en-us http://backend.userland.com/rss Your Friends @ Myvesta.org.uk (stever@myvesta.org) myvestaukblog_archive.html stever@myvesta.org 114306322414157161 Banks and card providers love customers that have a laissez faire approach to their credit cards. The kind of customer that takes no interest in the rate of interest they pay, how they use the card or how much they pay off each month.

Withdrawing cash

Withdrawing cash from a cash machine using a credit card is akin to throwing money away and should only be resorted to if you are truly desperate. Most card issuers now charge a 2% to 3% fee for cash withdrawals and charge interest on the withdrawal straight away, rather than giving the customer the standard 50 days-plus interest free period on normal card purchases. It is also likely that you will be charged a higher APR on the card.

Credit card cheques

This is similar to withdrawing cash - you will be charged interest straight away with goods purchased using a credit card cheque. Credit card firms have been heavily criticised by a Government body that reviews the credit industry for sending out unsolicited credit card cheques to customers, particularly ahead of key spending periods, such as Christmas or the school summer holidays. If you are going to use the cheque, why not just use the card instead?

The APR charged on credit card cheques is also usually much higher than the standard APR. For example, NatWest charges 20.89% interest on its Classic credit card cheques – 20% higher than the standard APR of 16.9%. Mike Naylor, a researcher with Which?, says: 'Credit card cheques cost more than paying by card and give less protection and as a result are best avoided.'

Overseas charges

Taking the wrong debit and credit card on your holidays can add nearly £100 in fees to the cost of the trip. It is estimated that banks rake in around £500m in extra charges from the £20bn customers spend when using cards overseas.

Our research shows Nationwide is the cheapest mainstream provider. If you don't get a special 0% interest rate then remember to clear the debt when you return from holiday or move it on to a special deal card, otherwise you will pay Nationwide's APR of 14.9%. Nationwide's debit card on its current account also stands out as being far cheaper than those offered by High Street rivals. Check out what the High Street banks charge here.

Long-term borrowing

Using the wrong credit card for long-term borrowing is only slightly less favourable than visiting the local loan shark. With so many cheap loans around, there is very little point in funding a long-term debt through a credit card that charges interest starting at 12% APR. The cheapest deals on the loans market currently start at 5.6% and there are a number that charge less than 6%.

Michael Clarke, This is Money
16 March 2006