Is anyone familiar with the new Credit card laws?

On paper it does seem to work. Do you have the available limit? You just know there's a catch in there somewhere.

You may want to wait several weeks after you deposit that promotional check into your bank account before you send the payment to the credit card company. I've heard of banks not honoring those credit card checks, claiming they were sent in error or expired. I'm sure the bank also has the right to withdraw the special promotion instead of honoring the promotional check.

Does your account have variable interest rate balances on it? If you have had the card a long time, then you may have some balance there at a lower interest rate, I don't know. If so, you pay the lowest first and leave the high rate balances on the card. That doesn't help you any.

It is highly unlikely that your interest rate has GONE DOWN since you opened the account.

You fail to say what the "new promotional rate" is and how that works. When write a promotional check, you pay the prevailing interest rate PLUS an additional one time charge of an extra 4% to get the cash. So they're going to charge you a $416 fee just to "loan" you the money.

What is the interest rate quoted on the promotional check? You don't mention that.

You haven't provided enough information to make a determination. Credit card companies always stack the deck in their favor. So without even having all the information I'm guessing you will lose money doing this.

But it is not illegal.

Can't answer your specific question without knowing which card issuer is concerned.

But assuming you're in UK then there's a new 'hierarchy of payments' being introduced but not until early 2011 in full. Some card issuers are introducing it early. As you suggest, the debt with the highest interest rate will be paid off first. At the moment you need to check the terms and conditions of your particular card issuer - usually on their web site.

Most card issuers at present use any payments to reduce the lowest rate debt eg. 0% balance transfers, which acts as a disincentive to use your card for purchases - because you'll then be charged interest on those purchases whilst all your payments go to pay off the 0% rate debt.

So, in theory your plan might work (but check the terms and conditions - card issuers aren't stupid) though a transfer to another card might be the better option (and lower charge than 4%).

You cannot use a promotional check to pay off an existing balance at the same bank. You could do what you want by depositing the promotional check in a checking account and using a check from the checking account to pay off the credit card's non-promotional balance.