Credit Card Cash Withdrawal Fees Rise

19th March 2007

Credit card customers are being urged to think again before using a credit card to withdraw cash from a cash machine, with a recent survey showing that fees for cash withdrawals have risen substantially over the last two years.

Research by the price comparison website uSwitch, has discovered that the average APR for credit card cash withdrawals has climbed to 27.06%, up from 20.83% before reforms were brought in by the Department of Trade and Industry, in May 2005, which were aimed at making it easier for consumers to compare different products.

These changes restricted the use of Annual Percentage Rates (APR's) in credit card advertising to main purchase rates, but an unforeseen consequence has been the large increases in the rates that credit card companies now charge their credit card holders for withdrawing cash.

Withdrawing cash using a credit card will immediately incur interest costs, as there is no interest free period on a cash advance, and will continue to incur interest until the full amount is repaid. Our advice would be to only withdraw cash using a credit card as a last resort to avoid paying interest at the very high rate being charged.

As always we recommend that you read the small print relevant to your own credit card to see what your credit card cash advance interest rates are.