Credit Card Cheques

Nowadays a credit card account is perhaps better thought of as a more general line of credit you can use in many situations. Credit card cheques are a natural extension of this idea. They have attracted a fair amount of controversy - not least over the amount they cost.

Credit card cheques are similar to a traditional bank cheques in that you make them out to the company you're paying. Card issuers say they are useful for using your credit account in situations where plastic can't be used.

The crucial difference is that with a credit card cheque you're adding to your card debt rather than simply transferring funds from your bank account, and this kind of debt is usually significantly more expensive than that arising from general credit card use. This kind of debt is usually significantly more expensive than that arising from general credit card use.

The interest rate will also usually be much higher than the purchase rate of your card. Especially if your cheque was for a small amount. Each repayment you make to your card will be used to pay off your cheaper debt first. Your cheque debt will effectively go to the back of the queue and will sit in your account. A significant amount of the interest you're charged will be at the higher rate. It will take much longer to repay your card balance. Especially if you are carrying a balance on your card. It's perhaps a little ironic that after decades of being told that plastic was more convenient than cheques. Some card companies are now saying the opposite - and profiting handsomely in the process.