Credit Card Convenience Checks: What They Are and the Costs

Independent guide - not affiliated with or endorsed by any card issuer. Check fees and rates differ by card and by offer; the disclosure table sent with your checks and your card agreement have the exact terms.

Credit card convenience checks are blank checks your card issuer mails you that draw on your credit card account rather than a bank account. You can use them to pay a bill, pay off another debt or write yourself a check for cash. They are often charged like a cash advance, at a higher rate than purchases, with a transaction fee and usually no interest-free period, so read the terms printed with the checks before you use one.

What are convenience checks and how do they work?

The FDIC describes convenience checks as blank checks you might get in the mail from your credit card company. You fill one in like a normal check, and the payment shows up as a charge on your credit card statement. The FDIC lists three typical uses: writing yourself a loan, paying bills, and transferring other loans and card balances to your credit card account.

Because the money comes from your credit line, a convenience check is borrowing, not spending your own funds. You may also see them called "balance transfer checks" or "credit card checks". Whatever the name, the key question is which rate and fee apply to the amount you write.

How are convenience checks charged?

Card issuers generally sort spending into purchases and cash advances, and the FDIC says the interest rate on convenience checks is charged at the cash advance rate, often higher than the purchase rate. Three costs usually come with that:

• A transaction fee, usually a percentage of each check. The FDIC's own example: write a $1,000 check with a 5% convenience check fee and you pay $50 on top of any interest. Your card's actual fee is in its agreement and on the offer table.
• Interest from day one. The FDIC notes you may not get an interest-free period, and many lenders start charging interest when the check posts, even if purchases get a grace period. The CFPB says the same about cash advances in general.
• A separate, lower limit. The CFPB explains that many cards have an overall credit limit and a separate lower limit for cash advances and checks written from the account.

The FDIC also points out that convenience checks may not earn the rewards a normal card purchase would. If you are used to cash back on everything, that is one more reason the check costs more than it looks. Our guide to how credit card APR works shows how interest builds daily when there is no grace period.

What the offer table on the checks must tell you

Regulation Z requires a disclosure table on the front of the page that contains the checks when they arrive more than 30 days after you opened the account, or sooner if their finance charge terms differ from your original disclosures. Under section 1026.9(b)(3), the table must show:

• If a promotional rate applies: the promotional rate, how long it lasts, the type of rate and the APR that applies after it ends, and the date by which you must use the checks to get the promotional rate.
• If no promotional rate applies: the type of rate that will apply to the checks, for example the cash advance rate, and that APR.
• Any transaction fees for using the checks.
• Whether there is a grace period. A row headed "How to Avoid Paying Interest on Check Transactions" means there is one; a row headed "Paying Interest" means there is not.

That last row is the fastest way to tell how a check will be treated. If it says "Paying Interest", expect interest to start right away. If your offer has expired or you used a check after the stated date, the issuer may honor it at a different rate, and the table must say so.

Convenience checks vs a balance transfer

Some issuers send checks with a promotional rate as a way to move debt onto the card. That can work like a balance transfer, but the details matter. A standard balance transfer is usually requested online and sent directly to the other lender, while a check gives you a payment instrument you have to fill in and mail or deposit yourself. Compare the promotional rate, the fee, how long the rate lasts and the APR afterwards on both options before choosing.

Remember how payments are applied if the card ends up with several balances at different rates. Under Regulation Z section 1026.53, the amount you pay above the minimum goes to the balance with the highest APR first, but the rule covers only that excess amount, so check your agreement for how the minimum payment itself is applied. A cheap promotional check balance can therefore sit next to a pricier one for longer than you expect. Our guide comparing 0% purchase and balance transfer offers explains how to plan around that.

Risks of using convenience checks

• Returned checks. The FDIC warns that if a check puts your card over its limit, the issuer may not honor it. A returned check can then trigger overdraft fees from your bank, returned-check fees from the business you paid and over-limit fees from your card issuer. If your issuer has lowered your limit since the checks were mailed, the check can fail even though the offer looked open.
• Weaker dispute protection. The FDIC notes that the billing error protections you have for card purchases are more difficult to extend to fraud involving convenience checks, even though they are linked to your card account.
• Theft. Checks left in a mailbox or a drawer can be stolen and used. The FDIC advises keeping them safe if you plan to use them and destroying them if you do not.
• Debt that is easy to take on. The FDIC cautions that many consumers expect to repay before a promotional rate ends but find they cannot, and that repeated transfers can cost more in fees than the low rate saves.

How to use a convenience check more safely

1. Read the table printed with the checks: the rate, the fee, the end date of any promotion and the grace period row.
2. Check your available credit and cash advance limit before writing the check, and leave room for interest and the fee.
3. Confirm the check cleared. The FDIC suggests calling your card company after depositing a check and before spending the money, to make sure it was honored.
4. Have a payoff plan. Divide the total, including the fee, by the number of months in the promotional period, and pay at least that much each month.
5. Compare alternatives. A personal loan with a fixed term may cost less for a larger amount; see our guide to credit card vs personal loan.

You can look up your card's standard check and cash advance terms in the CFPB's credit card agreement database, which holds agreements submitted by card issuers.

How to stop convenience checks

Contact your card issuer and ask it to stop mailing convenience checks. The FDIC suggests this if you are sure you do not want them, since it removes the risk of the checks being stolen from your mailbox and the temptation to use them. Until the mailings stop, shred any checks you receive.

The short version

Convenience checks are a way to borrow from your credit card by writing a check. Unless the offer table shows a promotional rate you have compared carefully, assume cash advance pricing: a fee, a higher APR and interest from the day the check posts. Use them rarely, confirm they clear, and shred the ones you do not need.