Credit Card Convenience Checks

Convenience checks are linked to the individual's credit card account, and are generally mailed to a credit card owner without pre-approved permission. In fact, credit card companies generally mail them in multiples of three. They arrive with a nice little note that entices the consumer with promises of lower interest rates, a very large limit, and the convenience of immediate use.

In essence, convenience checks are simply personalized checks that a consumer can use in numerous ways without the worry of needing to supply money in a bank account. Typically, the checks are designed for consumers to transfer balances from other credit card or loan accounts that have higher interest rates. Additionally, the checks can be used to purchase goods, especially from someone who does not accept credit cards, such as a private owner.



Generally, this type of check comes with an enormously large spending limit. Large purchases are convenient with this checks, hence the name. No bank balance is required since the amount written on the check will simply be added to the credit card balance. The convenience of being able to make a large purchase or pay off an outstanding balance with a different lender, however, comes with a price.

The issuer of the check, the credit card company or lender, is going to profit or make money on the use of the checks. Unlike credit card charges, no grace period exists on the use of the checks. Convenience checks start to accrue interest as soon as they are used. The interest rate charged varies among credit card companies. Initially, a company may charge a lower interest rate for a pre-determined amount of time. After that, the interest rate may hike up to a much higher rate.

Additionally, unlike the credit card, an additional fee is often charged on each individual check that is used. Generally, a predetermined percentage of the check amount is assessed against the credit card owner. This percentage usually fluctuates between two and five percent of the check amount. Additionally, as with the credit card, an interest rate is also calculated on the total amount of the check. Once payments are applied against this amount, the interest will be calculated against the remaining balance.

Certain risks come with the convenience of these checks. For example, since no signature verification exists, it is that much easier for someone else to cash or use the check without any difficulty. Therefore, caution should be exercised when disposing of unwanted checks. Shredding the checks in a crosscut shredder is the best approach to take.

Additionally, credit companies often have the right to use consumer payments on credit card balances toward actual credit card purchases first, before applying them toward the check amount. If the interest rate charged on the convenience check is higher than the interest rate charged on the credit card purchases, the consumer winds up paying even more.

Security measures on convenience checks are few and far between. Only a few companies require the receiver of the checks to make a toll-free phone call to activate the checks before using them.

Furthermore, although convenience checks are attached to the credit card, they do not enjoy the same privileges or protection that a credit card may give you. For example, if the purchase proves unsatisfactory, returns are generally easier with a credit card. Likewise, with a credit card, if a dispute should arise with the seller, one phone call to the credit card company and the charges will be reversed and taken off the account. With a convenience check, the consumer needs to deal with the situation alone.

Occasionally, the issuer of convenience checks may decide to decline the check. It is very similar to bouncing a check. If the consumer has taken possession of the item, then the consumer will need to make good on the check. Likewise, if a check is stolen, the individual is responsible for the entire amount of the check. Unfortunately, the usual fifty-dollar liability limit for unauthorized purchases made on a stolen card does not apply with convenience checks.

If a check is used to transfer balances from one higher interest account to the credit card account that is tied to the check, the check writer needs to use caution since the transfer might not go through immediately. Additional payments on the old account may be necessary until the transaction goes through.

Lenders, the credit card companies, will target consumers during holiday seasons in an effort to get business. As a means for saving money, the use of convenience checks is not reliable. As a means for quick and easy payment or purchase, convenience checks are excellent tools.