It is likely that at some point you have received mail with Credit One Bank convenience checks if you have a credit card with them. As most people do, you glanced at the checks and promptly threw them in the trash.
How Do Convenience Checks Work?
At first glance, convenience checks – which are essentially blank checks you receive from your credit card company – look good. Purchases that you couldn’t otherwise charge to your credit card can be paid for with them. For example, you may be able to pay your rent using your credit card through a convenience check. You can also pay off one credit card with another via convenience check. These papers typically come with fees and interest rates that can lead to a seemingly sweet deal turning sour.
What Do I Need to Know About the Fees?
Usually, a grace period of one month between the time you are billed and when you are supposed to pay applies to most credit cards. Nearly two months can pass during this grace period. Would you like to know how? Consider the following scenario: Every month, your credit card cycle ends on Day 10. You would not have to pay for your purchase until March 10 if you swiped your card on Jan. 11. The balance must be repaid nearly 60 days before you can avoid interest charges.
Credit One Bank blank checks or convenience checks, on the other hand, generally don’t include this grace period. It’s common for them to be accompanied by a 3% or $10 fee (whichever is higher). You might be charged a minimum of $30 in fees if you write a $1,000 check.
Consider also the case where you cash a convenience check on Jan. 15. A check charged with interest will usually begin to accrue interest right away (either at your card’s standard interest rate or at your card’s rate of exchange). Consequently, if you plan on paying off the sum in six weeks, you could accrue significant interest on the credit card.
When Should Convenience Checks Be Used?
Generally, you should not use Credit One Bank blank checks. They are incredibly tempting because of how they are designed in the form of a blank check. Despite the convenience they offer, they often come with high fees. When you receive one of these checks, keep these tips in mind:
Payments made by credit card don’t need a convenience check.
You do not need a convenience check if you can pay cash or with a check from your personal bank account.
If you are not saving any money by using a convenience check – for instance, if you are paying off a high-interest credit card balance – don’t use one.
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.
Let’s say you have a card with a $5,000 balance. Although you hope to eliminate that debt in the next year, you will still have to pay interest until it is. The 3% fee to use your credit card convenience check is negligible by comparison to what you will save on interest on a 0% introductory rate.
Considering all of your debt repayment options is a smart move. You might qualify for a premium balance transfer credit card that skips the fee or gives you an extended repayment period if you have poor credit. If there’s any fine print in the fine print that holds you responsible for retroactive interest on the balance, you might be better off getting a personal loan rather than trying to stick with 0% credit card offers.
Make sure you carefully read the fine print of a Credit One Bank blank checks. If you fail to do so, you might be the one to benefit, not the credit card company.