Convenience Check - Explained
What is a Convenience Check?
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What is a Convenience Check?
A convenience check is an order document (order to pay money) drawn on a credit card company. The credit card company provides the check to the cardholders who can use the check to make payment to a third party. Generally, the checks are limited to the following uses:
- Make a new purchase,
- Pay off the balance on an existing credit card, or
- Receive a cash advance from the credit card company.
The amount of payment becomes a debt that the credit card holder owes to the credit card company.
Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY
How Does a Convenience Check Work?
The limitations on the uses of the check serve to protect the credit card company in the event of default of payment. The percentage rate on funds borrowed through use of the convenience check may vary depending on what is purchased or paid with the check. For example, a purchase of a consumer good may be subject to a 10% APR (Annual Percentage Rate). A cash advance or balance transfer (using the check to pay off another credit card debt) may be subject to 15% APR. Additionally, the bank may charge an administrative fee for use of the convenience check. This is particularly common when the check is used to obtain a cash advance.
Related Topics
- Promissory Note
- Cashier's Check
- Convenience Check
- Certified Check
- Substitute Check
- Bill of Exchange
- Bank Draft
- Sight Draft
- Bankers Acceptance