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'Credit card cheques – convenience at a price'

October 9, 2007 at 11:03 am

Have you received credit card cheques from your card provider recently? If you have, you are certainly not alone. Thousands of UK consumers are being tempted to cash in this type of cheque without being fully aware of the costly consequences, according to Which?, the consumer champion.

Credit card cheques allow you to make payments using your credit card account in situations where cards themselves are not accepted. They sound like a good idea in theory, but they are expensive. The Office of Fair Trading (OFT) declared in April 2006 that “credit card default charges … have generally been set at a significantly higher level than is legally fair.” The maximum penalty fee was set at £12, and thousands of consumers have subsequently, successfully reclaimed card charges. Meanwhile, according to consumer organisation Which?, credit card providers have been trying to rack up the cost of their other services to try and offset the sudden loss of income.

Which? Money Editor Martyn Hocking said, “Credit card providers seem to be resorting to a raft of ingenious methods to recoup lost revenue following the OFT crackdown on penalty fees.” This includes credit card cheques.

Although the terms and conditions must be clearly stated by the credit card company, industry specialists are concerned about the volume of unsolicited cheques which are currently being sent out to customers, who are often ignorant about this form of payment. Many customers don’t realise that these cheques attract higher interest rates than a “normal” credit card transaction. Because credit card cheques are not sent out in a book, but singly or as a sheet with multiple cheques, they can be harder to keep track of – and therefore an easy target for fraudsters.

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