Charges on ATM withdrawals increase

30/11/2009

The cost of taking out cash on credit cards has increased over the past 12 months, according to data from MoneyExpert.com.

Typically, ATM withdrawals on the cards are being charged at 25.37 per cent APR, an annual increase of around 0.5 per cent.

Customers are also hit by an immediate average fee worth 2.73 per cent of the transaction itself, meaning that they lose out on the withdrawals even if they pay their card bill immediately.

The transactions not only increase credit card balances - leaving customers at a bigger risk of falling into uncontrolled unsecured debt - but are more expensive than interest- and charge-free debit card withdrawals.

However, many customers who are overdrawn on their bank accounts might prefer to avoid debit card transactions of this kind, as they could push balances to above the authorised overdraft limits and trigger bank charges.

Pierre Williams, head of research at MoneyExpert.com, said: "The APRs charged on cash withdrawals have always been high compared to those for purchases but the gap appears to be widening.

"Now more than ever, despite pressures to spend in the run up to Christmas, we’d advise consumers not to use credit cards to withdraw cash. In almost every case, doing so is a lose-lose scenario."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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