Friday, October 20th, 2017

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Ask the Expert: Twitter @youngmoney

Q: Twitter
if i’m selling a horse, is it ok for me to accept a credit card check? or is that too risky. should i just hold out for cash?

A: Response from @youngmoney
It’s most likely safe to accept that check as payment. Before you give the horse over, chk with ur bank that funds are there.

It’s hard to give a detailed answer and stay within Twitter’s 140-character limit. Therefore, if you Tweet us a question we will answer you right away, and then elaborate on the answer here. To follow us on Twitter: @youngmoney.

We live in a world of online retailers and anonymous transactions. Every day millions of people buy something from someone they will never meet. Ebay and Craigslist are two popular examples.  Whenever you complete a transaction on one of these sites you are putting your trust in the person on the other end, either to pay you or to complete your order. Whether you are a buyer or a seller, it can be a gamble.

If you are an online merchant, or you’re just trying to sell the lamp your grandmother left you, you may be faced with the question, "Should I accept a cash advance check as a payment?"

Josh Heckathorn, President of creditnet.com, says, “Go right ahead and accept it. If you already accept personal checks as a form of payment, a credit card check isn’t much different from your perspective and won’t cost you anything to cash it.  You might even consider it better than a personal check because the check is backed by the bank, not the individual." 

However, credit card checks are costly to the person writing it and might also be a red flag that he or she is short on cash.  If this person is making monthly payments of any kind to you, you may want to discuss why a credit card check is being used as opposed to a personal check."

Writing a check from your credit card company usually carries a high interest rate—a higher rate than you are charged for making purchases or transferring money. Furthermore, there isn’t a grace period for the check-writer to pay back the debt. This means that interest fees begin to accumulate automatically.

 These interest fees can amount to annualized interest rates that are sky-high. Finally, credit card companies have a nasty habit of applying your payments to the lowest interest rate loan that you have with them. This allows the credit card companies to earn more interest on your loan. Unfortunately, it also means more time for you to pay everything off. While the new credit card legislation is working to fix this, it can’t stop people from taking cash advances off of their credit cards. If you are considering paying for something with a credit card check take a moment and rethink it. Consider if there is any other way to pay for your purchase, if not, carefully weigh whether or not you really need to make the purchase in the first place.

Thanks for the question.

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