If you have a credit card, chances are you receive “convenience checks” in the mail from time to time from the associated card issuer. In fact, you probably receive them at least once a month. And though they may be tempting, like “free money,” they are far from it. So before you go cashing those checks, make sure you understand the terms and conditions that apply to their use.
How Convenience Checks Work
Convenience checks can be used like any other check. You can make them out to whoever accepts checks as payment, including merchants, family, friends, or yourself if you wish, to deposit funds into your own checking or savings account.
Checks can be written in any amount up to your total available credit line, and once posted, you will see a charge in your credit card transaction history. If you write a check for more than your credit line there is a good chance the check will bounce and you’ll be penalized with a fee.
Convenience Check Fees and APR
You should also understand that very few convenience checks come with no fee, though many will offer 0% APR for a few months so long as the checks are cashed by the date stated in the offer. The fee these so-called “convenience checks” carry is usually 3%, usually ranging between $5 and $99 which is similar to the cost of a balance transfer fee, though some convenience checks are treated as cash advances, often with APR of 20% or more.
Convenience Checks are Fraudsters Favorites
Beware that convenience checks are also a favorite for fraudsters and criminals, as they require no signature verification, and can be stolen easily out of your mailbox or your trash can if you fail to shred them. And credit card issuers may hold you liable for the use of the checks, unlike credit card fraud, which is mostly covered by the issuer.
Convenience Checks are Convenient for Card Issuers
Credit card issuers send these checks as a means to get consumers to spend more money and pay more interest and associated fees. You’ll likely see a pitch such as, “Use these checks to pay your bills, go on that dream vacation, or to make a down payment on a car!”
But why make those purchases just because you received blank checks in the mail? You already have the same credit available without an associated fee, so why use a convenience check and get nailed for 3% of the transaction plus finance charges if you don’t pay it off before the introductory period expires?
Convenience checks are really only useful in the case of an emergency. Otherwise you’re probably just throwing your money away and getting a raw deal from the credit card issuers. Terms do vary amongst card issuers, so make sure you review the conditions carefully before considering their use.