Taking cash out with a credit card 'can be expensive'
Published On 5 June 2007
Consumers who use their credit card to withdraw cash from ATMs are being charged very high rates of interest on their borrowing, a new report suggests.According to consumer website MoneyExpert.com, the average APR charged for customers using credit cards to take money out of an ATM is now 23.48 per cent. This represents an increase of over two per cent compared to the typical rate in November 2006.
However, the website also reports that the highest APR charged by a credit card provider on these transactions is 46.19 per cent.
While most credit card companies charge people for simply using their credit card to withdraw money from an ATM, some - including Egg Money, Abbey and the Co-Operative Bank - do not.
"Borrowing cash on your credit card is incredibly expensive and unless it’s really necessary we'd urge people to think twice before doing it," explained Sean Gardner, chief executive of the site.
"It can be tempting to use you credit card to take out cash but if you do you should clear the balance as soon as possible. Using a debit card for cash withdrawals is almost always the best idea."
Data suggests that other financial options - like homeowner loans - could be a cheaper way of borrowing money.
