Why+Cash+And+Credit+Cards+Don't+Mix!


 * Why Cash And Credit Cards Don't Mix! **

| 7 August 2007 Earlier this year, a friend accompanied me to a rugby match at Twickenham stadium. I'd bought two tickets to the game, so my chum agreed to pay me the £50 face value for my spare ticket. On the way to the game, he stopped at a cash machine, withdrew some money and then handed me my £50. So far, so good. Alas, as my friend went to return his plastic to his wallet, I noticed that he'd used his credit card, not his debit card, to make this withdrawal. This caused me to go into 'Grumpy Old Man mode', because I realise how horribly expensive it is to withdraw cash on credit cards. To be honest, if I'd know that he was that hard-up, I'd have given him the ticket for nothing! (The good news is that he's spent several years re-training and has just started a new career, so he won't be broke for much longer.) In my experience, being forced to rely on your credit cards to withdraw cash is a sign of financial meltdown. Quite simply, the interest rates and fees levied on these transactions are nothing short of piracy. In order to support this claim, I downloaded and analysed some data supplied by Fool partner and financial researcher Moneyfacts. In total, I checked the cash interest rates and withdrawal fees charged by 170 credit cards, made up of 113 standard cards and 57 gold, platinum and black cards. Here's what my exclusive research for Fool.co.uk revealed: When you withdraw cash on your credit card, you start paying interest from day one. In other words, you don't enjoy the interest-free period on purchases that you get if you always pay off your balance in full. What's more, the interest rates charged on cash withdrawals are a great deal higher than the standard interest rates charged on purchases. Let's see how bad things are: ** rate (% APR) ** ||
 * 1. Sky-high interest rates **
 * The good (cash interest rates under 11% APR) **
 * ** Card/Issuer ** ||  ** Cash interest **
 * Co-operative Bank Gold Base Rate Visa || 5.90 ||
 * Egg Money MasterCard || 7.90 ||
 * Northern Bank (NI) Platinum MasterCard || 9.90 ||
 * Northern Rock Base Rate Visa || 10.20 ||
 * Co-operative Bank Platinum Tracker Visa || 10.20 ||
 * Northern Bank (NI) Gold MasterCard || 10.89 ||

The Co-operative Bank Gold Base Rate Visa takes top honours in this field. However, although it charges the Bank of England base rate on all transactions, it comes with an annual fee of £120 and charges withdrawal fees (see below). This is certainly not a card for occasional use. Therefore, in this category, my Best Buy is the Egg Money MasterCard, which charges 7.9% APR and has no annual fee. There are 43 cards in this category, all of which you should steer clear of when it comes to cash withdrawals. Here's a summary of the more well-known cards in this category: ** rate (% APR) ** ||
 * The bad (cash interest rates of 11% to 21% APR) **
 * ** Card/Issuer ** ||  ** Cash interest **
 * Co-operative Bank Clear Visa, Flat Rate Gold and Platinum Visa || 11.90 ||
 * Barclaycard Student MasterCard || 14.90 ||
 * Smile Current Account Customer Gold Visa || 14.90 ||
 * Halifax Flat Rate Visa || 14.94 ||
 * Barclaycard Simplicity Visa || 15.80 ||
 * Co-operative Bank Advantage Visa || 18.90 ||
 * Co-operative Bank Gold and Platinum Advantage Visa || 18.90 ||
 * John Lewis/Waitrose MasterCard || 18.90 ||
 * Nationwide BS Gold Visa || 18.90 ||
 * Smile Current Account Customer Classic Visa || 18.90 ||
 * Co-operative Bank Travel Credit Card Visa || 19.90 ||
 * Smile Gold Visa || 19.90 ||
 * Sainsbury's Bank MasterCard, Advantage M/Card and Platinum M/Card || 19.95 ||
 * Tesco Bonus MasterCard/Visa and Clubcard MasterCard || 20.85 ||
 * Marks & Spencer Money &MORE MasterCard || 20.90 ||
 * Virgin Money Atlantic Black Amex and White Amex || 20.90 ||
 * Post Office Classic and Platinum MasterCard || 20.94 ||

