5 Credit Card Features You Shouldn't Use

Most credit cards come packed with money-saving benefits, offering perks ranging from car rental insurance to return protection to extended warranty coverage. Some credit card features and perks come with hidden costs and charges that can threaten your budget — or cause you more hassle than the benefits are worth. Here are five such benefits that most people should avoid.

Credit Card Convenience Checks

Those reams of blank checks you receive from your credit card issuer may look appealing — especially if they advertise a short-term 0% APR offer on balance transfers. Think twice before using them. Convenience checks often come with substantial rates and fees.

For example, if you use the check to pay bills or cash it at a bank, you could wind up paying a cash advance APR as high as 25% to 36%, and you may also be charged a transaction fee. Similarly, if you use the checks to transfer a balance from another card, interest-free, you’ll likely have to pay a balance transfer fee as high as 3% to 5%.

ATM Cash Advances

Using your credit card to withdraw cash from an ATM is also a bad idea. Some credit card issuers charge even more to withdraw cash from an ATM than they charge to use convenience checks. For example, an issuer might charge a 3% cash advance transaction fee if you use a check, but charge a 5% transaction fee if you pull cash from an ATM. You’ll also have to pay a higher cash advance APR if you carry over the amount you borrowed. Don’t expect to pay a tiny fee if you just withdraw a small amount, such as $20, either.

Issuers typically charge a minimum of $10 for transaction fees, or 3% to 5% of the full transaction, whichever amount is greater.

Interest-Free Balance Transfers

A 0% balance transfer with a lengthy promotional period could save you money if you have a lot of debt to trim, allowing you time to pay off your debt without building up more interest. These balance transfers often charge a fee, and if your card charges an above-average fee — such as 4% to 5% of the transferred balance — you could wind up paying hundreds of dollars in fees before you’ve even had a chance to tackle your balance. You’re better off instead looking for a card that doesn’t charge an initial balance transfer fee, but still offers a promotion, such as the Barclaycard Ring MasterCard, the BankAmericard Mastercard or the Chase Slate card.

Merchandise and Gift Card Rewards

Many credit cards offer merchandise and gift cards that you can buy with your rewards points. Check to see if you can use your points for a reward with a higher redemption value first. Merchandise and gift cards often have significantly lower redemption values than other card rewards, such as travel or cash-back. Depending on your credit card issuer, that means that 50,000 rewards points could potentially buy you $350 worth of gift cards or more than $500 worth of airline tickets. It’s an easy choice, so make sure you do your homework and make sure you’re getting your money’s worth on your points.

Card Reward Transfer Programs

You’ll also want to be careful about transferring your rewards points to another hotel or airline loyalty program. Some credit cards let you transfer your points on a 1:1 basis, so you don’t lose any value on the points you earned. Other loyalty programs make you spend significantly more points to convert your rewards into a single airline mile or hotel rewards point. If you just need a small burst of points to buy a ticket or earn a free night’s hotel stay, slashing the value of your card rewards points might still be worth it.

Just do the math before you agree to convert your hard-earned points.