Cashing In On Your Credit Card For Christmas

							Cashing In On Your Credit Card For Christmas?

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594

Summary:
'Tis the season to be jolly - and Christmas usually means spending more
than you'd like to. If you're finding your cash is spending even less
time in your wallet than usual, it can be hard to resist the urge to turn
to the credit card at Christmas for a little light relief.

Using your credit card to take out cash is tempting but can also be
horrendously expensive.

If you think you'll need more cash than usual at this time of year, don't
be surprised if you're hit for si...


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Article Body:
'Tis the season to be jolly - and Christmas usually means spending more
than you'd like to. If you're finding your cash is spending even less
time in your wallet than usual, it can be hard to resist the urge to turn
to the credit card at Christmas for a little light relief.

Using your credit card to take out cash is tempting but can also be
horrendously expensive.

If you think you'll need more cash than usual at this time of year, don't
be surprised if you're hit for six by the high costs. MoneyExpert.com
reveals how to keep costs to a minimum and still enjoy the festive
period.

So what makes withdrawing cash expensive?

Credit card providers rarely let you borrow money for free. Your current
debt and purchases may be covered by a zero per cent deal, but that won't
last forever and one day you'll be charged for borrowing money on your
credit card.

The difference is that you don't get the same leeway with credit card
cash withdrawals. If you want to borrow cash on your credit card you'll
have to pay - and in most cases, you'll pay dearly.

All this means that even if you've researched the market and saved money
with a great deal, you could scupper your savings with just one hefty
cash withdrawal.

How much does it cost?
The truth is that if you pay off your balance each month, withdrawing
cash from an ATM with your credit card in the UK won't cost you anything.
However almost all credit cards charge very high interest rates on cash
advances - and the interest is charged immediately.

So if you don't pay off your balance you'll have to fork out for the
interest from the point you withdraw the money. On average you'll be
charged a hefty 21.1% APR, but you could pay as much as 37%. In other
words, take out £100 in cash with your credit card and you could have to
pay your provider £137 back.

Holiday watch

The situation is even worse if you take cash out with your credit card
abroad. Brits on their holidays made nearly £6 billion worth of overseas
cash withdrawals last year - but we estimate that it will have cost
around £250 million for the privilege.

Most providers will offer you a poor exchange rate for starters, but will
also charge the same high rate of interest and in many cases an admin fee
for handling the transaction as well. It all adds up to a bad deal, so
avoid ATMs abroad with your credit card if you can.

What's the solution?

Cash withdrawals have always been the most expensive element of a credit
card - there's no escaping the cost. But if you think you might have to
withdraw cash on your credit card, there are a few providers who charge
below ten per cent for an advance.

The bottom line is that there's never a cheap time to withdraw cash with
your plastic. There may be a good time - particularly in emergencies -
but in those circumstances the cost of the process is usually not a
consideration.

With so many ways to pay for products and services these days, the cost
of cash shouldn't be the major reason for your choice of credit card. A
0% Purchase Rate Credit Card for example would allow you to get that must
have gift and put off paying it back for months . So, If you insist on
splashing out on your credit card this Christmas, make sure you do it at
the till and not at an ATM.