Managing credit card debt has become a heavier burden for more and more consumers. Both consumers and the credit card companies are wrestling with the problem of increasing credit card late payments and delinquencies. The credit card delinquencies create a number of problems for consumers including reduced credit card limits, an adverse credit rating in their credit report and additional credit card fees and credit card interest charges.
A recent problem compounding the issue of excessive credit card debt and credit card interest charges is the misuse or poor understanding of bank credit card convenience checks. The FDIC has recently published a notice regarding the potential problems consumers are facing with the use of these credit card services.
Credit card holders have to aware that even though the credit card companies issues these checks like dog treats that have the potential to push the user into higher levels of debt and extra credit card fees that can a be a real burden to pay. The number one problem with these credit card convenience checks is that the user is not aware of their credit card balance and the use of the convenience check pushes the credit card holder over their credit card limit. More importantly, consumers who know what their credit card balance and credit card limit often fail to check the limit for credit card cash advances, which is the category the convenience check use often falls under.
During periods of tough credit and restrictive credit card standards, many credit card companies are actively reducing the credit card limits on even their good paying customers. It is important for consumers who are using the credit card convenience checks to find out what the current credit card limit is in case the credit company reduced the amount you may borrow on your credit card through credit card cash advances right before you make a transaction with the credit card check.
If a credit card holder use the checks and the credit card services so heavily marketed by the credit card companies and subsequently find out that the convenience check puts the credit card balance over the credit card limit, even if it has just been reduced, the bank credit card issuer may not pay the amount of the funds on the check. The returned credit card check could now, very well cause overdraft fees from your bank if you have used the check with your bank funds or returned check fees from where the check was sent or even over the limit fees from the credit card company that issued the convenience check for your use. This creates the possibility of a perfect storm of higher fees and rates brought on by one credit card transaction.
It is equally important to understand the credit card interest rates and credit card fees associated with then use of these checks. For most credit card checks there is a separate transaction fee that may be the equivalent of to 3% to 7% of the amount of each check. In addition, the interest rate on this credit card loan can be much higher than the credit card rate on your standard credit card purchases. If the credit card check has an introductory cash advance offer, be sure to know what the time frame is pay this amount back and other conditions that may apply. For some credit card convenience checks the bank credit card company begins charging interest on the amount of the check when the check posts to the credit card account, even if the credit card company normally allows a grace period on credit card charges for standard purchases and transactions.
Another twist on credit card convenience checks is the loss of some consumer protections that are standard with normal credit card purchases. As an example, normal credit card purchases are protected under the Fair Credit Billing Act that allows the account holder to withhold the payment for defective goods, with conditions. This same protection does not exist with the use of credit card convenience checks. And finally, these credit card checks often are not counted towards credit card rewards programs or rebates. As inconsequential as that may first appear, credit card rewards used properly is one of the true benefits of good credit card management.
Credit card convenience checks are thrown at many credit card customers like Monopoly money but, these checks can also thrust many consumers into greater debt as well as long term credit problems. These credit card services can be very expensive if not used properly. Always make sure you know your credit card rates, credit card balance and credit card limit before using these products. For those who do want utilize these services, shop and compare the best credit card terms and conditions and find the best credit card first.
Tags: bank credit card, best credit card, credit card, credit card balance, credit card cash, credit card companies, credit card debt, credit card fees, credit card interest, credit card limit, credit card rate, credit card rewards, credit card services
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