For years credit-card issuers have used low teaser rates to entice you to apply for a new card, hoping you'll keep it after the rate jumps into double digits.
Now some consumers are turning the tables, using the card offers to write themselves cheap short-term personal loans and then paying them off before the rate rises.Earlier this year Margaret and Kenneth Williams of West Melbourne, Fla., used cash advances and balance transfers to obtain $45,000 in teaser-rate "loans" to buy shares in a family business. Introductory rates on their new cards ranged from 5.7 percent to 7.9 percent, and most of the cards charged an additional $20 to $25 for the cash advance. That's a far cry from the average 15.9 percent banks were charging this fall for unsecured personal loans.
To use this strategy successfully, consider the teaser-rate period, typically six months to a year, a self-imposed deadline for repaying the loan. If you're not confident you can pay off the loan in time, you should probably borrow elsewhere, because after the teaser period the rate can double.
Also, look for a bank that caps its cash-advance fees. The Wil-liam-ses were unpleasantly surprised by the high cash-advance fee they were charged by Barnett Bank - 2.5 percent of the advance, with no cap. One fee came to $237 for a $9,500 advance. When the Williamses complained, Barnett reduced the charge to about $100.
Some banks are more borrower-friendly. Mellon Bank, at (800) 753-7011, offers a six-month teaser rate of 5.9 percent and charges 2 percent, with a maximum of $20, for cash advances. First of America Bank, at (800) 423-3883, offers a 9.8 percent introductory rate for six months and caps fees at $20.
You may be able to avoid a fee entirely by using a balance transfer, for which there's often no charge, instead of a cash advance or a convenience check.
Start with an existing card on which you have no balance. When you're filling out the new credit application, request a balance transfer to "pay off" the existing card.
Since you don't actually have a balance, the amount you borrow will show up on the existing account as a credit, which you can ask to have paid to you by check.
Using that strategy, for example, you could access First USA Bank at (800) 347-7887 and use its 5.9 percent teaser rate up to your credit limit through a free balance transfer.