Capital One has just sent me some credit card cheques, delightfully telling me I’m lucky enough to have been specially selected. Well I don’t feel special, I feel insulted, and I feel an industry that perpetuates this type of action is acting irresponsibly.
Much has been written about the evils of credit card cheques, not just from Capital One, but most Credit Card providers. Yet often these complaints just skim the surface – there are many more hideous terms hiding beneath.
The Usual Reason To Spit
Most normal bile for CC cheques arises because they’re an obvious incitement to over borrow. They make it easier to use the money for anything or just to withdraw cash. They look and feel like normal cheques, and have that ‘oh it’s not real money’ spending pattern on them.
The Real Reason To Spit
Take a closer look at CC cheques and you realise where the real problems stem from:
For example Capital One’s No Hassle Platinum card costs 6.9% for spending and balance transfers, yet 20% on cash withdrawals – so you pay nearly three times as much. In the letter I received (for a different Capital One Card) the cash interest rate wasn’t in the main print, so for those who don’t know cash withdrawals cost a lot more (probably the majority of people) they’re going to assume it’s the same.
Now don’t confuse this with a 0% introductory offer. This is the term that means pay off in full at the end of the month and you won’t pay interest. So, withdraw cash or spend on a cheque and even if you were to repay in full at the end of the month, you’d pay interest and at that much higher rate.
That’s why CC Cheques are devilish. If you do receive a credit card chequebook shred it, burn it, eat, it, bury it, just don’t use it. (To any children reading, of course I don’t actually mean eat it, it’s just to make a point!)