Brits spend £4.6 billion in credit card cash transactions, resulting in £219 million paid in charges.

Mar 19th 2019

Embargo 00.01 Thursday 21st March 2019

  • Credit card cash cost consumers a total of £219 million in fees and interest last year
  • Average cash transaction was £125 last year
  • Withdrawal fees cost up to £6.25 for £125 transaction plus interest on top
  • There were more than 36 million credit card cash transactions in 12 months
  • Average interest rate on credit card cash transactions is 25.04% pa

Research carried out by financial advice website Moneycomms.co.uk and supported by credit experts TotallyMoney has revealed that credit card cash withdrawals cost UK consumers £219 million in fees and interest last year. In the 12-month period, there were more than 36 million credit card cash transactions. The average amount withdrawn or spent was £125. Every time a consumer makes a credit card cash transaction, they’re charged a withdrawal fee and (compared to standard credit card purchases) a higher interest rate applies. Some withdrawal fees cost up to £6.25 every time, and the average interest rate for cash purchases using a credit card is 25.04%. The result of cash spending using a credit card between December 2017 and November 2018, meant British consumers gave credit card companies a total of £219 million in fees and interest.   Commenting on the findings, Alastair Douglas, CEO of credit experts TotallyMoney, said: “Credit cards are a vital part of our financial armoury. They give us flexibility and financial backup for covering emergencies and unexpected costs. “However, withdrawing cash using your credit card is a very expensive habit that’s best avoided. It often costs people far more than they realise.The problem is that cardholders may not understand what their card provider classifies as ‘a cash transaction’. It’s not just ATM withdrawals. It can be gambling transactions and foreign currency purchases too.” Douglas added: “In a recent TotallyMoney survey, less than 1 in 10 customers realised that gambling transactions are treated as cash transactions. You end up paying more than you think because of the extra interest and charges. “Many consumers are also unaware that interest on cash transactions is charged at a higher rate compared to credit card purchases. What’s more, that interest will apply the moment the cash transaction takes place, whereas regular transactions often don’t incur interest until your statement arrives.” But the cost goes beyond the initial charges and fees. Andrew Hagger, Personal Finance Expert from Moneycomms.co.uk, who carried out the research, explains: “__If you withdraw cash on your credit card, it will show up your credit record and could be a danger sign to other lenders that may look at your record in the future. “Prospective lenders may think you’re making cash withdrawals on your plastic because you have no money left in your current account.” Paying over £6 to withdraw £125 is a high price to pay. Unfortunately too many people are oblivious to the damage a credit card ATM withdrawal does to both their wallet and their credit record.”   Workings 36,112,000 cash transactions at average fee cost £3.88 = £140,114,560 £4,588,000,000 interest at 22.5% x 28 days = £79,190,137 Total £140,114,560 + £79,190,137 = £219,304,697   Interest rates and withdrawal fees for each major UK credit card provider

Card Provider

Cash Interest Rate PA

Cash advance tariff

Withdrawal fee for £125

American Express

27.90%

3% (min £3)

£3.75

ASDA Money

27.90%

3% (min £5)

£5.00

Bank of Scotland

19.90%

3% (min £3)

£3.75

Barclaycard

27.90%

2.99% (min £2.99)

£3.74

Capital One

34.90%

3% (min £3)

£3.75

Clydesdale Bank

27.90%

3% (min £3)

£3.75

Creation Cards

27.90%

5% (min £5)

£6.25

First Direct

24.70%

2.99% (min £3)

£3.74

Halifax

19.90%

3% (min £3)

£3.75

HSBC

27.90%

2.99% (min £3.00)

£3.74

John Lewis F S

23.90%

2.5% (min £2.50)

£3.13

Lloyds Bank

19.90%

3% (min £3)

£3.75

M&S Bank

23.90%

2.99% (min £3)

£3.74

MBNA

27.90%

5%

£6.25

Metro Bank

13.00%

No fee

£0.00

Nationwide B S

17.90%

2.5% (min £3.00)

£3.13

NatWest

25.90%

3%

£3.75

Post Office Money

27.90%

2.5% (min £3.00)

£3.13

RBS

25.90%

3%

£3.75

Sainsbury's Bank

25.90%

3% (min £3)

£3.75

Santander

29.90%

3% (min £3)

£3.75

Smile

25.90%

3% (min £3)

£3.75

Tandem Bank

18.90%

2.5% (min £2.50)

£3.13

Tesco Bank

24.90%

3.99% (min £3)

£4.99

The Co-op Bank

27.90%

3% (min £3)

£3.75

TSB

18.90%

3% (min £3)

£3.75

Virgin Money

27.90%

5%

£6.25

Yorkshire Bank

27.90%

3% (min £3)

£3.75

Average

25.04% (22.5% simple)

£3.88

Research by Moneycomms.co.uk from provider websites 04 Feb 2019  

No of Cash Advance Transactions

Value of Cash Advance Transactions

Dec-17

2,693,000

£334,000,000

Jan-18

2,903,000

£362,000,000

Feb-18

2,774,000

£337,000,000

Mar-18

2,832,000

£355,000,000

Apr-18

3,158,000

£372,000,000

May-18

3,093,000

£408,000,000

Jun-18

3,142,000

£420,000,000

Jul-18

3,280,000

£443,000,000

Aug-18

3,289,000

£441,000,000

Sep-18

2,921,000

£377,000,000

Oct-18

3,176,000

£393,000,000

Nov-18

2,851,000

£346,000,000

Total

36,112,000

£4,588,000,000

Research by Moneycomms.co.uk from UK Finance Data 04 Feb 2019


For more information, please contact James McCaffrey

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