Finance & Loans

Should you use convenience checks from your credit card company?

Just before holidays you may have noticed that credit card companies have increased their activities to entice you to use their card. One such tactic is convenience checks that promise no interest for a certain period of time or ask you to treat yourself with one of their checks. Be aware of these convenience checks. They are full of hidden fees.

Almost all these convenience checks have an associated transaction fee. It could be 3 to 5 percent of the amount you use. These are onetime fees.

Your no interest privilege may be 10 to 12 months. If you exceed the time to repay the amount, they may start to charge interest on the original amount until you pay off the balance. Keep in mind that they are cash advances and therefore, subject to a higher interest rate. Interest can be from the date your check was cashed.

If you already have a balance on your credit card that you are paying, consider this. The credit card company will first take the minimum payment due on your existing balance first and then apply any amount over the minimum to the new convenience check debt balance. This may cause you to exceed the time limit and puts you into higher interest rate.