Cash shock on the cards for Christmas

Christmas shoppers tempted to hit their plastic to take out cash face paying average interest rates of a massive 24.8 per cent, new research from MoneyExpert.com reveals.

Rates charged are more than 7% higher than the average APR for purchases of 17.5%, the independent financial comparison website says.

And with demand for ready cash increasing as Christmas approaches the comparison website is warning credit card users of the costs of making withdrawals. MoneyExpert research this time last year found that one in 10 consumers were still re-paying debts from the previous Christmas and with most cards clearing debt from cash withdrawals last, consumers are likely to be paying the highest rates right until their card debts are fully repaid.

What's more, credit card firms offer no respite for users making cash withdrawals. Nearly two thirds (61%) of the market offers introductory rates on purchases and three quarters (73%) do likewise on balance transfers. All cards, however, charge their highest APRs immediately on cash withdrawals.

Sean Gardner, Director, MoneyExpert.com said: "Fundamentally, credit cards shouldn't be used for cash withdrawals unless you're paying the balance off straight away.

"But with finances squeezed and the temptations of Christmas spending it is worrying that rates are so high. It is a potentially toxic mix for people with debts.

"Given the ease of using cash it's an obvious temptation for those with a card to make withdrawals but with the high rates and the adverse order of payments, what seems like a relatively small sum could end up costing a very significant amount in interest. The advice is simple - don't do it!"

Across the market the rates charged for cash withdrawals range from just below 10%, from the likes of the Co-Operative Bank, to 39.9%. The Visa Card from Vanquis, primarily aimed at those looking to rebuild their credit profile, charges an incredible 49.9% on withdrawals.