Dec 06, 2004 -- Gotchas on convenience checks and credit
Have you ever gotten convenience checks in the mail from your credit card company? They usually come in a batch of three and are offered as a “convenience” for those bills you’ve accumulated after the holidays. But they’re not convenient at all because each check has different terms and conditions than the other two. For example, one check might have zero percent interest while another is 9.9 percent for an unlimited amount of time. The big gotcha is what happens when you use one of the checks and continue to use your card at the same time. Let’s say the regular rate on your card is 15 percent and the convenience check carries 5 percent interest. When you send in money, you probably expect that it’s going toward the 15 percent balance. But the credit card company applies it to the 5 percent balance so that more of your outstanding money is at a higher interest rate. So, when doing convenience check offers make sure that you have no outstanding balances on the account and that you don’t use the credit card until you’re done paying off the “convenience” charges.
A similar situation is happening to consumers who own Lowe’s or Home Depot cards. These two competitors are in legal trouble because of their store credit cards, which are operated by GE. Both companies told customers that if they used their store credit cards, and spent a certain amount of money, they would have no interest for six months. The problem arose when people sent in their payments. GE applied the payment to the zero percent balance and no money toward higher-interest balances. Home Depot and Lowe’s have now reached an agreement, whereby people can choose which account they’d like the money to be applied to. Also, avoid “No, No, No” plans when buying things. Companies that do these plans avoid telling you when the deadline is for your free interest period. That’s because the interest on that purchase is retroactive (usually at 22 percent to 25 percent) to the date of purchase if it’s not paid off by the deadline. Also remember to send every payment by Fed Ex or UPS tracking. 
