Why Using Credit Card For Online Gambling and Withdrawing Cash Carries Higher Fees
Banks in the UK re exploiting a boom when customers withdraw cash from their credit cards by hitting them with rip-off fees.
The official figures show that many borrowers are using their credit cards take out as much as £12 million daily from ATMs.
Customers use their Credit Cards to withdraw cash because they might have left their debit card at home, or might have had it stolen or it was cancelled due to fraud.
Use a Credit Card to pay for goods in a shop does not carry any charges as long as you pay your Credit Card bill in full at the end of the month.
Not all stores accept cards. If you mke use of your Credit Card to withdraw cash which you then spend in the shops, you will be hit with a double whammy of fees - you re still charged even if your repay the whole balance on your card month end.
Money Mail has found that customers who withdraw cash are being charged a £5 withdrawal fee, plus being charged with interest of up to 29.9%. Therefore, a £100 withdrawal could cost £107.20.
Many players and consumers often don't notice the fees as they are routinely buried in the banks' terms and conditions, so many times the first time shoppers learn about these extra charges is when they get their Credit Card.
Banks claim they charge the extra to withdraw on a credit card because it costs the bank money. They say that when a consumer purchased in a shop, the shopkeeper pays the bank fee, the banks say they lose out on that fee and needs the fees to pay towards running costs of ATMs.
Withdrawing from a credit card means you start paying interest from day you withdraw plus a withdrawal fee of about £3.
Experts, however say that it is unfair to bill customers different amounts for their borrowing the same amount of money over the same period.
The founder of advice firm, Candid Money, Justin Modray, says that it looks like some of the credit card companies charge whatever they think they would be able to get away with rather than charging what is fair.
When using Credit Card for your purchases including online gambling, most banks give up to 56 days to clear the balance before charging interest, except for cash withrawals and funding gambling sites.
Credit card best buys
Some of the major high street Bank names hit customers with higher rates, though.
Santander charges 29.9% on its popular 123 cashback credit card. They also levy a 3% withdrawal charge at a minimum of £5. This means that when withdrawing £100 from a cash machine using a Credit Card and repaying it within a month would still cost you a fee of £7.20.
Barclaycard charges 34.9%t on their Initial Credit Card, this card is targeting customers who are looking to build their credit rating. They have a 2.99% withdrawal fee, Therefore, withdrawing £100 would cost £5.89 in fees.
Royal Bank of Scotland and NatWest charge 27.9% on their student credit cards. There is a 3% fee, Therefore, withdrawing £100 would, cost £5.07 in fees.
Nationwide charges 27.9% on their Select credit card, and a 2.5% fee (a minimum of £3) for withdrawals and for a £100 withdrawal has a £5.07 feel.
HSBC charges 23.9%, and a minimum £3 fee; a total of £4.79 for a £100 withdrawal.
Lloyds, Halifax and Bank of Scotland charge 6.45% their Low Rate Mastercard. A minimum £3 cash withdrawal fee, when cashing out £100 will still cost up to £4.16 fee.
Making use of a credit card for buying foreign currency or to top-up an online gambling account, will also attract these higher rates as banks treat these transactions as cash withdrawals.
Most bank have a limit on the amount of cash tht can be withdrawn from a credit card, you will find its smaller than you overall spending cap.
James Daley, who is the director of consumer website, Fairer Finance, said the interest rates and the fees charged are very hard to justify.
He continued that perhaps the worst part was the fact that lenders are often shy at bringing the fees to the attention of the consumers, which means consumers only find out when they check their bank statements.
A UK Cards Association spokeswoman said that, overall, the number of cash customers who withdraw on their credit cards has dropped in the past decade.
They claim the number of transactions have declined by 2% to £28 million last year. The average amount withdrawn is £115.