Avoid Credit Card Cheques

Credit card companies are very inventive in their attempts to get us to spend more money.

Anyone with a credit card will know that in recent times they've taken to sending blank cheques urging you to 'treat' yourself or 'give yourself some extra cash'. You may even have received one already this year from card firms hoping you'll use it to settle Christmas and New Year spending debts.

They're best avoided, unless it is part of an introductory 0% deal, as you could be choosing an expensive option.

For a start, if you do feel inclined to 'treat' yourself to something, you're quite likely to face interest rate charges of 20% or more on your purchase. What's more, you'll be charged from the moment the cheque's cashed so there'll be no interest-free period to take advantage of. Then there'll be a 2% handling fee and/or quite possibly a further fee if you're using the cheque for balance transfer purposes.

An extra disadvantage is that you don't get the same level of protection using a credit card cheque as you would do using your credit card. For example, the protection you get from the Consumer Credit Act on goods that cost more than £100 does not apply.
Fortunately, the new Banking Code, which takes effect from March, will prevent providers from sending out unsolicited cheques to customers without proper checks being carried out on whether the customer is at their limit or late paying. People will also be able to opt out of receiving unsolicited cheques if they wish.

Either way, there are much cheaper ways to borrow money - an introductory 0% credit card being one. Be clear about what you want your card to do though as some may be interest-free only for balance transfers and will charge their usual interest rate on any purchases. So if you want to 'treat' yourself, and you can afford it, use a card that specifically offers an interest-free period for purchases.

Find out how to Be A Winner In The 0% Game and check out the 0% cards on offer in our Credit Card centre.

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