What are convenience checks and should you use them?

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You might be surprised to get a blank check from your credit card company.

These are called convenience checks, and even though they let you easily write a check on your credit limit, you could end up owing more money and compounding your debt. Before using a convenience check, you’ll want to know more about the potential downsides and other factors involved.

What is a convenience check?

A convenience check is a check issued by your credit card company that can replace cash or a credit card. “You use it to withdraw money tied to your available credit limit,” explains Bola SokunbiCertified Financial Education Instructor, Bestselling Author and Founder of Clever Girl Finance.

It’s different from a bank check, which draws money from your bank account. When you use a convenience check, you essentially receive a cash advance from your credit card issuer. But it’s similar in that “you can pretty much use the money for anything,” Sokunbi says.

This includes rent or other situations where you cannot use a credit card. “You can even use a convenience check as a way to pay a credit card with a credit card,” explains Gina McKague, owner and founder of McKague Financial. In most cases, transmitters will not let you pay a card directly with another card, but a convenience check makes this possible. This can get tricky, so be sure to consider each card’s APR as well as other fees and interest rates associated with that transaction.

For example, you will generally pay a higher interest rate for using a convenience check than for carrying a balance on your card. “They usually include either an upfront fee or possibly higher interest rates, and tougher repayment penalties,” McKague says.

Can you order convenience checks from your credit card company?

If your credit card company issues convenience checks, you may receive them in the mail with your statement or as part of a promotional offer. “Other credit card companies will only offer them to cardholders with certain credit levels based on your credit score,” McKague says. “But you can always call the number on the back of your credit card and ask for them.”

If you ask for them, ask if there’s an initiation fee to send them, McKague says. You also want to ask about the fees associated with using checks, beyond the interest rate, says McKague.

Disadvantages of convenience checks

Even with the benefits, using a convenience check can leave you with more debt than you can handle. “If you’re not careful how you use it, you could end up owing a hefty amount of interest,” says Sokunbi.

Although checks make it easier to access your credit, fees and interest rates can add up quickly. The interest rate is “usually much higher than your usual credit card interest rate,” notes Sokunbi. The typical APR for a cash advance can range from 25% to 30%, which is significantly higher than the average interest rate on credit cards. 14.51%.

You will usually pay transaction fees, which are normally about 3% to 4%. Also, convenience checks usually don’t have a grace period between when you use the check and when you pay it back. So while you have a few weeks to pay off your credit card balance before it accrues interest, a convenience check could start charging interest immediately.

Pro tip

If you’re writing a convenience check, make sure you can handle the high fees and interest rates you might incur.

Also, your cash advance limit may be lower than your overall limit for the card. If you are not aware of this restriction, you could exceed it and incur a penalty from your credit card issuer.

Your credit score also comes into play here. “Even though convenience checks don’t directly affect a person’s credit score, using a credit card convenience check could increase your credit utilization rate,” says McKague. A high credit utilization ratio, where you use a lot of the credit available to you, can negatively affect your credit score.

Benefits of Convenience Checks

You can use a convenience check to buy something from a retailer that doesn’t accept credit cards, for example if you’re short on rent. You can also use it to withdraw cash from a bank, with the money coming from your line of credit instead of your bank account.

Sometimes you’ll get a special deal with 0% interest for six months or even a year, McKague says. Keep in mind that at the end of this period, you must pay off your debt immediately or you will accrue interest.

Using one of those checks to pay off a high-interest credit card could save you money in the long run, but only if all factors line up, McKague says. “If you do the math, it might make sense to transfer the balance for that 0% interest rate as long as you know you’re able to pay off the balance within that time frame,” she says.

Are convenience checks safe to use?

If you know the APR and the terms, convenience checks can be written safely, McKague and Sokunbi say. However, there are a few issues to consider:

  • Possibility of identity theft: Many convenience checks do not require a signature. If they end up in the hands of a scammer, they can be used to fraudulently take money from your line of credit. Be sure to write VOID on your unused convenience checks and tear them up.
  • No dispute process: If you make a purchase with a credit card and the retailer turns out to be fraudulent or does not provide the product or service you paid for, you can often dispute the purchase with your credit card issuer. But if you use a convenience check, you’ll need to request a refund directly from the merchant.
  • Penalties for exceeding the limit: If you use a convenience check to withdraw money over your credit limit, you’ll likely incur an overlimit penalty from your credit card issuer.
  • Accepting a convenience check: Accepting a convenience check may not be safe, as the issuer may exceed their credit limit. “So if you’re someone who takes a convenience check, be very careful,” McKague says.

With the pitfalls and costs of convenience checks, it would be wise to only use them when you really have no choice. If you need cash fast, you can also consider getting a low-interest personal loan. If a convenience check is your only option, be sure to pay it off as soon as possible to avoid costly interest charges.

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