Blank Checks From Your Credit Card Company – Yes or No?
As you keep your credit cards in good standing, you might receive blank checks in the mail as an additional perk. Unfortunately, in many cases, the checks can cause you more problems than they are worth. Although you can use the checks as a cash advance, it might make more sense to destroy them on sight. Furthermore, you should probably request a stop order to keep your credit card company from sending checks to your home in the future. Read on to learn more about the risks associated with receiving and using these tempting blank checks.
You can use the Blank Checks From Your Credit Card Company to pay off entities that do not accept cards, such as mortgage offices or certain retailers. Unfortunately, since you do not actually have any money backing the blank checks, fees tied to your credit card apply to the funds spent. Furthermore, most credit card companies apply up to 5% more in charges, labeled as cash advance fees. The resulting APR for that purchase may reach up to 30% of the total cost.
No Grace Period
Even if your credit card comes with a no interest grace period for certain purchases, using cash advance checks negates that benefit. Instead, the interest rate will instantly apply to the balance at the end of the month. Furthermore, if you pay the minimum amount due each month, the funds will not cover the total written on the check. Instead, the total payment simply applies to the balance from using your credit card itself. If possible, you should always strive to clear your credit card balance by the end of the month to avoid associated fees and interest charges.
Credit Score Dive
Maintaining a high balance, especially as the cash advance charges spiral out of control, can quickly drop your credit score. Credit monitoring companies measure your total amount of debt against the assigned credit limit to find the current ratio. If the ratio doesn’t match the ideal of 10% debt to available credit, and remains that way for more than a month, your score will take a dive. Skip the cash advance checks to keep your balance tightly controlled to stay in range of the ideal ratio.
Identity Theft Risk
If you do not specifically request the delivery of a blank check, its presence in your mailbox is a huge risk of identity theft. Thieves dig through the mail in search of items that they can manipulate for a profit. Criminals can easily alter and cash a blank check in your name, tying the resulting charges to your credit card account. At that point, you’re on the line for the charges until you can prove that the check was stolen and used by someone else.
Solving The Dilemma
Simply talk to an associate from your credit card company to end this perk for good. After placing your request, you will only be able to obtain a cash advance on the fly by using your card in an ATM. Remember that all of the fees and risk associated with using the blank check also apply to cash advances obtained using your card. In fact, you may be better off trying to secure a line of credit from your bank instead. Always investigate all of the other funding options before committing to the terms.