Credit Card Debt Management

A convenience check recently arrived in the mailbox. The offer was 2.99% APR for the life of the balance. I set the checks aside, which is unusual behavior for me. Considering the APR was uncomfortably high on the particular credit line that the convenience checks were attached to, this 2.99% deal sounded like a good deal. Actually, it sounded too good to be true. Further research reveals that, indeed, this is not such a great deal.

Convenience checks are a practically irresistible temptation to take out a cash advance at the highest possible interest rate. Even at a low APR, it is usually an introductory offer that will jump up suddenly to the full, astronomical interest rate normally associated with cash advances. It is well known that using these convenience checks is the financial equivalent of playing with fire, which is why they are usually torn up and thrown away in my household. But that 2.99% APR for life… what could go wrong?

Naturally, the credit card company is hoping that the consumer would make one little slip-up and pay their bill late, which most people think they won’t do … until they do. Beyond that, Motley Fool points out that the convenience check can mess up a consumer’s payoff plan. The pre-existing, higher APR card balance is probably a priority for the consumer, but it’s a cash cow for the credit card company. The fine print on the so-called “convenience checks” often states that any payment from the consumer will be applied to lower APR balances first. So the longer they can keep you spending at the 2.99% APR level, the more expensive your pre-existing, high APR amount is becoming. For credit card companies, it’s a very profitable racket business.

So next time you’re tempted, think twice, read the fine print and consider the consequences. If you opt to skip the convenience checks, keep in mind that they can be very convenient for identity thieves as well so you should tear them up into a million tiny pieces before throwing them away — and that’s just what I think I’ll do now.