The Truth about Credit Card Checks
Should You Really Use Credit Card Checks?
Many consumers know that credit cards are a tool of convenience and one of the conveniences credit cards offers is the ability to write checks against your credit line. But are these credit card checks really a good idea, or are they just way to get in you’re your head?
Why Use Credit Card Checks?
Nowadays most credit card companies provide you with credit card checks. You can use these checks to pay bills or deposit them into your checking account. The amount you write the check for is then charged to your credit card.Why would you want to use credit card checks?
Let’s say that you had a terrible month with finances and you needed to come up with $150 to pay your electric bill before it became way overdue. If you don’t have $150 in you checking account, then you could pay using a credit card check.
You may be thinking whether or not it is wise to borrow money just to pay bills. Obviously, in perfect world, everyone would have enough extra money in their checking accounts to cover these expenses.
However, the world is not perfect. In a situation like the one above, it makes perfect sense to borrow money to cover your electric bill. If the electric company decided to cut your power you would have to pay termination fees and reconnection fees to have the power restored, so the credit card interest and any cash advance fees associated with using your credit card will likely be the less expensive alternative.
Another example would be in the situation where your checking account is overdrawn. Most banks these days will charge a $35 fee for each “bounced” transaction. This could easily add up to a few hundred dollars quickly.
If you realize that you wrote too many checks compared to you balance, then you could deposit a credit card check to fund your account. This would help you avoid a bunch of overdraft fees, which would likely be much more than any interest you would have to pay on your credit card.
It’s Not Free
There are fees involved with using most credit card checks. However, there are times when there are promotional periods where this fee is waived. The dollar amount drawn using a credit card check falls under cash advance interest rate. This rate is usually similar to your purchase rate although it is something you should look into.
As you can see, there are some definite situations when your credit cards can save the day. Even if you don’t plan on using your credit card checks, you may want to keep them tucked safely away in case you find yourself needing them.