News
Millions use credit cards to pay household bills
A lmost 5million UK adults admit regularly using their credit card to pay household bills, new research from moneysupermarket.com has found, while a further 2.5million withdraw money using their cards according to the web site Money Supermarket
Many people will find this reliance on credit cards hard to sustain, while the cost of withdrawing cash on cards is potentially around £90million a year.
Taking out cash using your credit card can be a very expensive business not only will you probably be charged a higher rate of interest than if you used the card to make a purchase - in many cases more than 25% - you’ll also be charged a withdrawal fee. Also, because you’ll start accruing interest from the day the withdrawal is made , even if you settle your credit card in full each month, you won’t avoid paying interest. So do think very carefully before withdrawing cash.
In terms of paying household bills, its not a bad practice provided that you are paying off the balance in full each month as you can actually make money by using a card in this way if you have a cashback or rewards card.
If you always clear the balance on your card every month then it makes sense to invest in a credit card that rewards you for spending. But that’s only the case as long as you clear it.
Kevin Mountford, moneysupermarket.com’s head of banking and credit cards, said: “Many consumers will fund all their day-to-day spending on credit cards in order to maximise the rewards on offer on the card, but to benefit from this you need to pay off the full balance each month otherwise the interest you will pay outweighs any gains.”
Post a Comment on this News Article.