The Canadian government is bringing in new regulations requiring credit companies to stop sending unsolicited convenience cheques to customers.
These cheques usually offer low interest rates, some times as low as 1.99%, for a specific period, like six months, after which the regular interest rate will kick-in. They can be used for purchases, balance transfer or as cash advances.
While this might come as a short-term advantage, money and credit experts generally are cautious about using these cheques.
One of the major setbacks is the cash-advance interest rate. Unlike other purchases, there is no grace period for payment for cash advances. You pay from the day you took the cash, and this interest is very high.
Another concern about these cheques is that they tempt people to buy unnecessarily.
According to the government plan, financial institutions will need the express consent of the clients before they can mail the convenience cheques.
More information about the regulation, and when it will come into effect, is expected in the coming weeks.