When is your credit card not a credit card?

Credit cards are a staple of the nation’s spending ways, but complicated charges and fees could result in consumers paying much more on certain transactions when using them according to MoneySupermarket.com.

  • Foreign currency and postal orders among transactions charged as cash
  • Credit card gamblers warned against using their plastic

The analysis by Britain’s number one comparison site into a wide range of transactions treated as ‘cash advances’ by credit card providers, found in most cases these transactions are charged at a much higher rate of interest than standard purchases on the card, with the interest also accruing from the date of the transaction. Cash advance transactions include any form of money transfer, buying postal orders, travel money purchases; all of which will be charged on your credit card in the same way as a cash withdrawal.

Any forms of gambling as well as traditional ATM cash withdrawals are also all treated as a cash advance and as a result anyone using a credit card for these transactions may face higher APRs, typically 23 to 28 per cent according to the analysis.

For anyone looking to use a credit card for cash or cash equivalent should consider opting for a card which offers a low rate of interest across the board. For example, The Co-operative Bank offers a low rate Fixed Rate credit card which charges 9.9 per cent APR on all transaction types, including cash advances.


Kevin Mountford, head of banking at MoneySupermarket said: “With all financial products, it is really important to check the terms and conditions applied, and credit card users should be extra careful about how and where they use their card. 

“Most consumers are aware that taking cash from an ATM on a credit card can be expensive, however, many may not understand where else their provider will treat purchases as a ‘cash advance’ and they could end up making a pricey mistake. A rule of thumb is that any transaction which buys you cash or the equivalent of cash will be charged at the higher rate of interest and the transaction won’t benefit from the interest free period you get on standard purchases.

“Credit card users may also not be aware that any kind or money transfer or travel money purchase made on a credit card is charged in the same way as a cash withdrawal meaning holidaymakers could be losing out on some serious spending money. Avoiding unnecessary charges is essential as they soon rack up and can end up being a very costly mistake. If you do need to use a card for cash, opt for one that charges a lower rate of interest, or pay off the transaction as soon as possible and don’t necessarily wait for your credit card bill to drop on your doormat.”

- Ends -

Notes to editors:

Credit Card

Cash Transaction APR

Definition of Cash Transaction

Virgin Credit Card

27.90%

A transaction under which you receive cash or a cash substitute by using your card or card number, including foreign currency, traveller's cheques, postal order, gambling transactions and any electronic transfers of cash which are not money transfers.

M&S Credit Card

23.9% to 25.9%

Any cash withdrawal, purchase of travellers cheques or foreign currency (other than from Marks & Spencer plc), cheque transaction, money order or electronic money transfer (excluding balance transfers), any payment by Direct Debit and any betting or gambling transaction.

Barclaycard (Platinum)

27.90%

Use of card for ATM withdrawals, cheques and foreign currency.
Gambling transactions are dependent on how the merchants process the transaction.

Royal Bank of Scotland (Platinum)

24.90% to 27.95%

Defined as cash at ATM, gambling transactions, foreign currency, money transfers or cash in branch.

NatWest (Platinum)

MBNA (Credit Card)

27.90%

A transaction under which you receive cash or a cash substitute by using your card or card number, including foreign currency, traveller's cheques, postal order, gambling transactions and any electronic transfers of cash which are not money transfers.

Capital One (Aspire World)

19.94%

means a withdrawal of cash made by you or any cardholder and also means any transaction made where you or any cardholder: obtain foreign currency, travellers' cheques and/or money orders; make an electronic money transfer (excluding balance transfers); make a payment to open a deposit account; carry out a transaction where payment is made to an establishment that is identifiable as carrying on gambling and the purpose of the transaction is payment for gambling activity.

Sainsbury's (Credit Card)

24.93%

Cash advance - cash, traveller's cheques or foreign currency obtained by using the card or money transfers, finance payments or gambling transactions made with the card.

Halifax (All in One)

27.95%

Cash advance - cash, traveller's cheques or foreign currency obtained by using the card or money transfers, finance payments or gambling transactions made with the card.

Lloyds TSB (Platinum)

24.9% to 27.95%

Any cash withdrawal, advances made by Card or Card number, gambling transactions, purchases of currency and cash related transactions such as the purchase of travellers cheques, money orders or gaming chips.

Sourced by http://www.moneysupermarket.com/ 12.06.2012


 

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