2.10 ATMs and cash withdrawals with credit cards

If you have a cash facility with your credit card, you will be able to use your card in ATMs to withdraw cash.

To do this, you will need to know the 4 digit PIN number for your credit card. You should be sent a randomly generated PIN number at around the same time as your credit card. However, they will not be sent in the same letter because if it were to fall into the wrong hands someone could very easily use your card to make purchases and cash withdrawals.

When you have received both your credit card and your PIN number, you can use the card in a cash machine and change the PIN number to another 4 digit number you will remember.

You will only be allowed to withdraw the cash up to your cash limit which forms part of the overall credit limit attached to your credit account.

If you use your credit card to withdraw cash, the credit card provider will charge you for the service. The fee will be a percentage of the amount you have withdrawn (normally between 2.5% and 3.0%). However, the credit card provider will set a minimum fee that will always have to be paid if you withdraw cash. For example, if you withdraw £10 on your credit card, 2.5% of this would be 25p. If the minimum fee for a cash withdrawal is £2.50 you would pay this even if you only withdrew £10.

Any cash you do withdraw on your credit card will be charged at a much higher interest rate than that which will be applied to any purchases you make using the card. The market norm is around 27.9% APR for cash withdrawals, although some do charge around 25% APR.

Interest on cash withdrawals is usually charged from the date the money is withdrawn rather than the monthly billing date.

Also, many credit card companies will apply any payments you make towards the balance of your credit card debt to cheaper debt first, namely balances being charged at the lowest interest. As cash withdrawals are likely to be charged at the higher level of interest, most providers will put your payments towards cash balances last.
 

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