People advised to avoid using credit cards to withdraw cash

By Sarah Engle, Tue 22 Jul 2008 - Published in Credit Cards

Credit card companies are profiting from customers who take out money from cash machines, according to research by MoneyExpert.com.

A study by the website has found the average annual percentage rate (APR) charged when people borrow cash and fail to clear the balance has increased from 21.27 per cent to 25.3 per cent since November 2006.

It also revealed 65 per cent of credit card firms charge above the market average APR for using a cash machine, with the most expensive charging 46.19 per cent.

Sean Gardner from MoneyExpert.com advised: "Before you put your credit card in an ATM for cash, remember that it is one of the most expensive forms of borrowing around."

He added if it was absolutely necessary customers should clear their balance as soon as possible so any cash that has been withdrawn does not keep accruing interest.

In related news, Sainsbury's Finance has advised that some people can benefit from credit card reward schemes.

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