Should You Cash that Credit Card Check You Received in the Mail?

No matter how meticulously you plan your expenses, once in a while you may find yourself short of funds as you near the end of the month. In such circumstances, it is quite natural to look for means to make up the shortfall. In fact, this is exactly when you may be tempted to use the convenience checks that you find in the mail.

Most credit card issuers send their customers blank checks in the mail. These can usually be used for any purpose – transferring a balance from one card to another, making a purchase, or even depositing money into your bank account. However, before you take advantage of these offers, there are a few issues that you must clear up with your issuer or you may find that you’ve lost, and not gained, from the transaction. 

The first thing that you need to know is that credit card checks make sense only if you are using them to transfer a balance from an account that has a higher interest rate and more adverse terms. For example, convenience checks often come with 0% APR offers for a limited time. You can take advantage of these if you are sure that you’ll be able to pay back the money before the promotional period expires. Otherwise, you might find that once the introductory period is over, you are charged interest on the full balance – and right from the beginning!

Many consumers are attracted by the 0% APRs offered by convenience checks and believe that they apply to purchases and cash deposits too. However, this is where you need to be careful. For all you know, the 0% interest rate may be applicable only for balance transfers. The issuer may consider any other transaction as a cash advance and apply a 20% or higher APR, along with a fee of 4% or 5% of the amount that’s borrowed.

Another thing to keep in mind is the balance transfer fee. Issuers usually charge 3% - 5% of the amount transferred or $5 - $10, whichever is higher. So, if you’re planning to transfer about $10,000, you may have to shell out as much as $500 in balance transfer fees. You should also be aware that most banks do not allow consumers to transfer balances from one account to another if both those accounts are with the same organization.

Whenever you use a convenience check, the amount (along with any fees) is added to your credit card balance. Thus, you first must make sure that you have enough credit. If you go over your credit limit, you could be charged penalty fees and may even trigger the penalty interest rate.

You also need to be aware of the expiration date for such offers. If you use the convenience check after the valid date, then the issuer will either decline your transaction or charge you the regular APR on that balance.

Finally, before you use a credit card check, you should analyze the effect that it may have on your credit score. If you are someone who manages your credit well, then using a convenience check should not affect your score adversely. However, if you use it to borrow a large amount that significantly changes your credit utilization ratio (i.e., the proportion of total available credit that has been used), or pushes you over your credit limit, then your credit score may suffer a blow.

In short, convenience checks are best used for balance transfer purposes during a 0% promotional period offer and only after considering factors such as balance transfer fees and your credit limit. But what if you need hard cash for some other purpose, such as financing your small business or providing a down payment on a property? In these cases, credit card checks can prove to be very expensive and may even land you in debt, thanks to their sky-high interest rates and other fees. For such purposes, Fund&Grow has a better solution. We offer individuals with good credit the opportunity to obtain $50,000 - $250,000 of unsecured credit at 0% interest. Available for a period of 6, 12 or 18 months, these funds can be used for anything – no questions asked! So if you need such funds, call us at (800) 996-0270 today, and we will do our best to take care of your needs.