Credit Card News Cardholders Warned About Credit Card Cheques 7657041
Cardholders warned about credit card cheques
27 January 2005
Moneynet.co.uk has said that credit card providers are currently sending millions of cheques to customers in the hope they will use them to settle their Christmas debts.
The cheques let customers buy goods from places which do not accept credit cards and can make a payment to an individual easier as well as allowing people to post-date payments.
However, Moneynet.co.uk is advising cardholders to think carefully before using the cheques, as they often incur a two per cent handling fee.
“Many people will be feeling the pinch as all the bills start to roll in, and will be tempted to use these cheques – but they could find it an expensive option,” said Moneynet.co.uk’s chief executive Richard Brown.
“A two per cent fee is very hefty, and even if the card companies protest that there is a cap the more expensive ones can easily cost up to £35 for the privilege of writing a cheque. It would be cheaper to arrange an alternative form of borrowing,” he added.
In addition to handling fees, credit card cheques often have APRs in excess of 20 per cent, with interest charged from the moment the cheque is cashed.
“At four times the base rate, consumers may want to think twice before using these cheques. And don’t forget, users also forfeit the benefit of the lengthy interest free periods available on standard credit card spending,” Mr Brown concluded.
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