I recently received cheques from American Express. I normally just shred the letter and cheques without even looking at them, but decided it was time to finally have a look. So, here’s what the nice folks at Amex had to say to me.
- They were delighted to offer me all purpose cheques with a low interest rate
- In fact, I could benefit form a low rate of 0.99% for up to 6 months!
- I could use this cheque for just about anything – home improvement, vacation, or when credit cards are not accepted, like my dentist or doctor’s! (My dentist takes credit cards, and so does my doctor..I doubt they’d want a cheque).
- They are easy to use – just fill them out like I would a regular cheque.
- The cheque amount will be charged to my card account
- A low 1% balance transfer fee will be charged on my cheque transaction amount, and interest is payable on the amount of this fee at the applicable interest rate for purchases. Wait, what now?
Okay, I actually tried reading the Terms and Conditions and got completely lost. i understood about how long the 0.99 rate was good til, and that it was bad to miss a payment, and that would make the nice rate go away. And then I got lost.I think I may have to pay interest on a fee – or something like that..? And different interest rates in different cases.
It made my brain hurt. I can certainly see how people run into trouble with credit card companies.
I don’t think I’d use the cheques at all. There aren’t many places that prefer a cheque over a credit card, and I don’t carry a balance anyways, so a lower rate isn’t much use to me. I can see some benefit (if I actually understood the things correctly) to using the cheques over your credit card, if you really needed to pay for something, and would have the money to pay off your balance in the near future. And I guess they’d be helpful for balance transfers.
I’d still advocate the “don’t buy it til you can pay for it” route though.
Have you ever used cheques from your credit card company? How was your experience?
I’ve used credit card checks in the past, but that was a long, loooong time ago. The last time I used one, I called my credit card issuer to see if they’d waive the 3% transaction fee. They agreed to charge me 1.5% instead of the 0% I aksed for. Sometimes they’ll agree to waive the transaction fee entirely. A few years ago, one of my credit card issuers raised the fee on these checks to 4%. If you’re going to use them, you should look closely at other options. The transaction fee is charged up front. It may be cheaper to use your credit card, carry a balance, and pay it off over time.
You also have to make sure you pay the balance off before the promotional rate expires. The rate on cash advances (which is the category credit card checks may fall under) is higher than the rate on purchases.
Personally I’ve used these offers a few times when I had a balance remaining on a loan. Rather than pay the higher interest, I would transfer it all over to one of these offers at 0%. It does limit my motivation for paying off that debt, but it’s a nice breather from the interest charges. The balance transfer fee does eat into that a lot though. So I prefer t go for the ones that are 12-15 months at 0%. I generally just shred the ones that are 2% or higher.
I used one check once to transfer a balance to a new card but that was it. You lose a ton of money on interest so it isn’t really worth it. I would recommend staying away from them. They really are just another way people can sink themselves into debt.
Shawanda – sounds like you did your homework and kept on top of things!
MM – Sounds like if the rate is right, and you can save money, they’re not a bad route to take some times.
Miss T – Also a good point. In my case, I’m just too confused to bother getting into them!
make sure you don’t pay a single penny in interest with those checks. Your spelling of checks tells me your from a different country, UK?
Hey SB – yes, good point. One reason I decided not to use them – cause I got confused in the fine print and might end up paying interest. And I’m from Canada – but we tend to use a lot of British spelling.
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