Come ON, folks!

Don't you hate all of the junk mail you get, the mortgage offers, the credit card deals, the credit protection, the convenience checks, and so on? I do, and am seriously considering signing up with Green Dimes at some point, but I have to admit that a part of me will miss getting all of this garbage. Why? Because I get some kind of perverse amusement out of seeing the many creative ways that business - mostly lenders - try to separate you from your money.

Yesterday I went through my pile and sorted out the usual crud, and two pieces caught my eye. One was a batch of convenience checks - those are the checks you can write to anyone and the lender will consider it a cash advance. Most of the time they offer a lower rate either as a limited time teaser or until the balance is paid off, but this one didn't so I set it aside to read further. It was a doozy, too. The letter attached to the checks was all of the usual cheery drivel about how they were kindly offering you the ability to consolidate debt, pay for that much deserved vacation, finish the basement, or whatever you wanted to do.

The first thing I looked for was the transfer fee. In the past, transfer fees have run about 3% but had a maximum of $60-75, regardless of how much you took as an advance. I've been waiting for those maximums to go away and sure enough, this one did not have one. In the past, if you wanted to use a low rate offer and take a cash advance of $5000 to pay off a balance with a higher card, you would paid a maximum of $75 (1.5%), but this advance was $150 (3%). Since transfer/cash advance fees should be considered when figuring out whether to move debt or leave it where it is, an offer without a maximum definitely changes the equation.

In this case, though, it didn't matter because there was no low teaser rate. This cash advance was going to get smacked directly at almost 24% interest from day one. 24%!!! Oh my dear heavens! If your lender charged a 4% minimum payment (hitting you with $200/month more in monthly bills), it would take you 15 years to pay off a $5000 cash advance at 24%, and you'd pay almost another $5000 in interest.

Meanwhile, if you could control yourself for a little while and just set aside $200 in a a puny 2% interest bearing account, you'll have $5000 in a little over two years. Keep going and in that same 15 years that you would have been paying off your silly cash advance debt, you would have a little over $40,000.

Maybe you don't need that vacation so much, and maybe the basement can wait a little bit, eh?