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TPG reader Christiaan sent me a message on Facebook to ask about cash advances:
“I just got some 0% APR promotional checks from my new Southwest card. Can I use those checks to help me meet the spending requirement for the sign-up bonus?”
There are plenty of credit cards that come with an introductory 0% APR on purchases, including several that earn travel rewards. I think it’s best to avoid carrying a balance whenever possible, but if you’re trying to manage existing credit card debt, these cards can give you some relief from more costly interest charges. That said, there are other 0% APR offers with much less favorable terms, and the ones Christiaan received are a perfect example.
Credit card companies often send out promotional checks that come with a 0% APR, but the deal isn’t as good as it may seem on the surface, especially when it comes to earning rewards. For starters, payments made with these checks are generally processed as balance transfers or cash advances. That means you won’t earn points or miles, and any amount you spend will not count toward meeting the spend requirement for the sign-up bonus.
Even worse, you’ll likely get hit with additional fees. For example, the Southwest Rapid Rewards Premier Credit Card charges at least 5% of the transacted amount for balance transfers and cash advances, as well as a higher interest rate for cash advances. If you need to transfer a balance, you’d be much better off with a card like the Chase Slate, which offers a 0% APR on purchases or balance transfers for 15 months from account opening (after that, 16.99%–25.74% variable APR), and it doesn’t charge a fee when you transfer a balance within the first 60 days.
I get these promotional checks frequently, and I think the best thing to do is run them through the paper shredder. Award travel can be incredibly lucrative, but carrying a balance and incurring additional fees on a rewards credit card will eat into the value of the points and miles you earn. I recommend you think twice about applying for a card if you’re going to have trouble meeting the spending requirement, and think long-term when it comes to managing your finances and credit score.
For more on managing credit and maximizing rewards, check out these posts:
- Avoiding Late Payments and Other Silly Credit Card Mistakes
- Travel Rewards Strategies for People with Low Credit Scores
- Travel Credit Card Resolutions for 2016
The Barclaycard Arrival Plus is one of the best travel credit cards on the market right now because you can use the miles to cover many expenses that traditional miles won’t cover.
- Limited Time Offer: Enjoy 70,000 bonus miles after spending $5,000 on purchases in the first 90 days
- Earn unlimited 2X miles on every purchase
- Book travel your way—no airline, seat or hotel restrictions—and redeem your miles for travel statement credits
- Get 5% miles back to use toward your next redemption, every time you redeem
- No foreign transaction fees
- International Chip and PIN for use at self-service chip terminals around the world
- Miles don't expire as long as your account is open, active and in good standing
- See Rates & Fees