uSwitch slams card firms for 'indefensible' cash withdrawal charges

14/10/2008

Credit card providers are accused today of "cashing in" on vulnerable customers, in a new report from financial website uSwitch.

According to the new data, over a million Britons are using cash withdrawals on their credit cards - which are charged at rates of up to 32 per cent APR - to pay off their mortgage repayments, loans or household bills.

Worse still, around 700,000 were found by uSwitch to be withdrawing cash from one credit card in order to pay off the debt from another, potentially locking themselves into a debt spiral.

The uSwitch data also shows that APRs for taking cash out on the cards has increased by 41 per cent since 2005 - and now stands at around twice the average purchase APR.

This means that, as the economy slows and more and more people use the withdrawals to make ends meet, personal debts are likely to climb still higher than they would do otherwise.

Louise Bond, personal finance manager at uSwitch, said: "People who use a credit card to withdraw cash may already be struggling under the burden of debt and are forced 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 them.
"While we accept that credit card providers have to make money, and that cash withdrawals carry a higher risk of people getting into bad debt, it is indefensible for companies to penalise their most vulnerable customers."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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