CREDIT CARDS

Credit cards: be careful with ‘cash advance’ hidden rates

A new report warns customers to be aware of the range of transactions referred to as ‘cash advance' by credit card providers. The rate of interest in these cases is generally much higher than in standard credit card purchases.

Latest research by a leading comparison site revealed how ambiguous credit card charges and fees can be.

Particularly, research analysed the wide range of credit card transactions treated as a ‘cash advance' finding that these services are charged at a much higher rate of interest than standard purchases on a credit card, with the interest also accruing from the date of the transaction.

In addition to this, the UK's major credit card providers also treat traditional ATM withdrawals and any form of gambling activity on credit cards as a cash advance, which results in higher APRs for customer transactions.

"It's perhaps not widely known that any kind or money transfer or travel money purchase made on a credit card is charged in the same way as a cash withdrawal meaning holidaymakers could be losing out on some serious spending money,” commented Kevin Mountford, head of banking at MoneySupermarket.

Credit cards secret fees

As an example, the reports shows that consumers paying for gambling activity with the Virgin Credit Card will be charged 27.9% APR, 12.1% higher than their advertised standard purchase APR of 15.8%.

Regarding those hidden increases the official customer body Consumer Focus warned recently that bank charges cost millions of pounds to Brits every time they buy foreign currency and use their cards overseas.

Among other complaints, it said it is unreasonable that up to £30 in fees are charged to Brits who convert £500 into Euros and that up to £1bn is ripped-off from British bank accounts every time customers use their cards abroad.

Comparing credit cards fees included when they use them is essential to avoid paying unnecessary charges.

Tags: credit card awareness, credit card comparison, CREDIT CARDS, hidden fees