Which of the following statements about credit card convenience checks is true?

• A. They often have higher interest rates than regular credit card purchases.
• B. They always offer a grace period before interest is charged.
• C. They are not subject to any fees or charges.
• D. They do not affect your available credit limit.

Answer: (A)

Verified step by step guidance

1. Understand the concept of credit card convenience checks: These are checks provided by credit card companies that allow cardholders to access their credit line in the form of a check. They are often used for payments where credit cards are not accepted.
2. Analyze the interest rate aspect: Credit card convenience checks typically have higher interest rates compared to regular credit card purchases. This is an important feature to consider when evaluating their cost.
3. Evaluate the grace period: Unlike regular credit card purchases, convenience checks often do not offer a grace period before interest is charged. Interest may start accruing immediately upon use.
4. Consider fees and charges: Convenience checks are usually subject to additional fees, such as transaction fees or cash advance fees, which can increase the overall cost of using them.
5. Assess the impact on credit limit: Using a convenience check affects your available credit limit, as the amount used is deducted from your total credit line, similar to a regular credit card transaction.