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It is a cash advance with higher interest rates that start from day one. Never ever use them. It’s no real status. It’s just dumb to use.
@Anonymous wrote:
Is it a reflection of your credit standing with the credit card company to receive a convenience check? Further, Is it a negative if you ask and they say no? Or are they just generated at certain times of the year and that is that?
A "convenience check" is just another way for an issuer to get you to take a cash advance or balance transfer (check the fine print). Some lenders send these all the time, others never - many will send them once in a while such as Holiday spending or Summer vacation spending time(s) of the year.
If it's a balance transfer offer and its a good deal like 12-15 months at 0% in exchange for 2-3% upfront, do the math its a good deal. On the other hand, if its a cash advance at a higher APR with no deferred interest its just a way to get you to think of it as "spendable money" rather than a high-interest loan.
They are a trap.
Let's say you use a $500 convenience check. It starts generating interest at some low rate you have decided is a good deal. OK!
But then you spend $100 on that credit card in a store. And of course when you get your bill you go and pay the $100 off. So your $500 that you borrowed at a low rate is still there, right? And when it comes due you will pay it, probably saving interest from some other card via a balance transfer, or some such?
WRONG.
What you now have is $400 running at the low interest rate and $100 running at the full high interest rate. They always apply your payment ot the lowest interest debt you owe, keeping the high interest debt running. Or at least a lot of them do--you need to read the fine print. So it tricks you into running up a bunch of high interest credit card debt when you think you're running low interest debt.
I rip these things up whenever I get them. I should look into how to actually go about telling the issuers to never, ever send them -- the only thing they do is provide an opportunity for a mail thief to steal money since I'm never going to use it.
My guess is that you feel like your initial question has been answered. If not, then my take is:
Not a reflection
Not a negative
Often just sent at various times of the year (e.g. Nov/Dec to induce spending)
As far as the other issues raised, my feeling is that in one sense they are never good. The example we have heard of a good one is a 0% balance transfer with an up front 2% fee. That's only good if you have a lot of high interest debt. But that situation is a bad situation to be in; it's a symptom of probable bad spending and saving habits. So even when they are good they are a symptom of something bad going on.
The other commenters are hitting on a good point, which is that everyone should be trying to get to a place ASAP when they are confident they will always rip them up. That's the goal everyone should have. If a person thinks they might be appealing in the future, that's because he expects to be in high interest debt in the future.
I think they CAN be useful, but like many things you need to pay attention and not assume anything. Let's say its Winter and you need a new heating system for your house price $9000 (trust me that's a possible cost). You can put it on a low-interest rate card or perhaps with deferred interest for 6 months (like BlisPay or Lowes). At the 6 month point where either interest is charged, you use convenience check at 2% up front and 0% for 18 months (such as op said he had), Given this example, you'd have 24 months to pay in full the $9000 with you only interest being 2% upfront - that's a pretty good deal.
I should note that I had to replace a heat pump and furnace at the same time and it wiped out savings (not investments) and I had a new roof put on the House through Lowes 84 months at I think it was 3.99% at the time (paid it off in 28 months). Sometimes its good to have options other than 19.99% APR on a high limit basic card.