I Got a Convenience Check in the Mail. What Is it — & Should I Use One?

Those blank checks that come with your credit card bill aren't always as convenient as they appear.

If you have a credit card, you’ve probably at some point received a bill that comes with convenience checks. If you’re like most people, you glanced at those checks and sent them straight through the shredder.

But what are convenience checks, anyway? And should you use one?

What Is a Convenience Check?

On the surface, a convenience check — essentially a blank check your credit card company sends in the mail — looks like a great deal. You can use them to pay for purchases that you would otherwise be unable to charge to your credit card. For instance, you could pay your rent with your credit card by means of a convenience check. Or you can pay off one credit card with another via convenience check. However, there are generally fees and interest rates associated with these little pieces of paper that can make a seemingly sweet deal turn sour.

What Fees & Interest Do I Have to Look for?

Allow us to explain: Most credit cards come with a grace period every month from the time you get billed to the time the payment is due. This grace period can be almost two months long. How, you ask? Well, let’s suppose your credit card cycle ends on Day 10 of every month. If you swipe your card on Jan. 11, that cycle won’t end until Feb. 10 and you won’t have to pay for that purchase until March 10. That gives you nearly 60 days to accumulate the cash necessary to pay off the balance and avoid interest. (Here’s an explainer for anyone who wants more information on how this works.)

Convenience checks, on the other hand, generally don’t include this grace period. And they will often come with a 3% or $10 fee (whichever is greater). In other words, if you write a $1,000 check, you’ll likely have a minimum of $30 in fees.

Moreover, let’s suppose you cash a convenience check on Jan. 15. There’s a good chance the amount charged to the check will start to accumulate interest right away (usually at your card’s standard interest rate). So, if you want six weeks to pay off the sum, you could rack up a considerable amount of credit card interest.

Is There a Bad Time to Use Convenience Checks?

Generally speaking, you should avoid using these checks. They are incredibly tempting because of how they are designed — Look, a blank check! — but the fees associated with them often out weigh the convenience. Some rules of thumb to keep in mind when you get one of these checks in the mail:

  • If you can use your credit card to make the payment in question, a convenience check isn’t necessary.
  • If you can pay with cash or a check from your personal bank account, a convenience check isn’t necessary.
  • Unless it will save you money — for instance, you’re paying off a high-interest credit card balance — a convenience check isn’t necessary.

In most cases, you should avoid these checks, unless you’re doing a balance transfer (more on this in a minute) or it’s an absolute emergency.

Is There a Good Time to Use Convenience Checks?

Despite their shortcomings, these checks can prove to be beneficial from time to time, but only if you use them appropriately.

Suppose you have a card that carries a $5,000 balance. You believe that in the next 12 months you can wipe out that balance, but until it’s gone, you’ll still be paying 20% interest. If you have a credit card convenience check that offers 0% interest on the first 12 months, you’ll pay the 3% fee to use it — but you’ll also be saving on interest. You’ll have to crunch the numbers before cashing in, but if the terms line up, you could wind up reducing your bills and ultimately wipe out your debt.

Of course, you’ll want to consider all your get-out-of-debt options. Depending on your credit, you may be able to qualify for a premium balance transfer credit card that lets you skip the fee or gives you a longer period to pay a costly balance off. You also may be better off taking out a personal loan instead of messing around with 0% offers on revolving credit lines, like credit cards — especially if there’s a clause in the fine print that holds you responsible for retroactive interest on the full balance should you fail to pay it off before the offer ends.

In other words, be sure to read the fine print on a convenience check carefully. Otherwise, the credit card company might be the one that benefits, not you.

Image: jacoblund

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