The continent, credit cards and ATM’s are a costly combination!
An alarming amount of UK holidaymakers are opting to use their credit cards to withdraw cash from ATM machines, unaware of the extortionately high rates of interest tagged to such transactions.
Accordingly almost 25% of British holidaymakers use their credit cards abroad in this way, unknowing that interest rates for such withdrawals can vary massively from their cards main rate of interest. The average rate of interest for using a card as a form of credit varies between 18-20%, however if the same card is used to withdraw cash from an ATM, the rate can rise to around 25%. Even more alarming is that sub prime borrowers who opt to use their cards abroad, have reported withdrawal rates rising to a staggering 50%.
It is unwise to use credit cards to withdraw cash from ATM’s in the UK, however it is certainly not a good idea to use them in this way abroad. Additionally, it is also likely that the card user will be charged a transactional fee, which is typically 3% of the purchase.
In order for consumers to avoid coming home to unsightly credit card statements, after holidaying abroad, it is advisable to plan well ahead and take as much currency and/or travellers cheques as possible. Ideally a credit card should only be used in cases of emergency.
