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Do you know what it costs you? 10 March 2006

    Has your credit card company ever sent you a batch of cheques to use on your credit card account? You might think this is a good idea - perhaps it will allow you to use credit when buying from a business that doesn't accept credit cards.

    Although it may be the case that credit card cheques allow for additional flexibility, purchases made by cheque can attract a higher interest rate than those made by card and there is often no interest free period as interest is charged as soon as the cheque is processed. Additional fees are also often charged for using a credit card cheque, typically two per cent of the value of the transaction.

    Chairman of the Isle of Man Office of Fair Trading, Quintin Gill MHK, advises:

    "If you are sent these cheques make sure you understand what costs are involved. Find out from the card company if the cheques are treated as cash advances rather than purchases - if cash advances, what charges do they incur? Find out what interest rate applies to the cheques and whether this differs from the rate charged for card purchases. Check when interest is charged and whether there is an interest free period. Also check if there are additional fees or charges, and if so, how much? Lastly, make sure you check whether using a credit card cheque offers you the same purchase protection as using a credit card."

    10th March 2006

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