Credit Card Firms Move Goalposts On Cash Advances
Using your credit card to purchase gift vouchers or for online gambling could see you being hit with a new fee that is normally reserved for cash withdrawals.
 Some of the UK's largest credit card issuers are to extend their definition of cash withdrawals that will see online gambling and gift vouchers fall under that umbrella.
With cash withdrawal interest rates on credit cards substantially higher than purchases, thousands of UK credit card holders could see their credit card balance rocket. To add insult to injury, there will be no interest-free period either resulting in vouchers and Internet gambling costing more than their face value.
With many credit card firms profits being dented with interest-free offers and the Office of fair Trading imposed cap on late penalty fees, many are looking at new avenues to recoup some of their losses.
According to APACS, the UK payments service, cash withdrawals on UK credit cards totalled £8.3bn in 2006. These withdrawals would have resulted in credit card firms raking in around £164m in transaction fees before interest is accrued. Currently in the UK the average interest rate for cash withdrawals sits at 20.27%.
"Credit card providers are squeezing every last penny out of consumers to recover the millions of pounds they lost when the OFT capped their penalty fees at £12," said Nick White, director of financial services at online comparison site uSwitch.
He went on to say: "Card holders are being bamboozled. They don't know whether they will be charged at the much higher cash withdrawal rates on a whole raft of credit card transactions unless they scour the small print in their terms and conditions.
"There's no standard definition of what will be classed as a cash withdrawal. And since millions have more than one credit card they'll have to remember which charges for certain types of purchases as and which don't. The situation is farcical."
Alisdair Milton
13th April 2007
More Information:
- The Hidden Dangers Of Using Credit Card Cheques
Always on the lookout to find new and innovative ways to market credit card use in the UK, UK credit card issuers have sent out thousands of unsolicited credit card cheques to UK credit cardholders over the past year to entice cardholders to make use of this seemingly useful system.
- Credit Card Charges
Credit cards appear to have only one cost to a user – the interest charged on purchases, but there are a whole raft of hidden charges just lurking below the surface. So, some cards offer an annual payment option in return for certain benefits. What is the best option, and in what circumstance
- Making Credit Card Fees Easier To Understand
On average, UK credit card issuers make somewhere between £300 and £400 million a year in fees charged off of UK credit card users who have not fully understood how the credit card issuer has arranged the charging of their fees and who do not complain directly to the card issuer for any excessive or incorrect fee charges. In anyone’s language, this is a staggering amount of money!
- How To Avoid Paying Those Pesky Credit And Debit Card Fees
It seems that UK credit and debit card providers would like to charge us each and every time we use our plastic cards these days. While the charge for each separate individual transaction may not seem like much, add them up over a month or two and suddenly the amount has some value. So, how do we avoid having to pay pesky fees to UK credit and debit card providers?
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