Brace yourself, because there are 121 cards which you should avoid like the plague for cash withdrawals. Here is a summary of the most widely used cards in the ugly category ** rate (% APR) ** ||
 * The ugly (cash interest rates of over 21% APR) **
 * ** Card/Issuer ** ||  ** Cash interest **
 * First Direct Credit Card Visa and Gold Card Visa and HSBC Credit Card MC || 21.90 ||
 * Nationwide BS Classic Visa || 21.90 ||
 * Smile Classic Visa || 21.90 ||
 * Abbey Credit Card MasterCard/Visa || 22.90 ||
 * Egg Visa || 22.90 ||
 * AA Credit Card MasterCard and Online Credit Card M/Card || 22.95 ||
 * Halifax One 12 Month Offer MasterCard || 22.95 ||
 * The GM Platinum MasterCard || 23.90 ||
 * Bank of Scotland One MasterCard || 23.95 ||
 * Virgin Money MasterCard || 24.90 ||
 * MINT MasterCard/Visa, Gold MasterCard/Visa and Platinum MasterCard || 24.94 ||
 * NatWest Credit Card, Gold Card and Platinum MasterCard/Visa and and Student MC || 24.94 ||
 * Royal Bank of Scotland Classic, Gold, Platinum and Student MasterCard/Visa || 24.94 ||
 * The Nectar Credit Card Amex || 25.90 ||
 * Capital One Bank Platinum and Platinum Cashback MC || 25.94 ||
 * Goldfish MasterCard || 26.80 ||
 * Alliance & Leicester MC/Visa, Moneyback Reward and Online MC/Visa || 27.90 ||
 * Barclaycard Flexi-Rate Visa, Graduate MasterCard/Visa, Initial MasterCard/Visa, Platinum Cashback MC/V, Platinum Life of Balance Visa, Platinum and Platinum Low Rate MC/Visa || 27.90 ||
 * Lloyds TSB Advance MasterCard, Airmiles Duo Amex and MasterCard, Airmiles Premier A/C Holder and Premium Duo Amex and MC, Classic, Gold, Platinum and Student MC || 27.90 ||
 * MBNA Classic MasterCard, Platinum Plus Visa, Platinum Rewards Visa, Rewards American Express, Rewards Platinum American Express and Travel American Express || 27.90 ||
 * SonyCard and Sony Platinum M'Card/Visa || 27.90 ||
 * Capital One Bank Classic Visa || 34.94 ||

For the record, the average cash interest rate levied by these cards is **23.2% APR**, which is almost seven percentage points higher than the average interest rate on purchases (16.5% APR). Not content with charging exorbitant interest rates on cash withdrawals, credit-card issuers line their pockets by charging a fee based on the value of each withdrawal. However, this fee has a minimum charge, so a £20 withdrawal could incur a fee of £3, or a 15% surcharge. Ouch! Again, let's take a look at the good, bad and ugly in this category: ** rate (% APR) ** ||
 * 2. Rip-off withdrawal fees **
 * The good (no cash-withdrawal fees) **
 * ** Card/Issuer ** ||  ** Fee (%) **  ||  ** Minimum (£) **  ||  ** Cash interest **
 * Egg Money MasterCard || None || N/A || 7.90 ||
 * Co-operative Bank Clear Visa || None || N/A || 11.90 ||

As you can see, only two credit cards don't charge cash-withdrawal fees. Again, Egg Money MasterCard is my Best Buy in this category, and therefore claims the Fool Award for the best credit card for cash withdrawals. Good work, Eggheads! A total of 43 cards charge fairly steep cash-withdrawal fees. Here's a selection: ** rate (% APR) ** ||
 * The bad (fees of 1.5% to 2.25%) **
 * ** Card/Issuer ** ||  ** Fee (%) **  ||  ** Minimum (£) **  ||  ** Cash interest **
 * John Lewis/ Waitrose MasterCard || 1.75 || 2.50 || 18.90 ||
 * Nationwide BS Classic Visa || 2.00 || 2.00 || 21.90 ||
 * Nationwide BS Gold Visa || 2.00 || 2.00 || 18.90 ||
 * Post Office Classic and Platinum MasterCard || 2.00 || 2.00 || 20.94 ||
 * Smile Classic Visa || 2.00 || 2.00 || 21.90 ||
 * Smile Current Account Customer Classic Visa || 2.00 || 2.00 || 18.90 ||
 * Smile Current Account Customer Gold Visa || 2.00 || 2.00 || 14.90 ||
 * Smile Gold Visa || 2.00 || 2.00 || 19.90 ||
 * Tesco Bonus MasterCard/Visa and Clubcard MC || 2.00 || 2.00 || 20.85 ||
 * Lloyds TSB Student MasterCard || 2.00 || 2.50 || 27.90 ||
 * Virgin Money Atlantic Black Amex and White Amex || 2.00 || 2.50 || 20.90 ||
 * Alliance & Leicester MasterCard/Visa, Moneyback Reward MC/V and Online MC/V || 2.25 || 2.50 || 27.90 ||

