When is your credit card not a credit card?

Moneysupermarket.com has released research into the wide range of transactions that are treated as cash withdrawals by credit card providers. The research shows that all of the UK’s major credit card providers treat all forms of gambling activity involving a credit card as a cash withdrawal.

This means that any consumer who uses their credit card(s) for gambling may face higher APRs than they might expect, with consumers charged as much as 11% higher than the advertised APR when using their credit card as cash.

There are also other scenarios where consumers might hit with a higher APR after using their card for a ‘cash withdrawal’. Transactions including purchasing foreign currency, electronic money transfers, postal orders, and the purchase of traveller’s cheques may also be classified as cash withdrawals and thus will come with a hefty interest rate.

Kevin Mountford, Head of Banking, moneysupermarket.com, said:

“Credit card users have to be careful how and where they use their card. The vast majority of consumers are aware that withdrawing cash on a credit card can be a costly exercise and should be avoided. However, many people do not understand where else their provider will treat purchases as cash withdrawals and can be fooled into making a pricey mistake.

“The growth of online gambling makes it more likely that people will use their credit cards when placing a bet. Our analysis show this might narrow your odds significantly, as the cost of using a credit card for online gambling can almost double the standard APR you are charged elsewhere.

“In addition to this any form of money transfer or travel money purchase will be charged on your credit card in the same way as a cash withdrawal. Credit card users should be careful to ensure they don’t expose themselves to higher charges by knowing exactly when and where their credit card transactions will be more expensive.”