Increase in Credit Card withdrawal charges

25/11/2009

Consumers are being told to watch out when using credit cards to draw money out as some providers have upped fees for cash advances over the past year.

It's claimed that the average annual interest rate for withdrawals from an ATM on a credit card is now 25.37 per cent, while in November 2008 it was 24.8 per cent.

Some card holders might not be aware that even if they pay off their balance straight away, they will still have to pay an average fee of 2.73 per cent of the value of the withdrawal.

So for example on a withdrawal of £200, customers would pay an extra £5.46.

Kevin Still Director of debt management company EuroDebt says "Cash withdrawal charges are just the tip of the iceberg.

The credit industry would regard regular cash withdrawals on a credit card in the UK as a sign of financial difficulty.

Consumers should also be aware of the significant rise in the interest rates on existing balances that are often increased by card issuers.

It's not rare for the minimum payment to now be equal to the interest applied every month, so you are in fact standing still.

It is now often the case that when entering a Debt Management Plan'>Debt Management Plan [DMP] that the balance will reduce significantly faster than if you were making minimum payments because interest & charges have been frozen."

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