Finally, I have a long list of 125 cards which charge really excessive fees for withdrawing cash. Here's a selection: ** rate (% APR) ** ||
 * The ugly (fees of 2.5% of 3%) **
 * ** Card/Issuer ** ||  ** Fee (%) **  ||  ** Minimum (£) **  ||  ** Cash interest **
 * Barclaycard Flexi-Rate Visa, Graduate MasterCard/Visa, Initial MasterCard/Visa, Platinum Cashback MC/V, Platinum Life of Balance Visa, Platinum and Platinum Low Rate MC/Visa || 2.50 || 2.50 || 27.90 ||
 * Barclaycard Simplicity Visa || 2.50 || 2.50 || 15.80 ||
 * Barclaycard Student MasterCard || 2.50 || 2.50 || 14.90 ||
 * Co-operative Bank credit cards of all types || 2.50 || 2.50 || From 5.90 to 18.90 ||
 * First Direct Credit Card and Gold Card Visa and HSBC MC || 2.50 || 2.50 || 21.90 ||
 * Lloyds TSB Advance MasterCard || 2.50 || 2.50 || 27.90 ||
 * Lloyds TSB Airmiles cards of all types, Classic, Gold and Platinum MasterCard || 2.50 || 2.50 || 27.90 ||
 * Marks & Spencer Money &MORE MasterCard || 2.50 || 2.50 || 20.90 ||
 * MINT cards of all types || 2.50 || 2.50 || 24.94 ||
 * NatWest and RBS cards of all types || 2.50 || 2.50 || 24.94 ||
 * Northern Rock Base Rate Visa || 2.50 || 2.50 || 10.20 ||
 * Sainsbury's Bank cards of all types || 2.50 || 2.50 || 19.95 ||
 * AA MasterCards of all types || 2.50 || 3.00 || 22.95 ||
 * Abbey Credit Card MasterCard/Visa || 2.50 || 3.00 || 22.90 ||
 * Halifax One 12 Month Offer MasterCard || 2.50 || 3.00 || 22.95 ||
 * The GM Platinum MasterCard || 2.50 || 3.00 || 23.90 ||
 * Bank of Scotland One MasterCard/Visa || 3.00 || 3.00 || 23.95 ||
 * Capital One Bank Classic Visa || 3.00 || 3.00 || 34.94 ||
 * Capital One Bank Platinum and Platinum Cashback MasterCard || 3.00 || 3.00 || 25.94 ||
 * Egg Visa || 3.00 || 3.00 || 22.90 ||
 * Goldfish MasterCard || 3.00 || 3.00 || 26.80 ||
 * Halifax One Anniversary MasterCard || 3.00 || 3.00 || 23.95 ||
 * Halifax One MasterCard/Visa || 3.00 || 3.00 || 23.95 ||
 * MBNA Classic MasterCard, Platinum Plus Visa, Platinum Rewards Visa, Rewards Amex, Rewards Platinum Amex, Travel Amex || 3.00 || 3.00 || 27.90 ||
 * SonyCard and Sony Platinum M'Card/Visa || 3.00 || 3.00 || 27.90 ||
 * The Nectar Credit Card Amex || 3.00 || 3.00 || 25.90 ||
 * Virgin Money MasterCard || 3.00 || 3.00 || 24.90 ||

For the record, the average cash-withdrawal fee comes to 2.43%, with the average minimum charge being £2.66. What a swizz! So, stick to using your credit cards for __ purchases __and Why Cash And Credit Cards Don't Mix!


 * 7 August 2007

Earlier this year, a friend accompanied me to a rugby match at Twickenham stadium. I'd bought two tickets to the game, so my chum agreed to pay me the £50 face value for my spare ticket. On the way to the game, he stopped at a cash machine, withdrew some money and then handed me my £50. So far, so good.

Alas, as my friend went to return his plastic to his wallet, I noticed that he'd used his credit card, not his debit card, to make this withdrawal. This caused me to go into 'Grumpy Old Man mode', because I realise how horribly expensive it is to withdraw cash on credit cards. To be honest, if I'd know that he was that hard-up, I'd have given him the ticket for nothing! (The good news is that he's spent several years re-training and has just started a new career, so he won't be broke for much longer.)

In my experience, being forced to rely on your credit cards to withdraw cash is a sign of financial meltdown. Quite simply, the interest rates and fees levied on these transactions are nothing short of piracy. In order to support this claim, I downloaded and analysed some data supplied by Fool partner and financial researcher Moneyfacts.

