Egg announces £5 penalty for cash withdrawals

”Egg

Two major credit card providers have ramped up charges for cash withdrawals, uSwitch.com revealed this week.

Egg card holders will now be charged a minimum of £5 for making a cash withdrawal using their credit card, a 67% increase from the previous minimum charge of £3.

Egg said it decided on the increase because using a credit card to withdraw small amounts of cash is often a clear sign of financial difficulty.

Smile, meanwhile, has increased the minimum cash withdrawal fee from 2.5% to 3%.

Britain’s 7.3 million credit card holders withdraw an average of £500 cash each per year, uSwitch.com said.

These are made despite the fact that cash withdrawals are often charged a higher rate of interest than purchases and balance transfers.

Louise Bond, uSwitch.com’s personal finance manager, advised credit card holders to only withdraw cash using their card in an emergency.

“We strongly advise customers not to use this facility on any credit card unless they are really desperate for the cash,” Bond said.

“Interest is applied to credit card cash withdrawals from the day they are made and the APR is generally far higher than that applied to purchases.”

Recent research by consumer advice group Which? found that credit card providers have increased interest rates by up to 4% in the last year despite the Bank of England’s base rate cut.

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