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When is Your Credit Card Not a Card?

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CHESTER, England, June 19, 2012 /PRNewswire/ --

  • Foreign currency and postal orders among transactions charged as cash
  • Credit card gamblers warned against using their plastic

Credit cards are a staple of the nation's spending ways, but complicated charges and fees could result in consumers paying much more on certain transactions when using them according to MoneySupermarket.com.

The analysis by Britain's number one comparison site into a wide range of transactions treated as 'cash advances' by credit card providers, found in most cases these transactions are charged at a much higher rate of interest than standard purchases on the card, with the interest also accruing from the date of the transaction. Cash advance transactions include any form of money transfer, buying postal orders, travel money purchases; all of which will be charged on your credit card in the same way as a cash withdrawal.

Any forms of gambling as well as traditional ATM cash withdrawals are also all treated as a cash advance and as a result anyone using a credit card for these transactions may face higher APRs, typically 23 to 28 per cent according to the analysis.

For anyone looking to use a credit card for cash or cash equivalent should consider opting for a card which offers a low rate of interest across the board. For example, The Co-operative Bank offers a low rate Fixed Rate credit card which charges 9.9 per cent APR on all transaction types, including cash advances.

Kevin Mountford, head of  banking at MoneySupermarket  said: "With all financial products, it is really important to check the terms and conditions applied, and credit card users should be extra careful about how and where they use their card.

"Most consumers are aware that taking cash from an ATM on a credit card can be expensive, however, many may not understand where else their provider will treat purchases as a 'cash advance' and they could end up making a pricey mistake. A rule of thumb is that any transaction which buys you cash or the equivalent of cash will be charged at the higher rate of interest and the transaction won't benefit from the interest free period you get on standard purchases.

"Credit card users may also not be aware 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. Avoiding unnecessary charges is essential as they soon rack up and can end up being a very costly mistake. If you do need to use a card for cash, opt for one that charges a lower rate of interest, or pay off the transaction as soon as possible and don't necessarily wait for your credit card bill to drop on your doormat."

Notes to editors:

    Credit Card             Cash Transaction APR      Definition of Cash Transaction                                                        
                
    Virgin Credit Card         27.90%              A transaction under which you
                                                   receive cash or a cash substitute
                                                   by using your card or card
                                                   number, including foreign currency,
                                                   traveller's cheques, postal
                                                   order, gambling transactions and
                                                   any electronic transfers of cash
                                                   which are not money transfers.

    M&S Credit Card            23.9% to 25.9%      Any cash withdrawal, purchase of
                                                   travellers cheques or foreign currency
                                                   (other than from Marks & Spencer
                                                   plc), cheque transaction, money 
                                                   order or electronic money transfer
                                                   (excluding balance transfers), any
                                                   payment by Direct Debit and any
                                                   betting or gambling transaction.

    Barclaycard (Platinum)     27.90%              Use of card for ATM withdrawals,
                                                   cheques and foreign currency.
                                                   Gambling transactions are dependent 
                                                   on how the merchants process the
                                                   transaction.

    Royal Bank of Scotland                         
    (Platinum)                                     Defined as cash at ATM, gambling
                               24.90% to 27.95%    transactions, foreign currency,
                                                   money transfers or cash in branch.
    NatWest (Platinum)                                               

    MBNA (Credit Card)         27.90%              A transaction under which you
                                                   receive cash or a cash substitute
                                                   by using your card or card
                                                   number, including foreign currency,
                                                   traveller's cheques, postal
                                                   order, gambling transactions and
                                                   any electronic transfers of cash
                                                   which are not money transfers.   

                
    Capital One                19.94%              means a withdrawal of cash made by you
    (Aspire World)                                 or any cardholder and also means
                                                   any transaction made where you or
                                                   any cardholder: obtain foreign
                                                   currency, travellers' cheques and/or
                                                   money orders; make an electronic money
                                                   transfer (excluding balance transfers); 
                                                   make a payment to open a deposit
                                                   account; carry out a transaction
                                                   where payment is made to an
                                                   establishment that is identifiable as
                                                   carrying on gambling and the
                                                   purpose of the transaction is
                                                   payment for gambling activity.
     Sainsbury's (Credit Card)  24.93%             Cash advance - cash, traveller's
                                                   cheques or foreign currency
                                                   obtained by using the card or money
                                                   transfers, finance payments
                                                   or gambling transactions made
                                                   with the card.

    Halifax (All in One)        27.95%             Cash advance - cash, traveller's
                                                   cheques or foreign currency
                                                   obtained by using the card or money
                                                   transfers, finance payments
                                                   or gambling transactions made
                                                   with the card.
    Lloyds TSB (Platinum)       24.9% to 27.95%    Any cash withdrawal, advances made by
                                                   Card or Card number, gambling
                                                   transactions, purchases of
                                                   currency and cash related
                                                   transactions such as the purchase
                                                   of travellers cheques, money
                                                   orders or gaming chips.
    Sourced by http://www.moneysupermarket.com 12.06.2012


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MoneySupermarket.com compares (at 29th March 2012)

  • 98 car insurance providers and 81home insurance providers
  • 11 broadband providers and 18 energy providers
  • 31 unsecured loan and 5 secured loan providers
  • 62 mortgage lenders and 28 credit card providers
  • 67 savings providers and 37 current account providers.
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If you need further help or support, you can contact our sales advisors or customer services agents.

For further information please contact:
Paul Lawler
PR Manager Financial Services
+44(0)1244-370317
+44(0)787-237-9545
paul.lawler@moneysupermarket.com

SOURCE moneysupermarket.com



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