Using CC purchase checks

Surprising, I couldn't find a thread about this. If I missed it, I apologize.

I just got a set of "purchase checks" from Cap1. The information says that there is "absolutely no transaction fee" and that the checks "are treated as purchases according to the terms and amendments of your Customer Agreement."

Has anyone tried using these? My statement closes on the 28th each month, and payment isn't due until the 23rd. That means that if I write myself a check on 6/29, it'll show up on my 7/28 statement, and I can PIF on 8/23. That's 8 full weeks of interest I could earn. Since I have no plans to AOR anytime soon, this seems like an easy way to score a little extra cash.

Has anyone ever used these checks? Any caveats I should be aware of?

That's exactly what I do with them with one change - I pay the balance in full before the statement actually cuts each cycle, then pull the money out right after. This prevents the utilization from ever showing up on my personal credit reports. If you don't care about the hit on your statement every other month (depending on your utilization and other factors, it may or may not be significant), then your method will be a little easier to manage.

This is actually the first time I've seen this offer from anyone. All the checks I've received from any issuer in the past either had a transaction fee or didn't have any grace period.

This one, right after the part about the checks being treated as purchases, says they "do not qualify for reward programs."

joemama, do you get these often enough that you can do this repeatedly? My checks expire on 8/2 - that's enough time to do two iterations of what you propose. I'm curious if you get these often enough that you can keep this going throughout the year.

xoneinax said: joemama15 said: I pay the balance in full before the statement actually cuts each cycle, then pull the money out right afterCareful with the timing. Capital One puts large payments to a CC account on a invisible hold.
Can you give more detail on that?

I'm trying to understand how this works: if I schedule a payment of $10K to post online on 7/27, will it not actually post on 7/27? Or do you mean that it will post, but my available credit will remain depleted for several days afterward?

Do not assume your "available credit" figure is what it says it is after making a large payment. And the CSR will be clueless as well.

Obama4Prez said: Is Cap1 the only one that does this? I do not recalling see any such offer from Citi/Chase/AMEX.
BofA?

I have a pile of checks from one my cards from them, and I've never been charged any fee for using them. It's worked great for cards with 0% purchases.

Edit: Also noticed that I have some checks for the Discover Business that, if I read it right, post as purchases and earn Cash Back. I've never used them, and am not clear if there are any catches.

sechs said: Edit: Also noticed that I have some checks for the Discover Business that, if I read it right, post as purchases and earn Cash Back. I've never used them, and am not clear if there are any catches.
I've received personal Discover checks that had no fee and posted as purchases. The catch was that they had no grace period, and so started accruing interest as soon as they posted. I don't know if yours have the same terms, but that's something to look for.

Agreed, it sounds like my original plan (waiting for the due date to pay) isn't a good one. I'll do what others have suggested and PIF before statement close. (It sounds as if I can PIF on the close date, which makes sense but inexplicably makes me nervous.)

I guess the exception will be if I find myself without any more checks. This will happen in August if they don't send me more, as this batch expires 8/2. In that case, I may ride a balance of 69% of my CL out to the due date and see how painfully it strikes me. I'm willing to trash my FICO for a month in the name of science.

Capital One purchase checks have been discussed in a number of FWF threads over the years. (There have been more than a few "Capital-One-Sucks-because-they-gave-me-a-tiny-credit-line" threads.)

I've been doing it a couple years with a 15K line, never had a problem. Besides foreign currency purchases, purchase checks are all I have been using my Capital One card for.

They finally stopped sending the checks to me a few months ago, but I don't care right now since I've maxed out my reward checking accounts with other 0% borrowing.

If you aren't applying for credit, don't worry about your FICO falling for a couple months, it will bounce right back. If you are applying for credit, pay it off before your statement date.

I got one of these in the middle of my A0R2.0, and carefully read the T&C. Looked fine, so I deposited one for $18,999 on a CL of $20K. Paid the minimums for about three months then paid off the balance before the 0% rate expired. Worked like a charm for me. GL.

2Cor521

If you get all the timing right, it's an interest free loan for a month or two. If you keep doing this each month, you might earn almost* a whole year's interest on your credit line (almost since you need the money around to pay the bill, wait up to a week for them to release the available credit, etc).

