Give Credit Card Cheques The Chop

Blank credit card cheques make very good bedding for hamsters. Don't use them for anything else though.

This morning my new credit card provider kindly sent me a couple of credit card cheques 'in case they'll come in handy'. At least this lot didn't come with the usual earnest attempt to persuade me to 'treat' myself, which is what my last card provider always urged me to do. I fed so many of the damn things through my shredder that it almost went into overdrive!

And that's what you should do with credit card cheques. Shred them! They're among the most expensive ways of borrowing. Usually, you pay interest immediately on what you're borrowed, the interest rate is normally very high and then there's the handling fee of around 2-3%. And don't forget the penalty charges if you write a cheque that takes you over your credit card limit.

You also don't get the protection of Section 75 of the Consumer Credit Act which ensures that your card provider has equal liability for anything that goes wrong with a purchase. If you have trouble sorting out a problem with a trader you can take action against the card issuer to get a refund as long as the goods you've paid for cost more than £100 and less than £30,000. (The legislation even applies if you only make a part-purchase - for example, by using your credit card to pay a deposit of, say, £20 for goods priced at £120).

So, convenient though they may be, think very carefully about using them.

Funnily enough, in the same post, I also got a letter from my old credit card provider confirming that they had closed my account. I've enjoyed an interest-free period of 18 months (yes, really) but it's pointless hanging on to an account that I'm never going to use and it's not enough simply to cut up the card.

This is particularly important if you regularly make use of 0% balance transfer deals by switching your debts from card to card. Your credit files won't look very good if they show that you've got numerous old and unused credit card accounts gathering dust - it'll look as if you've got 'too much' available credit so it's essential to formally close them. Besides, in time you may even qualify for new 0% balance transfer offers from card providers you've used in the past, as you'll probably be considered a new customer.

> Compare credit cards here at the Fool