What Are Convenience Checks and Is It Smart to Use Them?

Writing checks seems like an archaic way to pay for things — after all, why would you need to break out a checkbook when you can use a credit or debit card? But there’s another kind of check called a “convenience check,” and it differs from the standard check that we typically envision.

But what is a convenience check, and is it a good idea to use one? In short, a convenience check is a blank check that your credit card company sends to you that functions as a standard method of payment. This method draws upon your line of credit, rather than the funds in your checking account.

It’s easy to see why the idea of a blank check could be appealing — at first blush, it feels like free money, and who doesn’t want that? But remember, there are no free rides. Convenience checks can certainly be useful in some situations, and they have their benefits, but there are definitely some points to keep in mind before you use them. Let’s explore.

What Are Convenience Checks and How Do They Work?

In addition to providing the plastic card that you keep handy, credit card companies also offer convenience checks. These are literal blank checks that you can fill out to use in various situations — say, for instance, when a vendor doesn’t accept credit cards.

These checks may look like a standard check, but they are different in that they don’t draw on your checking account — they pull funding from your credit line. This means that they largely work as a credit card, but they come with certain benefits — for instance, some credit card issuers offer a convenience check grace period with 0% interest.

That’s a positive reason to use a convenience check but there are downsides, as well — for instance, they can also come with user fees that will show up on your credit card statement. Also, convenience checks often have a higher interest rate than credit cards, and these fees typically charged at the higher cash advance rate.

What Are Credit Card Checks Used For?

Convenience checks, also known as “credit card checks,” are often used in ways that people use personal checks. Convenience checks, though, allow people to access cash from their credit card account, which provides funds beyond their standard checking account balances.

This method of payment is optimal in several scenarios, including:

Balance Transfers

People often use convenience checks to perform a balance transfer, when is when you move the balance of one credit card account to another. By doing this, you can pay the entire balance on a higher-interest account and move it to a card with, for instance, a 0% introductory annual percentage rate (APR). By doing this, you could pay off the remainder of your debt interest-free.

Cash Advance

A cash advance is a way to obtain cash by borrowing against your credit card's line of credit. When you use a convenience check to get a cash advance, you’re essentially taking out a loan against your available credit limit. This allows you to access funds similar to a cash withdrawal, but through the mechanism of writing a check.

Making Purchases

You can use convenience checks to make purchases from merchants who accept them, essentially treating the check like a cash payment. One benefit of using this type of payment is the ability to take advantage of promotional 0% APR offers, allowing you to finance the purchase interest-free for a set time. However, it's important to note that credit card checks may be processed as cash advances, which typically have higher fees and interest rates, so you'll want to understand your card's terms before using checks for purchases.

Risks And Rewards Associated with Convenience Checks

Using convenience checks can be a double-edged sword — there are risks to using them, as well as rewards:

When Is It a Good Idea to Use a Convenience Check?

Despite its drawbacks, there are certain financial situations when a convenience check is a financially solid option. It can provide a quick source of emergency cash, for instance, or a way to pay down high credit card balances when used judiciously.

For some, using a convenience check makes the most sense when you need to pay off a debt quickly before interest has a chance to compound significantly. Here are other times when using a convenience check is a sound decision:

• Covering a large, unexpected bill before your next paycheck arrives
• Paying upfront costs for a large expense before you can secure financing
• Transferring a high-interest balance from another credit card to a lower APR card
• Buying supplies for a small business or side gig before cash flow stabilizes

Convenience Check Alternatives

If using a convenience check seems off-putting, there are other options you can consider. Here are a few of them:

Personal Loan

Taking out a personal loan may be a good alternative to a convenience check for a few reasons — for starters, personal loans often have lower interest rates than the cash advance rates that typically come with convenience checks. When you take out a personal loan, you get the cash directly rather than borrowing against a credit card's line of credit. A personal loan is also a separate debt from your credit card, which helps you avoid maxing out your existing credit limit.

Side Hustle

Another way to avoid using a convenience check is to come up with the money yourself — perhaps by working a side hustle or, essentially, a part-time job that you perform in addition to a full-time position. While this option may not be possible for everyone, it can be a good way to earn some ancillary cash without increasing your debt load.

Possible side hustles include:

• Delivering food
• Becoming a virtual tutor
• Selling used items
• Becoming a dog walker or pet sitter
• Driving for a rideshare company
• Babysitting local kids

Balance Transfer Credit Card

When you use a balance transfer credit card, you can transfer existing credit card balances from other accounts to a new card. This is ideal when you can get a card with a low interest rate — often in a promotional context — for a set period of time.

This may be preferable to using a convenience check because you can avoid the fees and immediate accrual of interest that come with using a convenience check. Most balance transfer cards, for instance, offer a 0% APR promotional period of up to 24 months. During this time, you can focus on paying down the balance without accumulating additional interest charges. This allows you to pay off the debt more quickly, compared to when you have a convenience check with a higher interest rate.

The Bottom Line

Convenience checks live up to their name: they’re convenient. And when used in the right situation, they can indeed be a beneficial method of payment. But it’s critical that you have a good sense of the pros and cons that come with convenience checks before using one. To be sure you have a handle on your finances, download the Rocket Money℠ app to help determine whether using convenience checks is the right move for you.