The Imaginary Conveniences of Convenience Checks

May 08, 2008

You can find numerous credit card articles that throw light upon such issues as credit card fees and rates, rewards programs, tips on eliminating debts, improving credit score and wise credit card management. But have you come across much information on convenience checks tied to your credit card account?

Meanwhile, these checks are hidden hefty charges that you are imposed right after you cash them. Convenience checks might seem to be very convenient at first sight. But if you take a closer look, you will find a good number of downsides to using convenience checks. This easy money can turn into a heavy financial problem for you.

A convenience check is nothing more than a regular check (it seems to be at least) with a certain amount of money you can spend after cashing the check. The money will be withdrawn from your credit card account. And that is where the catch is. If you know about cash advances pitfalls and what enormous interest rates and fees you get charged once you take out a cash advance from your credit card, it will be easy for you to understand the idea of convenience checks.

The target audience such checks were designed for are mostly card holders prone to impulse buying and those who badly need cash. But even reasonable credit card users can sometimes fall for provocative alluring sums of $500 or $1,000. But you should better stay strong and resist such a temptation. Otherwise, you will have to pay a high price for such a momentary weakness.

Convenience Checks' Traps

So, you go and cash your convenience check, make some large purchase or use it as a balance transfer. That is the pleasant part about convenience checks. But what happens after will hardly give you any positive emotions or do any good to your financial standing.

However, your credit card statement does not contain the information on your convenience checks rates and fees. You can find out about these charges in your credit card agreement in the fine print, or by contacting your credit card issuer.

Once you cash your check, you get accrued an interest rate of up to 20%. Plus you will be imposed either a 2% flat fee, or will be additionally charged 5% of the check worth. But even if you cash your check consciously thinking that you will pay down your debt with the first payment, you can fall a victim to your credit card company's policy of allocating your monthly payments.

As a rule, creditors use your payment to cover the balance with a lower interest rate in the first place. This can keep your convenience check balance unpaid for quite a long period of time, which will cause a further accumulation of finance charges on the balance.

Besides, if your purchase made with a convenience check is accidentally damaged, stolen or lost, you will not be able to get coverage or ask your credit card company to remove that purchase from your credit card statement. When you use your credit card you are protected by a purchase protection plan.

What is more, convenience checks are an additional treat of credit card fraud. Since checks are sent by mail, they do not require a signature verification, they can become an easy catch for fraudsters. Once crooks get to one of your convenience checks, they can easily use them for making purchases or open a new credit card account.

Sky-high interest rate, no purchase protection and credit card fraud. I believe, this is more than enough to prevent you from cashing your convenience checks.