In total, I checked the cash interest rates and withdrawal fees charged by 170 credit cards, made up of 113 standard cards and 57 gold, platinum and black cards. Here's what my exclusive research for Fool.co.uk revealed:

1. Sky-high interest rates

When you withdraw cash on your credit card, you start paying interest from day one. In other words, you don't enjoy the interest-free period on purchases that you get if you always pay off your balance in full. What's more, the interest rates charged on cash withdrawals are a great deal higher than the standard interest rates charged on purchases. Let's see how bad things are:

The good (cash interest rates under 11% APR)

Card/Issuer Cash interest

rate (% APR)

Co-operative Bank Gold Base Rate Visa 5.90

Egg Money MasterCard 7.90

Northern Bank (NI) Platinum MasterCard 9.90

Northern Rock Base Rate Visa 10.20

Co-operative Bank Platinum Tracker Visa 10.20

Northern Bank (NI) Gold MasterCard 10.89

The Co-operative Bank Gold Base Rate Visa takes top honours in this field. However, although it charges the Bank of England base rate on all transactions, it comes with an annual fee of £120 and charges withdrawal fees (see below). This is certainly not a card for occasional use. Therefore, in this category, my Best Buy is the Egg Money MasterCard, which charges 7.9% APR and has no annual fee.

The bad (cash interest rates of 11% to 21% APR)

There are 43 cards in this category, all of which you should steer clear of when it comes to cash withdrawals. Here's a summary of the more well-known cards in this category:

Card/Issuer Cash interest

rate (% APR)

Co-operative Bank Clear Visa, Flat Rate Gold and Platinum Visa 11.90

Barclaycard Student MasterCard 14.90

Smile Current Account Customer Gold Visa 14.90

Halifax Flat Rate Visa 14.94

Barclaycard Simplicity Visa 15.80

Co-operative Bank Advantage Visa 18.90

Co-operative Bank Gold and Platinum Advantage Visa 18.90

John Lewis/Waitrose MasterCard 18.90

Nationwide BS Gold Visa 18.90

Smile Current Account Customer Classic Visa 18.90

Co-operative Bank Travel Credit Card Visa 19.90

Smile Gold Visa 19.90

Sainsbury's Bank MasterCard, Advantage M/Card and Platinum M/Card 19.95

Tesco Bonus MasterCard/Visa and Clubcard MasterCard 20.85

Marks & Spencer Money &MORE MasterCard 20.90

Virgin Money Atlantic Black Amex and White Amex 20.90

Post Office Classic and Platinum MasterCard 20.94

The ugly (cash interest rates of over 21% APR)

Brace yourself, because there are 121 cards which you should avoid like the plague for cash withdrawals. Here is a summary of the most widely used cards in the ugly category

Card/Issuer Cash interest

rate (% APR)

First Direct Credit Card Visa and Gold Card Visa and HSBC Credit Card MC 21.90

Nationwide BS Classic Visa 21.90

Smile Classic Visa 21.90

Abbey Credit Card MasterCard/Visa 22.90

Egg Visa 22.90

AA Credit Card MasterCard and Online Credit Card M/Card 22.95

Halifax One 12 Month Offer MasterCard 22.95

The GM Platinum MasterCard 23.90

Bank of Scotland One MasterCard 23.95

Virgin Money MasterCard 24.90

MINT MasterCard/Visa, Gold MasterCard/Visa and Platinum MasterCard 24.94

NatWest Credit Card, Gold Card and Platinum MasterCard/Visa and and Student MC 24.94

Royal Bank of Scotland Classic, Gold, Platinum and Student MasterCard/Visa 24.94

The Nectar Credit Card Amex 25.90

Capital One Bank Platinum and Platinum Cashback MC 25.94

Goldfish MasterCard 26.80

Alliance & Leicester MC/Visa, Moneyback Reward and Online MC/Visa 27.90

Barclaycard Flexi-Rate Visa, Graduate MasterCard/Visa, Initial MasterCard/Visa, Platinum Cashback MC/V, Platinum Life of Balance Visa, Platinum and Platinum Low Rate MC/Visa 27.90

Lloyds TSB Advance MasterCard, Airmiles Duo Amex and MasterCard, Airmiles Premier A/C Holder and Premium Duo Amex and MC, Classic, Gold, Platinum and Student MC 27.90

MBNA Classic MasterCard, Platinum Plus Visa, Platinum Rewards Visa, Rewards American Express, Rewards Platinum American Express and Travel American Express 27.90

SonyCard and Sony Platinum M'Card/Visa 27.90

Capital One Bank Classic Visa 34.94

For the record, the average cash interest rate levied by these cards is 23.2% APR, which is almost seven percentage points higher than the average interest rate on purchases (16.5% APR).

