A credit card cheque is like a normal cheque, but the money goes on your credit card bill instead of coming out of your bank account. If your credit card falls on a payment period in which you have insufficient funds in your account, you may see a cheque in your account. The cheque expires after it has been used.
The timing of the cheque is important. If the cheque is dated prior to the payment period, it may help the bank determine your availability to pay. If it is dated after the payment period, the bank could cancel the cheque and allow you to pay with another form of payment that may be more convenient for you.
Another possible benefit of a credit card cheque is that your creditor may send you an “invoice” at the end of the payment period that you can follow to avoid a late payment fee, as shown in the chart below. Note that the bank may avoid paying a late payment fee if the credit card provider’s rate is below the balance-due amount for your account.
Of course, if you fall behind on your payments, you can still use a credit card cheque to make up the shortfall.
When to Use Credit Card Cheques
You are unlikely to need to use a credit card cheque after you’ve established an established payment pattern. For example, this could be when you’ve made a regular payment every few weeks for years and then have skipped payment periods. If you have a personal chequing account and rely on that for your payments, you may be able to use a credit card cheque to avoid paying an early payment fee or to make up for an overdue payment.
Cancelling a Credit Card Cheque for Payday Loans
An unscheduled payment does not always mean you should cancel your cheque. If a payment you haven’t paid can’t be stopped, the cheque should be cancelled. If your scheduled payment falls on a payment period in which you have insufficient funds in your account, you may see a cheque in your account that will need to be paid. You should also cancel your credit card cheque before your scheduled payment date and ensure you get rid of any other questionable cheques.
You may not have a regular payment pattern, but you do have financial need. You can still use a credit card cheque to make up for the lack of funds in your account, as shown in the chart below. Note that credit card cheques expire after you have used them.
If you have to make a payment more than once in a week, it may be better to pay with your regular payment method for the time being.
Reviewing the amount owing on your credit card is a good practice, as it makes it easier to keep track of your credit score.
You will be able to pay off your account more quickly with an account that has a payment history.