What Are Convenience Checks For Credit Cards? – Forbes Advisor

Credit card companies often offer credit card convenience checks to cardholders. The preprinted blank checks resemble traditional bank checks, but come with a twist. Instead of being tied to your checking or savings account, they’re linked to your credit card account.

Credit card companies issue these checks to allow cardholders to access their credit line for purchases or bills when checks are accepted but credit cards aren’t. The convenience checks can also be used to transfer outstanding balances from one account to another, borrow money against your credit line or transfer loans to your credit card. It’s important to note that convenience checks are not the same as standard checks connected to your checking account. They incur different fees and carry separate terms and conditions. The check amount is added to your credit card statement at the end of the billing cycle.

Credit cardholders typically receive convenience checks directly from their credit card issuers either as part of a promotional offer or upon opening a new account. These checks are also periodically mailed as a booklet directly to cardholders. In addition, cardholders can proactively request convenience checks from their credit card issuer either through an online account portal or by contacting customer service.

• Accepted where credit cards aren’t. Credit card convenience checks fill the gap in places where plastic can’t tread. The checks come in handy in situations like paying a contractor who doesn’t take credit cards or covering costs at a cash or check-only establishment. They empower you to use your credit line even in scenarios where traditional card payments are not accepted.
• Debt consolidation tool. If you’re juggling multiple credit card balances, a convenience check can be a strategic ally. You can use it to pay off other credit cards and consolidate your debt under one account. If your convenience check comes with a lower interest rate offer, it could potentially save you money on interest charges in the long run.
• Immediate cash access. In a pinch for cash? A convenience check is a quick fix. It’s as simple as writing a check payable to yourself and walking into a bank to get instant access to money. This method can be faster than applying for a traditional loan and is especially useful in emergencies when you need liquidity right away.
• No additional credit checks required. With convenience checks, there’s no need to jump through the hoops of securing a new loan or line of credit. You are able to bypass the time involved in a credit check because the checks are linked to your existing credit account.

• Cash advance fees. Swiping your credit card might feel the same as writing a convenience check, but your wallet knows the difference. These checks typically come with cash advance fees that can add a substantial sum to your total. These fees increase the cost of borrowing and can make convenience checks a more expensive option compared to other forms of credit.
• Higher interest rates. The APR (Annual Percentage Rate) for funds accessed via convenience checks doesn’t play nice. They can carry higher APRs similar to those of cash advances. This means the money borrowed through convenience checks can accrue interest at a rapid clip making it costlier over time, especially if you’re unable to pay off the balance quickly.
• Reduced purchase protections. Credit cards offer consumer protections for purchases. Convenience checks often lack avenues for recourse if there are issues with purchases like defective merchandise or non-delivery.
• No grace period. Unlike the buffer you often get with credit card purchases, convenience checks start the interest timer the moment they’re cashed. Because there’s no grace period, there’s no opportunity to avoid interest by paying off the balance within a certain period. This immediate onset of interest charges can quickly inflate the cost of borrowing. You might want to ask yourself if the immediate access to funds is worth the extra cost.

The length of time it takes for a convenience check to clear depends on the issuing bank, the location of the check and the amount of the check. That said, typically it only takes one to two days to clear. If it’s an unusually large deposit, it might take longer.

• Personal loans. If you’re eyeing a convenience check for a significant sum, a personal loan might be a more economical route. Personal loans typically come with lower interest rates compared to convenience check APRs and offer fixed repayment schedules. Plus, they’re often unsecured, meaning you won’t need to put down collateral like your home or car.
• 0% Intro APR credit card offers. For new purchases or debt consolidation, credit cards with 0% introductory APR offers are a savvy choice. These cards can provide a period of interest-free borrowing that convenience checks don’t offer. This window can give you breathing room to pay off balances without the burden of accruing interest.
• Home equity loans. Leveraging the equity in your home can be a potent alternative to using convenience checks. Home equity loans often offer lower interest rates because they’re secured by your property. Just remember, while this can be a cost-effective strategy, it does come with the risk of putting your home on the line if you’re unable to fulfill the repayment terms.
• Borrowing money from family or friends. Sometimes the old-fashioned way is best. Borrowing from family or friends can be an interest-free option. However, it’s vital to treat the arrangement with the seriousness of a bank loan by setting clear terms for repayment to avoid damaging relationships.
• Picking up a side hustle. If you want to avoid debt, consider earning the extra cash you need through a side hustle. Whether it’s driving for a rideshare service, freelancing online or selling crafts, the gig economy offers numerous ways to generate additional income. This approach not only sidesteps borrowing costs, but can also bolster your financial independence and resilience.

Credit card convenience checks can offer a quick solution when credit cards fall short, but it’s not a one-size-fits-all financial fix. With convenience comes a bundle of drawbacks—higher interest rates, immediate interest accrual and additional fees—that can turn a short-term solution into a long-term financial burden. Carefully consider alternative financing options and possible risks to make the best decision that aligns with your overall financial strategy.