Credit cards Updated:
Credit cards can be a useful way to manage your monthly finances, spread the cost of a big payment, or get rewards or cashback for your spending.
But there can be downsides to using a credit card. The biggest is the expense accrued for not paying your balance off in full each month – if you don't, your flexible friend can soon become quite costly.
Cash advances from a credit card rank as the most expensive thing you can do – so don't consider withdrawing cash on your card unless it's a last resort.
When we talk about cash advances, we are primarily talking about making withdrawals at an ATM. But there are also other payments you can make on a credit card that may be considered a cash advance:
If you're considering making an unusual transaction, it's probably worth checking with your credit card provider first to see how it will be treated.
Withdrawing cash on your card attracts several charges, as well as a higher interest rate.
If you find yourself in a situation where you have to withdraw cash, try to minimise the pain by following these tips:
Remember, in order to secure a mortgage, credit card or personal loan you need to have a good credit rating. To find out if yours has a clean bill of health, contact a credit check provider such as Experian CreditExpert to investigate your credit report.
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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.
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