Credit Card Cash Withdrawal Costs Rise

Wednesday, March 21, 2007

Credit Card Cash Withdrawal Costs Rise

According to recent research, many UK credit card holders are actually unaware of the true cost of withdrawing cash from ATM's with their credit card. Many don't realise that the APR charged for cash withdrawals has risen significantly, making it more expensive to lift cash on credit cards.

The research conducted by price comparison website uSwitch, revealed that since May 2005 cash withdrawal fees have risen relatively unnoticed by UK consumers from an average APR of 20.83% to 27.06%. May 2005 saw the Office of Fair Trading (OFT), in conjunction with the Department of Trade, begin an investigation designed to reform the way credit card APR's were advertised.

The rise in the cost of withdrawing cash on credit cards will have a greater impact on UK consumers after the website revealed that since the introduction of Chip and Pin in February 2006, there has been a 11% increase in the number of UK consumers who withdraw cash using their credit cards.

Nick White, director of financial services at uSwitch, said: "People who use a credit card to withdraw cash may already be struggling under the burden of debt and are having to resort to this method of borrowing to make ends meet.

"They can ill afford to pay the exorbitant rates of interest that most lenders are now charging."

However, APACS, the UK's payments association, strongly disagreed with uSwitch's findings, saying that according to their figures the number of cash withdrawals made using credit cards had actually dropped by 8% last year. APACS also added that the number of cash withdrawals made using credit cards in the UK is small when compared to those made using debit cards.

Sandra Quinn, APACS communications director, added: "This (uSwitch) claim is based on unclear methodology rather than the industry-wide figures that we collate directly from UK credit card issuers. We would encourage uSwitch to check its facts before making such claims."

Source

http://www.cardguide.co.uk/news/200703/credit_card_cash_withdrawal.html