Personal Finance Advice

Convenience checks are checks that are issued by credit card companies for accountholders to use as a method of accessing funds from the revolving credit line attached to the credit card.  You can request these checks to be sent to you by your credit card company, but oftentimes these checks are sent to you without you requesting them at all.  You might open your mailbox and find a letter from your credit card company congratulating you on your prompt payments or a recent increase in credit limit accompanied by some blank checks that you can use to consolidate debt, access cash or whatever else you want to do with the money.  Some credit card companies attach convenience checks to billing statements regularly in an attempt to get you to use the checks.

They’re called convenience checks because they are supposed to be easy tools to use for accessing cash, but they aren’t without their pitfalls.  Before using a convenience check, make sure you know what the terms and conditions of usage are.

What is the interest rate? Unless the credit card company specifies that the interest rate for the convenience checks is at a special rate, you will probably find that the interest rate for the convenience checks is actually higher than the rate for purchases made with your card.  This is because most credit card companies charge the interest rate for cash advances for these checks.  Keep in mind that some companies charge an even higher interest rate beyond the cash advance fee, so make sure you know what the interest rate is before using a convenience check.

When does the interest rate start? Like cash advances, most credit card companies start charging interest on convenience check purchases the very day they are used.  This means there is no grace period to pay off the balance prior to the statement cycle.  A common exception to this is when the credit card company offers a promotional 0% interest rate for a specified period of time.

Are there additional fees? Make sure there are no additional fees for using the checks.  It may seem like a good idea to use a convenience check for a purchase or to pay a bill, but it becomes a bad idea if you have to pay a costly fee for the convenience of using the check.  You can find out what fees - if any - are charged for convenience checks by reading the Terms and Conditions associated with the account.

Are convenience checks ever a good idea? They can be a great way to do balance transfers, especially when a promotional interest rate will save you a great deal of money in the long run.  Just be sure to have the balance paid off before the promotional interest rate expires or you may find yourself paying more money than you paid before the balance transfer.