Convenience Checks - Should You Use Them?

You receive unexpected “convenience” checks in the mail from your credit card company. Should you use them? Read the Fine Print Before using convenience checks you need to look for the following:

• Does it have a fee - such as a 3% to 4% same as cash fee?
• Does it have a higher interest rate? Cash advances have a higher rate.
• Does it go to the higher cash advance interest rate after an introductory period?

How Safe Are They?

Convenience checks do not have the level of protection that a credit card has. Federal Regulation Z limits liability for unauthorized use of a credit card. The $50 limit for unauthorized use does not apply to convenience checks.

It is easier for thieves to steal your checks. However, bankers insist that consumers should not worry about fraud or theft. They say that state and federal laws that cover checks typically include convenience checks, so you are protected from unauthorized transactions. However, the credit card company could accuse you of being negligent with the checks - so be sure to shred them as soon as you receive them, unless you are going to use them.

There’s no formal opt-out program for convenience checks. If you want to stop credit card offers from being mailed to you, you can call 1-888-5 OPT-OUT to remove yourself from the pre-approved credit card mailings. But there is no easy way to stop convenience checks. You can call your credit card companies and ask them to stop sending them. You may find out that they don’t have a way to stop the mailing for an individual customer, or you may find out that they won’t stop for several months because they are printed months in advance of mailing.

When to Use a Convenience Check

• It is better to use a convenience check than a payday loan or loan shark. Hopefully, you will not be in such a situation.
• If it is a balance transfer check that is truly a good offer. Be sure you understand any fees that will apply and what the interest rate is. Some companies make you pay the total transfer fee in your next monthly payment, so you could have a potentially larger bill for one month.

Remember that you can always call your credit card company and ask what the terms are and what offers they have available. You don’t have to have a convenience check to call your card company and transfer a balance.

If you take advantage of a zero percent interest transfer, be sure to check the fine print about purchases. Most offers give you zero percent interest only on the transferred amount and charge you a regular interest rate on purchases. Your payments will be applied to the zero percent interest balance while your purchases accumulate interest. So unless purchases are also zero percent interest, do not use that account for purchases.