Fresh warning over credit card cheques

Writing a credit card cheque can cost consumers more than 30, a new report has said.

16:53 26 January 2005

Writing a credit card cheque can cost consumers more than 30, a new report has said.

Credit card firms are in the process of sending out millions of cheques, hoping customers will use them to settle up their Christmas debts, Moneynet.co.uk has said.

Credit card cheques allow customers to buy goods from suppliers who do not accept credit cards. In theory they also allow a cardholder to more easily make a payment to an individual, and to post-date a payment.

But Moneynet.co.uk is advising consumers to think twice before using this service, which incurs a two per cent handling fee.

The organisation's chief executive Richard Brown said: "Many people will be feeling the pinch as all the bills start to roll in, and will be tempted to use these cheques - but they could find it an expensive option.

"A two per cent fee is very hefty, and even if the card companies protest that there is a cap the more expensive ones can easily cost up to 35 for the privilege of writing a cheque. It would be cheaper to arrange an alternative form of borrowing," he said.

James Plaskitt MP has tabled an amendment to the Consumer Credit Bill this month that will prevent credit card companies from sending out unsolicited credit card cheques to consumers.

He explained: "They are a deliberate attempt to get people to use up their credit lines.

"The case for their very existence is weak - the case for their unsolicited issuing is just non-existent."