Should You Use Credit Card “Convenience Checks”?

If you have a credit card account, then you’ve no doubt seen the blank “checks” attached to your monthly statements. They are advertised to make your life easier…obtain fast cash, pay rent, and transfer higher-interest balances.

Let’s Define “Convenience”
As it turns out, these checks are often more convenient for the creditor and identity thieves than they are for you.

When you use convenience checks, your creditor makes a much greater profit than when you simply swipe your card at the store. That’s because:

• The interest rate on convenience check usage is often higher than the rate charged on card purchases.
• The creditor may charge a substantial convenience fee for using the check (up to 5% of the check amount, with no cap).
• There may be no grace period on purchases made with these checks, which means interest charges will be to accrue from the moment you use the check.
• Your creditor may apply your monthly payments first to lower-interest balances (such as card purchases) rather than to the high-interest convenience check charges.

Higher Risks; Less Protection
Traditionally, if you purchase defective merchandise with your credit card and you have no luck returning it to the seller, you may contact your credit card company for relief. However, if you use a convenience check to make the purchase, these protections may not apply.

Convenience checks are also a favorite target of mailbox thieves. Unlike unsolicited credit card offers, you can’t “opt out” of receiving them. Since you never know when the credit card company will send checks, you can’t report them missing when they don’t arrive. Also, for some strange reason, most creditors don’t require a call to activate the checks, and merchants often don’t verify signatures on convenience checks. To make matters worse, the regulations that limit your liability to $50 for use of a lost or stolen credit card do not apply to convenience checks.

So, the bottom line (if you haven’t already guessed) is we recommend that you “inconvenience” yourself by using the ol’ trusty credit card instead.