Is it just me or has there been a flurry of credit card cheques suddenly appearing in our mailboxes?  After speaking with friends and family, it appears that maybe the credit card providers are having a final push on sending out unsolicited (unrequested) credit card cheques.

For those of you who are wondering what a credit card cheque is, they are blank cheques which are often included with your monthly credit card statement. They effectively work like ordinary cheques, but the money is charged to your credit card instead of coming from a bank account. You can also pay money into your current account using these cheques, which will again be charged to your credit card. But beware, as they have a far more expensive APR than paying for purchases on your credit card.  Credit card cheques are treated as if you were withdrawing cash on your credit card and as such you will be charged handling fees of around 2.5 per cent of the value of the cheque – so for example on a cheque of £1,000, a £25 fee would be charged to you straight away.

Credit card cheques have always been controversial as most people are not aware of the charges and fees associated with them.  Our research found that 97% of credit card cheques issued in 2008 were unsolicited. Of those people who used the cheques (1.5 million), 86% of them did not understand the charges.  The fact that the majority of cheques are unsolicited coupled with the fact that people are unclear of the associated costs has led the government to take action.

In July 2009, the Government published a White Paper proposing a host of consumer protection reforms, one of which is banning credit card providers from sending out cheques except in response to a specific request from a customer at a particular time.  This is good news for consumers, but at the moment, this has not been passed as law.

As a last note, please be careful, as these cheques are an expensive option and should only ever be used as a last resort.