Cashing in on Convenience Checks and Their Consequences

When credit card bills make the climb higher and higher each month, though, cardholders may hastily seek a payment alternative. Convenience checks, often temptingly tucked away inside of a consumer's credit card statement, pose an easily accessible yet consequence-bearing substitute. Before seeking a cash advance through handy convenience checks, cardholders should become familiar with the fine print and applicable fees involved with writing out and presenting a convenience check.

Neatly printed in sets of threes with perforations for quick and easy use, convenience checks are linked to one's credit card account, permitting the cardholder to transfer a balance, make purchases or pay taxes or bills.

Downfalls that are not immediately apparent with convenience checks include the lack of a grace period and a pretty much standard charge of two to five percent of the amount borrowed, incurred simply for the privilege of using the service. Interest rates may also hike up to 20 percent, if not more.

Credit card companies provide convenience checks as fast cash advance services for their clients. As quickly as the creditors loan consumers their desired funding, though, the borrowed money begins to collect interest at extremely high rates. Immediately upon purchase or cashing of the check, interest is charged to the account at an often considerably higher rate than normal credit card balances will carry.

This becomes a vicious cycle, whereby the creditors have created a very effective means of making even more money off of their cardholders. The cardholders may have been desperately in need of money immediately, but they'll be paying for it several percentage points more than they might expect. It is very important for those considering convenience check usage to read all of the fine print and terms of service prior to signing or cashing any checks.

For those considering the use of convenience checks, proper research should be done to make oneself aware of any fees and charges to be expected as well as the interest rates one will encounter. If using convenience checks is a necessary evil, be sure to pay off the balance as soon as possible to avoid any additional debt from accumulation of interest. Another thing most cardholders may not know is that credit card companies will often apply consumers' payments to the balance with the lower interest rates, allowing the interest rates on the convenience checks to accrue heftier sums. For any questions that are not easily answered within the literature sent with the checks, consumers should call the issuer and learn about all the terms and fees of using them.

Consumers may also reach difficulties if they purchase an item or incur a charge from a service with which they were not pleased. Many times when shopping with credit cards, cardholders can refuse payments by asking the creditor for a chargeback. Convenience checks usually do not allow this form of buyer protection, unfortunately, making things seem a bit less convenient than one would expect.

Finders Keepers...

Fraud and identity theft may also become problems with convenience check usage if consumers are not especially careful. If a convenience check falls from one's belongings and is found by another, the cardholder's money may be as good as gone. No signature is required to cash convenience checks, making them a ridiculously easy way for a thief to tap into someone's hard-earned cash.

For those who do not intend to use the convenience checks issued by their creditors, shredding the documents should become a routine process. Merely tossing them into the wastebasket opens the door for thieves to take advantage of an unsuspecting credit card user.

So what are the positives to utilizing a convenience check for your financing needs? With the high interest rates, convenience charges and nonexistent grace periods, fast cash is the only apparent advantage. Consumers employing these payment forms should research all the terms thoroughly and should use these checks sparingly if at all.