! Unlike balance transfers, cash advances have no grace period with 0% APR, so if you are looking to transfer money from your credit line to your debit account, be sure to make clear whether you are doing a balance transfer or a cash advance—it can make a huge difference.
>>Related: Can Credit Cards be used at the ATM?
Conclusion
When it comes to balance transfers, Discover often gives you a lot of options to get the money. Transfers to checking accounts are possible, but definitely make sure to weigh the pros and cons in your personal situation. Keep track of your ability to make payments on time, and balance transfers can be a very powerful tool.
To learn more about balance transfer, check out this article where we answered the most popular questions about balance transfer credit cards on Reddit.
Looking to apply for a balance transfer card? See our list of the best balance transfer credit cards.
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