A $2,000 check treated as a cash advance, with a 5% fee and a 29.99% rate, costs $100 the day it posts. Interest then runs about $50 a month until you start paying it down.
Paying in full every month won’t stop it. Purchases come with a grace period, which lets you skip interest by paying the statement balance by the due date. Cash advances usually don’t, so interest starts the day the check posts, even if you’ve never paid a cent of interest on purchases.
The exception is a check that comes with a promotional rate, sometimes 0%, for a set number of months. Even then you pay a fee, usually 3% to 5% of the check.
The rate table tells you which kind you’re holding. Federal rules require issuers to print it on the front of the page that holds the checks, and it lists:
- The rate the checks carry, promotional or not
- How long a promotional rate lasts
- The date you must use the checks by to get that rate
- The rate that applies once the promotion ends
- The fee for each check
- Whether a grace period applies or interest starts on the transaction date
A genuine 0% check can make sense for a bill that won’t take a card, such as a contractor who takes only checks. First confirm the 0% covers a check written to a business, since some offers apply it only to checks that pay off another card. Say you write a $2,000 check at 0% for 12 months with a 3% fee, pay about $172 a month, and charge nothing else to that card. It costs $60. On most cards, carrying a balance ends the grace period, so interest on new purchases starts the day you make them. Whatever you still owe when the 0% ends accrues interest at the rate that follows.
Shred the checks you won’t use, since anyone who pulls one from your mailbox or trash can write it against your credit line. If you’ll never want them, call your issuer and ask it to stop mailing them.
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