Dangerous Checks in the Mail

Here's a piece from Money Central that talks about those convenience checks sent to you by your credit card company -- you know, the ones where all you have to do is sign them and you get whatever amount of money you need? Turns out (no surprise, really) they are very costly. Consider the following that are associated with such checks:

• Typically come with hefty upfront fees for using them, often 3% to 4% of the check amount.
• Can trigger high interest rates, often 19% or more, which kick in immediately with no grace period.
• Have fewer consumer protections than credit cards.
• Leave you vulnerable to thieves.

Not a great list at all. My advice -- avoid them completely.

Here's a funny personal story on this subject.

Several years ago, I was working for a company (not my current company) where we were considering launching a branded credit card. I was in the meeting with several high-level executives, including my company's president and executives from the credit card issuer. The subject of convenience checks was brought up and my company's president said he had recently used one of them. He talked about how he needed to use one just to "help with his cash flow" and he was "surprised when he got that bill because they charged him interest."

Ok, this is a COMPANY PRESIDENT. Why does he need help with his "cash flow?" And seriously, he didn't know they would charge him interest? Did he just crawl out from under a rock?

Needless to say, the rest of us were speechless. I tried to switch the topic as quickly as possible, but it was certainly an awkward moment as we all stared at my president and wondered what kind of a doof he was at handling his personal finances.

Comments

[Scott]

Dilbert comes to mind!

[Lord]

Often they will waive interest for a while, though usually not the initial fee.

And what about going ebill to avoid theft only to continue to receive them in the mail?