Credit Card Checks

Credit card checks are checks that allow for money to be withdrawn on the credit card.  They are like normal bank checks in that they can be paid to anyone, although some are made out to the account holder and can only be paid to that person.

Credit card checks are treated as cash advances.  This means that they fall under the cash advance rules that credit card companies operate.  Cash advances are rarely treated as well as credit card purchases.  For a start cash advances have no grace period.  This means that interest is charged from the day a check is cashed, unlike a purchase when interest is usually charged a set number of days after sending the statement.
If money is taken out with a credit check then this will count against the cash withdrawal limit.  The cash withdrawal limit is a lower amount than the overall credit limit, and usually a proportion of the credit limit. 

As a cash withdrawal, credit card checks are likely to attract a higher rate of interest.  Cash withdrawals rarely attract promotional rates of interest, and are almost always the most expensive non penalty rate available on the credit card compared to the rate on purchases and credit card balance transfers.

Credit card checks are known as fraud risks as if the mail is stolen then they can be easily used.  However credit card companies have moved against this, making credit card checks harder to alter and not holding the borrower liable for any reported fraud, unlike credit cards where the card holder is liable for some of the overspending.  As with all personal mail, it is advisable to shred all unused checks to stop identity fraud.
The Credit Card Act 2009 can complicate sending credit card checks as it can be construed as raising the credit limit.  This is a grey area, but it is likely that this will slow down the amount of credit card checks being sent.

One common use of credit card checks has been to pay for home down payments, particularly when 100% mortgages are no longer available.  This is strongly advised against by various experts partly because of the very high interest involved which mounts up far faster than the asset value, and partly because it can be seen as fraud.  Most mortgage companies will count credit card checks against current borrowings and so against the borrowing requirement, while if the credit card check is taken by a relative and then gifted then this can be viewed as fraud as it is not a real gift.

It is possible to ask providers to stop sending credit checks.  Not all providers will do this, but the main credit card providers mostly offer this service.  It sometimes takes a couple of months from the request before the checks stop being sent.