ATM cash withdrawals using credit cards bring high interest rates
Unless one has no other choice, it is not necessarily the best idea to withdraw cash from an ATM using a credit card. New figures from MoneyExpert.com show that the average credit card customer is charged 23.48 percent interest on money borrowed on a credit card from a cash machine. That is up from 21.27 percent just six months ago. And that isn’t the half of it…literally. MoneyExpert found that the most expensive card charges 46.19 percent to borrow from a cash machine. Despite the high and rising interest rates on money withdrawn from ATMs using credit cards, however, UK residents use them to withdraw around £750 million per month.
MoneyExpert chief executive Sean Gardner advises that it is always better to use a debit card to withdraw funds from an ATM. And even if one has to withdraw money using a credit card, it is best to pay off the balance in full every month. Even doing that, warns Mr. Gardner, could cost more money that using a debit card, as many credit card providers charge up to three percent for withdrawing money from ATMs even if the balance is paid at the end of the month.
Not all credit card providers charge high prices for ATM withdrawals, however, according to MoneyExpert. Egg Money, part of Citigroup (NYSE: C); Abbey, part of Spanish bank Santander (LSE: BNC; NYSE: STD) and Co-Operative Bank each offer at least one credit card for which they don’t charge withdrawal fees, while Co-Operative Bank’s Life Visa base rate is just 5.6 percent for withdrawals of cash.