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Have you ever opened a letter from your credit card company and been confused to find that they’ve sent you the gift of a check?

These checks are called credit card checks or convenience checks and they are linked to your credit card account.

Convenience checks can be used to make purchases, pay off other credit cards or pull cash advances from your line of credit.

How convenience checks work

A convenience check is used in a similar way as a bank check. If you want to make a purchase, you simply make the check out to the merchant for the amount of your purchase and sign it. If you want to get cash for yourself, simply make the check out to yourself for cash and cash it anywhere you would cash a personal check. When you use a convenience check, the amount will be deducted from your credit line in the form of a cash advance.

What you should know about convenience checks

If you’ve received convenience checks from your creditor, here are some things to consider before using them.

What is the APR (annual percentage rate)?

Even though your convenience checks are attached to your credit account, they do not work in the same way as credit card purchases. Instead, convenience checks are treated more like cash advances, which have a higher APR. Credit card companies can lure you to use convenience checks by offering lower promotional rates for a limited time. However, when that time period passes, the APR can get to twice as high as the rate for using your credit card. According to Linda Sherry, director of national priorities at Consumer Action, “When you write a convenience check, you will typically be charged the cash advance interest rate, which may be higher than your regular rate, and a cash advance fee.”

What are the fees?

Unlike using your credit card, convenience checks also usually charge a fee, though sometimes this fee may be waived during a promotional period. According to Sherry, the fee is typically 3 to 4 percent of the amount of the check. She also notes that there may be a charge to stop payment on a convenience check if you change your mind about a purchase. To know for sure how much you will be charged to use a convenience check, check your credit card agreement for cash advance fees.

What is the grace period?

Credit card purchases will usually give you a grace period before interest rates will be applied. This gives you time to pay off a purchase before having to add interest. However, Sherry notes that with convenience checks,  “Usually interest begins to accrue immediately.”

What is the credit limit for your checks?

While a convenience check is connected to your credit line, it will likely not have the same limit as your credit card. According to John Ulzheimer, president of consumer education at SmartCredit.com, “You do not have the same credit line for cash-related advances as you do for charges.” If you aren’t sure what your cash advance limit is, it’s best to call your creditor and get that information before you use your checks.

What is the impact on your credit score?

Using a convenience check won’t have a direct impact on your credit score, however, it may be affected indirectly. For starters, convenience checks usually have a higher APR than credit charges, not to mention the other fees attached to them. Using convenience checks can rack up charges on your account quickly that may be difficult to pay down or pay off. Your debt-to-available credit ratio, or credit utilization, is a significant factor in your credit score. It makes up 30 percent of your total score calculation. Experts recommend using only 10 to 30 percent of your available credit in order to keep your credit utilization in a good place. Carrying a high balance on your accounts will make this difficult to do and could lead to a decrease in your credit score.

Should you use convenience checks?

If you’ve been given a low promotional APR on a set of convenience checks, you could use them to pay off a higher interest credit card debt. Just make sure you understand the terms and conditions before going forward. And make sure you know how you’ll repay the debt once you’ve written the check. “Have a repayment plan in mind before you sign on the dotted line,” says Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling. She goes on to say, “Make a contract with yourself as to when you will pay off the money.”

Securely dispose of unused convenience checks

If you decide that you don’t want to use your convenience checks, it’s important to make sure you dispose of them properly. Convenience checks are directly linked to your credit card account, so it’s important to shred them before you dispose of them. You may even want to write ‘void’ across the check before you put it in the shredder, for good measure. If not disposed of properly, it’s very possible the checks could be used without your consent and lead to a case of identity theft. If you’d prefer not to have to deal with convenience checks at all, you can call your provider to opt out of receiving them.

The bottom line

Convenience checks are promotional tools used to get you to spend more easily. While they can be helpful, they have the potential to cause some damage to your account and your credit if not used properly. Make sure you understand all of the costs before you use a convenience check. Cunningham says, “Convenience checks are just that. They’re convenient. But what consumers need to realize is there’s always a cost of credit.”