2% interest on a $10K credit line earns you at most $200/year. After taxes on the interest and timing delays, you'd be looking at maybe $125. That's $10 per check deposited - and for that you've got to go to the bank/ATM to deposit the check, check the statement closing date (which CapOne doesn't make particularly clear), make a payment, and then confirm in a few days that the available credit allows you to do this again.

Maybe back when interest rates were 6% this was (a little more) worthwhile, but at today's interest rates I find this isn't worth the trouble.

I had that deal with First USA, probably before 2000. By depositing the checks in a money market fund, I netted anywhere from $5-60 a month (FUSA frequently changed my limit).

xerty I couldn't agree w/ you less. You're going to go drive by your ATM, or stop in the bank at some point. Even if you earn 100 a year with it, it's 100.

ThePessimist said: but I think you're saying that the available credit shown could be completely wrongYes, it is an invisible hold; if you call and talk to a frontline CSR, he is clueless about it as well. Put it this way, a check for 95% of your CL would not clear today. Capital One does not bounce it and assess any fee to you; it just does not clear and the bank you deposited it with will be notified.

I am not sure if a purchase worth 95% of your CL would be automatically declined; had no occasion to try it.

I was considering using these too, and wondering about the rewards. Mine says "May not qualify for rewards."
I was trying to figure out if that means "Will not qualify for rewards." Or "Might not qualify for rewards."

ThePessimist said: This is actually the first time I've seen this offer from anyone. All the checks I've received from any issuer in the past either had a transaction fee or didn't have any grace period.

This one, right after the part about the checks being treated as purchases, says they "do not qualify for reward programs."

joemama, do you get these often enough that you can do this repeatedly? My checks expire on 8/2 - that's enough time to do two iterations of what you propose. I'm curious if you get these often enough that you can keep this going throughout the year.

Certainly, with Cap1, I didn't get any rewards from using my purchase check.

Also, I've been meaning to post: I paid off my first check on the 26th, and then wrote a new check on the 28th which cleared on the 30th. I didn't notice the problem xoneinax mentioned of having an invisible hold, despite the payment being for 96% of the credit line.

I wonder if they handle it differently for Visa Signature cards (since they have no preset spending limit) and for regular cards. After all, even if I'm already at 96% of my "credit access line," a purchase that puts me over should clear anyway.

For the past few months, my Cap1 statements have included purchase checks attached to the top. My latest statement doesn't have one, leaving me thinking the gravy train will end soon.

Are other people still getting these, or is Cap1 scaling back?

peteypablo said: It's available for me online. Don't need the paper check.
Interesting - once you said that I looked around on the site. I hadn't noticed the "no hassle check" option on the BT screen. How long does that take to get once you request it? Since I PIF before the statement closes and then deposit a new check, a week's delay means losing almost 25% of the profit from this strategy.

As it happens, after I wrote that note Cap1 sent me a whole booklet of purchase checks good through early October, meaning I'm set for doing the August and September cycles. Even more surprising, I just found out they gave me a CLI from $12.5K to $17.5K, making this strategy 40% more lucrative.

The CLI really surprises me - for a few months now, my statement balances have all been zero, and my only activity has been using purchase checks. I guess the high monthly activity is still enough to trigger their automatic CLI, even if I create no profit for them.

Well, I'm going to run now and deposit another $5,000 purchase check at Alliant...

This was weird. On 8/28, I deposited a $17,000 purchase check at Alliant. Today, I receive a letter from Alliant telling me that the entire amount is on hold because Cap1 sent them a "stop payment" notification. Which is especially odd given that I can see the check posting to my Cap1 account on 9/1.

The Alliant CSR told me that Cap1 hasn't followed up the stop payment notification with a request for the money back, so they'll release the hold on 9/9 if Cap1 hasn't done so by then. They'd release it right away if I got Cap1 to fax them a letter on bank letterhead confirming the check went through, but I think it's unwise to bring this to the attention of any humans at Cap1. The Alliant CSR pointed out that at least I'm still earning interest on the money despite the hold.

Has anyone else ever had this (stop payment notification even though the check posted) happen? I have no idea what could have triggered it, except that this was the first time I've written a purchase check that large.