The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
Here’s what every cardholder should understand before using credit card convenience checks:
1. Cash advance fees. The easiest way to understand these checks is to realize that they are simply cash advances that do not require cardholders to visit an ATM. Therefore, the cardholder will incur cash advance fees of 3% – 5% with most credit cards.
2. Higher APR for cash advances. Along with the cash advance fees, the balance created by convenience checks is subject to the card’s cash advance APR, which is often in the 20% – 30% range.
3. No grace period. Cardholders who pay their balances in full each month will still incur interest on the amount of any cash advances or convenience checks written. So the high interest rate begins to be accrued the day the check is cashed until the cash advance balance is paid off.
4. Minimum payment amount will not apply. The CARD Act of 2009 requires banks to apply customers’ payments to the balance with the highest interest rate first, but only the portion that is in excess of the minimum payment. So those who make only the minimum payment will continue to accrue the high cash advance interest rate on the value of the checks written.
5. Security risks. These checks do not have all of the federal protections that cardholders enjoy from their normal credit card purchases. Convenience checks can be stolen from your mailbox or trash and can used by thieves. Therefore, unused checks should always be shredded. And finally, cardholders who do not wish to receive convenience checks should contact their card issuer and ask to not have them sent.
Some alternatives to convenience checks
There are several services that cardholders can use to pay people with their credit card without resorting to convenience checks. PayPal allows payments to companies and individuals to be funded with a credit card, but it does charge a fee of just under 3%. Better yet, Amazon Payments also allows $1,000 a month to be sent to individuals without any fees. Recipients can then withdraw their payments to a linked bank account. In addition, Google Wallet recently began offering a similar service with no fees, but you must receive a payment first before you are eligible to make one. Fortunately, a qualifying payment can be as small as a penny to enable this feature.
Paper checks issued against your credit card account can come in handy in a bind, but cardholders should always be aware of the costs involved. By comparing these checks to some of the alternatives, credit card users can make the best decisions when they need to pay a person or business that does not accept credit cards.
Image: Photodisc
April 9, 2024
Credit Cards
October 21, 2020
Credit Cards
August 3, 2020
Credit Cards