With your shopping list about to undergo its annual growth spurt, it can be especially tempting to use those convenience checks tucked inside mailings from your credit card issuer.
The checks allow you to make purchases, get cash advances or even transfer balances from other credit cards.
But before you bite, beware the hidden dangers.
Typically, the checks are much costlier to use than a credit card, said Bill Hardekopf, CEO at the credit card comparison website Lowcards.com.
In most cases, the best thing to do with them is "make a beeline to the shredder," he said.
For one thing, the interest rate for using convenience checks usually is a lot higher -- often above 20 percent -- than on credit card purchases. And typically there's no grace period, meaning interest starts accruing as soon as the check is processed.
In addition, there's usually an upfront fee of some 3 percent to 4 percent of the check amount, or $15 to $20 on a $500 check.
Another negative is that spending via convenience check normally doesn't qualify for earning cash back or other rewards that the cardholder may be getting for using a credit card.
Some card issuers try to entice people to use convenience checks by offering a promotional zero percent interest rate. In that case, it might be worth using them, Mr. Hardekopf said, perhaps to pay off a balance on another credit card with a higher interest rate, as long as the rate doesn't zoom too high after the promotional period ends.
The best strategy would be to avoid all interest charges by paying off the balance before the promotion expires, he said.
Also consider whether the card issuer is waiving the typical 3 percent to 4 percent upfront fee as part of the promotion.
People should be aware that convenience checks count against the credit limit on their accounts, Mr. Hardekopf said. If a convenience check exceeds the limit, the card issuer might not honor the check, which probably will trigger a returned check fee by the merchant. If the check is honored, the card company likely will charge an over-the-limit fee.
For people who know that they'll never use the checks or those who don't want the temptation, it might be worth calling their credit card companies and asking that the companies stop sending the checks.
Patricia Sabatini: firstname.lastname@example.org or 412-263-3066.