2. Rip-off withdrawal fees

Not content with charging exorbitant interest rates on cash withdrawals, credit-card issuers line their pockets by charging a fee based on the value of each withdrawal. However, this fee has a minimum charge, so a £20 withdrawal could incur a fee of £3, or a 15% surcharge. Ouch!

Again, let's take a look at the good, bad and ugly in this category:

The good (no cash-withdrawal fees)

Card/Issuer Fee (%) Minimum (£) Cash interest

rate (% APR)

Egg Money MasterCard None N/A 7.90

Co-operative Bank Clear Visa None N/A 11.90

As you can see, only two credit cards don't charge cash-withdrawal fees. Again, Egg Money MasterCard is my Best Buy in this category, and therefore claims the Fool Award for the best credit card for cash withdrawals. Good work, Eggheads!

The bad (fees of 1.5% to 2.25%)

A total of 43 cards charge fairly steep cash-withdrawal fees. Here's a selection:

Card/Issuer Fee (%) Minimum (£) Cash interest

rate (% APR)

John Lewis/ Waitrose MasterCard 1.75 2.50 18.90

Nationwide BS Classic Visa 2.00 2.00 21.90

Nationwide BS Gold Visa 2.00 2.00 18.90

Post Office Classic and Platinum MasterCard 2.00 2.00 20.94

Smile Classic Visa 2.00 2.00 21.90

Smile Current Account Customer Classic Visa 2.00 2.00 18.90

Smile Current Account Customer Gold Visa 2.00 2.00 14.90

Smile Gold Visa 2.00 2.00 19.90

Tesco Bonus MasterCard/Visa and Clubcard MC 2.00 2.00 20.85

Lloyds TSB Student MasterCard 2.00 2.50 27.90

Virgin Money Atlantic Black Amex and White Amex 2.00 2.50 20.90

Alliance & Leicester MasterCard/Visa, Moneyback Reward MC/V and Online MC/V 2.25 2.50 27.90

The ugly (fees of 2.5% of 3%)

Finally, I have a long list of 125 cards which charge really excessive fees for withdrawing cash. Here's a selection:

Card/Issuer Fee (%) Minimum (£) Cash interest

rate (% APR)

Barclaycard Flexi-Rate Visa, Graduate MasterCard/Visa, Initial MasterCard/Visa, Platinum Cashback MC/V, Platinum Life of Balance Visa, Platinum and Platinum Low Rate MC/Visa 2.50 2.50 27.90

Barclaycard Simplicity Visa 2.50 2.50 15.80

Barclaycard Student MasterCard 2.50 2.50 14.90

Co-operative Bank credit cards of all types 2.50 2.50 From 5.90 to 18.90

First Direct Credit Card and Gold Card Visa and HSBC MC 2.50 2.50 21.90

Lloyds TSB Advance MasterCard 2.50 2.50 27.90

Lloyds TSB Airmiles cards of all types, Classic, Gold and Platinum MasterCard 2.50 2.50 27.90

Marks & Spencer Money &MORE MasterCard 2.50 2.50 20.90

MINT cards of all types 2.50 2.50 24.94

NatWest and RBS cards of all types 2.50 2.50 24.94

Northern Rock Base Rate Visa 2.50 2.50 10.20

Sainsbury's Bank cards of all types 2.50 2.50 19.95

AA MasterCards of all types 2.50 3.00 22.95

Abbey Credit Card MasterCard/Visa 2.50 3.00 22.90

Halifax One 12 Month Offer MasterCard 2.50 3.00 22.95

The GM Platinum MasterCard 2.50 3.00 23.90

Bank of Scotland One MasterCard/Visa 3.00 3.00 23.95

Capital One Bank Classic Visa 3.00 3.00 34.94

Capital One Bank Platinum and Platinum Cashback MasterCard 3.00 3.00 25.94

Egg Visa 3.00 3.00 22.90

Goldfish MasterCard 3.00 3.00 26.80

Halifax One Anniversary MasterCard 3.00 3.00 23.95

Halifax One MasterCard/Visa 3.00 3.00 23.95

MBNA Classic MasterCard, Platinum Plus Visa, Platinum Rewards Visa, Rewards Amex, Rewards Platinum Amex, Travel Amex 3.00 3.00 27.90

SonyCard and Sony Platinum M'Card/Visa 3.00 3.00 27.90

The Nectar Credit Card Amex 3.00 3.00 25.90

Virgin Money MasterCard 3.00 3.00 24.90

For the record, the average cash-withdrawal fee comes to 2.43%, with the average minimum charge being £2.66. What a swizz!

So, stick to using your credit cards for purchases and balance transfers and never withdraw cash on them -- unless you enjoy being ripped off, that is!

and //never// withdraw cash on them -- unless you enjoy being ripped off, that is!