Credit card cheques come with hidden costs

UK credit card cheques are like normal bank cheques, except that money is drawn from your credit card, not from your current account. However, there are differences to normal credit card transactions, and they will cost you more.

Another begging letter arrived from my bank today.

Yet again they are begging me to borrow money and go into debt.

This time it’s Credit Card Cheques.

According to MoneySuperMarket.com, 98% of credit card cheques are sent out unsolicited.

My bank promotes these as being of benefit at it allows the consumer to make payments on credit to companies or individuals who do not take credit cards. Of course this is another method for consumers to get into debt, furthermore this debt is more expensive than conventional credit card debt for the following reasons:-

• Interest From Day One
  Normally, there is not the usual interest free period between purchase and credit card statement (maximum approx 56 days). The transaction is treated like a cash advance, so interest starts to accrue immediatley. 
• Higher Interest Rates
  The interest rate charged is that of a cash withdrawal – not a product purchase.
• Less Protection on Purchases
  Your credit card company considers this to be a cash transaction. Therefore you may not be covered under the insurance and warranty cover of the credit card if the product is latter found to be defective
• Handling Fee
  To add insult to injury, you are likely to be charge a handling fee – of up to 2% per transaction, in a similar manner to a cash withdrawal

According to the Office of Fair Trading, Research suggests that only one in three users is aware of these additional charges. It is hardly surprising the debt problems facing so many UK consumers when we are bombarded by such high pressure, high interest and high fee products. Avoid them like the plague.

Link Partner:
Debt Advice from 60secondadvice.com

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