Understanding Credit Card Convenience Checks: A Comprehensive Guide

At O1ne Mortgage, we prioritize consumer credit and finance education. This blog aims to provide an objective view to help you make the best financial decisions. If you have any mortgage service needs, feel free to call us at 213-732-3074. Let’s dive into the world of credit card convenience checks and explore their pros, cons, and alternatives.

What Is a Convenience Check?

A convenience check is a type of blank check sent to you by your credit card company. These checks allow easy access to your available credit line and may be sent periodically to encourage spending. If you’re tight on cash, you can write a convenience check to yourself as a cash advance. Convenience checks can also be used instead of your credit card to make purchases, pay bills, or transfer balances to your credit card.

Charges from convenience check purchases show up on your credit card statement as cash advances. This means that you’ll likely pay a higher interest rate than you would with a standard credit card purchase. Most credit card companies begin charging interest as soon as the check clears, meaning you’ll need to start paying interest right away, rather than at the end of your billing cycle like you do with regular purchases.

Your credit card company will also likely charge a transaction fee when you use a convenience check. Typically, this is calculated as a percentage of each check. For example, if your credit card issuer charges 5% for using a convenience check and you write a check for $2,000, the fee would be $100.

Before using a convenience check, it’s a good idea to check the terms, interest rates, and cash advance limit with your credit card company.

How Do I Get a Credit Card Convenience Check?

Credit card companies typically send convenience checks in the mail. You may receive a convenience check when you first open a new credit card or periodically from your credit card issuer. If you have paperless billing, your credit card company may still send you convenience checks in the mail from time to time. Be sure to open any mail you receive from credit card issuers so you don’t accidentally toss a convenience check in the trash.

Convenience checks you decide to keep should be stored securely to keep them from getting into the wrong hands. And to help protect your credit card account and prevent fraud, it’s important to destroy any unused checks before tossing them in the trash.

If you no longer want to receive convenience checks, you can contact your credit issuer and ask them to stop sending the checks. This saves you from the risk of convenience checks being stolen from your mailbox or trash.

Pros and Cons of Convenience Checks

Before using a convenience check to give yourself a cash advance or make a purchase, it’s important to understand the advantages and disadvantages. Here’s a closer look at some of the pros and cons of convenience checks.

Pros of Convenience Checks

• Provides quick access to cash: You can make out a convenience check to yourself to get a cash advance against your credit line. This can be faster than getting a personal loan, and funds are usually available as soon as you cash the check.
• Ability to make purchases without a credit card: If you need to make a purchase with a vendor or store that doesn’t accept credit cards, using a convenience check may be an option. But if you have cash on hand or can write a personal check, that may be a better choice to help avoid fees and high interest.
• Makes balance transfers simple: Convenience checks can be used to transfer a balance from one credit card to another. But before doing so, it’s important to be aware of any fees you’ll be charged, like balance transfer fees.

Cons of Convenience Checks

• Potential for higher costs: Convenience checks can be expensive to use. They typically come with higher interest than regular credit card purchases and fees. Using them for cash advances often costs more than a personal loan.
• No grace period: Standard credit card purchases may not start racking up interest charges right away, thanks to grace periods. But when you use a convenience check, credit card companies often charge interest as soon as the check posts to your account.
• Lack of protection: Your credit card company may offer certain types of protection for purchases made with your credit card, like payment disputes. Purchases made with convenience checks don’t typically have the same level of protection. This can put your account at risk for unauthorized purchases or take away the ability to stop payment if you have an issue with a vendor.

Alternatives to Credit Card Convenience Checks

While using convenience checks may seem like a simple way to pay for purchases or give yourself a quick cash advance, here are some alternatives you may want to consider.

• Use cash: The best way to avoid paying fees or interest is to use cash to make a purchase. If you don’t have the cash on hand to cover the cost of a purchase, you can consider a cheaper option or waiting to buy until you have enough money saved.
• Pay with a credit card: Using a credit card instead of a convenience check can help you avoid racking up additional fees. Just keep in mind that if you don’t pay off the balance during the grace period or are using a card with a special introductory rate period, you may still be on the hook for interest if you carry a balance.
• Take out a personal loan: Personal loans may take more time to fund than a cash advance from a credit card convenience check. But you’ll typically pay less in interest and fees.
• Borrow money: If you’re in a situation where you need cash fast, consider reaching out to friends and family for assistance.

Frequently Asked Questions

Where Can I Cash a Credit Card Convenience Check?

Credit card convenience checks can be cashed at your bank, a check-cashing business, or any other place that cashes personal checks. You can also deposit a convenience check into your bank account, but it may take a few days for the funds to be available, depending on your bank.

Do Convenience Checks Hurt Your Credit?

Simply using a convenience check doesn’t generally hurt your credit. But using convenience checks can increase your credit utilization, which can affect your credit. And if you write out a check for more than your available credit or you can’t keep up with payments to your credit card company, you could face steep interest, penalty fees, and damage to your credit score.

Do You Earn Rewards on Convenience Checks?

If you have a rewards credit card, you’ll only be able to earn points for credit card purchases. Convenience checks are considered cash advances so you won’t be able to earn rewards.

The Bottom Line

Although convenience checks may seem like an easy option when you need cash fast or can’t use a credit card, it’s important to understand that they can come with some unexpected costs and possible consequences to your credit when not used responsibly.

Before using a convenience check, be sure to do your homework to understand the terms and fees. And if you find yourself using convenience checks often, especially for cash advances, it could be a good idea to take a closer look at your budget.

For any mortgage service needs, O1ne Mortgage is here to help. Call us at 213-732-3074 to speak with one of our experts today!