What To Avoid When Using Your Credit Card

We now have one of the lowest interest rates in the world, the lowest for decades, yet credit card providers are doing all they can to squeeze more money out of their users.

Credit card customers who purchase goods or services on their card then pay the bill off in full are in a fortunate position. They don`t incur any charges. Not everyone is able to do that though, and it`s those customers who the banks love, they make the profits for the card providers.

Almost 30 providers of popular credit cards had either increased interest rates or other charges, reduced the number of days to pay or reduced the number of interest-free days over the past year.

Two years ago roughly sixteen companies offered cashback cards. Today that figure is down to half that. Others have cut the amount of cashback available.

Withdraw cash from an ATM using your credit card and you’ll be charged a fee for doing so. This is normally a percentage of the withdrawal amount but there will also be a minimum charge.

One provider recently announced it was increasing its minimum cash withdrawal fee from £3 to £5 or 3% of the withdrawal amount (whichever is greater). This means customers making several small cash withdrawals will be hit hard.

Cash withdrawn from dispensers is treated as a cash loan. This means that interest is applied to credit card cash withdrawals from the day they are made. Also, often the APR is far higher than that applied to purchases.

If cash withdrawals are made abroad customers will also be charged a foreign exchange loading charge. When all the fees are taken into account, withdrawing £500 in cash abroad will cost you nearly £30 with some providers.

If you can get away with not withdrawing cash using your credit card then clearly it`s in your own interests to do so, otherwise you`ll end up paying an arm and a leg to your credit card provider.

The amount of time you have between making a purchase and interest being charged on the amount is the `interest-free` period.

Pay off your bill within this time period and you won’t be charged any interest. Some credit card firms are now cutting the number of interest-free days they offer. After all, they are providing a sort of loan, and they don`t like doing that without making some profit from the deal.

Have you ever been sent credit card cheques by your card provider? You don`t even have to ask for them, they get sent out of the blue. The companies aren`t doing it for your benefit. They know that if you use their cheques they stand to make a nice profit out of you.

First of all, what are credit card cheques?  They can be used to pay for something when you don't have cash and you can't use your card – tradesmen for example.

Be warned though, this is a very expensive way to borrow as lenders treat the money as a cash advance-and charge higher interest rates, up to 30% APR in some cases.

Credit card providers are one step ahead when it comes to parting you from your money. Use a card for purchases, pay them off in full, and you are taking advantage of an interest free loan for a short period.

Use your card without paying it off in full each month, or for cash advances, or use the cheques you are sent, and you`ll end up paying through the nose. After all, the banks are in a financial mess. They have to recoup their lost revenues from somewhere.