Credit Card Cash Problem

Posted by Tom Wilkins on Fri 31st August 2007 at 06:00 AM, Filed in Credit News

Credit cards do offer a wide range of useful features. However, one complaint that often crops up is the cost of withdrawing cash.

It seems that many credit card companies see cash withdrawals as an easy meal ticket. I suppose they’ve got to make their money somewhere but the fees and interest on cash withdrawals is gradually becoming a problem.

Here’s why:

1. Card issuers begin charging you interest as soon as you withdraw the cash.

2. In contrast, many cards offer interest free periods on purchases if you pay off the balance in full.

3. Interest rates charged on cash withdrawals from credit cards is significantly higher than that charged on purchases. E.g American Express charges 20pc on cash withdrawals, compared with 18.9pc on purchases, according to a recent survey..

4. A fee of 1.5% is usually charged on any cash withdrawal.

5. Really watch out when you’re abroad. You might get a double whammy of cash charges and interest, plus currency conversion fees. Ouch. UK based Nationwide Credit Card is always best for use on holiday.

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