Credit card customers lose free borrowing in new hike

Bank of Ireland (BoI) is to drastically increase the cost of borrowing for some credit card customers


Customers withdrawing cash from an ATM will now have to pay interest from the moment they borrow the money. They were previously able to borrow interest-free if they repaid their bill on time.

The country's biggest lender will scrap the free borrowing period from mid-March, imposing a 26pc annualised rate on cash withdrawals. The move will hit many people who have become used to taking out money at the beginning of the month before their wages have been paid.

The latest increase in charges reinforces the fact that credit cards are one of the most expensive ways to borrow cash.

There is now no way to avoid paying interest on cash withdrawals using a BoI credit card -- unless the consumer treats it like a bank account and lodges money into it before withdrawing it.

The bank has defended the move, saying: "A credit card is primarily a payments device, not a lending facility."

A spokeswoman said the move brought it in line with the rest of the market, although not all lenders have followed suit. AIB, the country's second-largest lender, does not charge interest on cash withdrawals if cardholders pay off their balance in full every month.

However, Permanent TSB and Ulster Bank use a similar strategy, penalising credit card cash withdrawals with interest rates in excess of 20pc. All four banks charge fees for each withdrawal made using a credit card, on top of steep interest rates. The highest is charged by Ulster Bank while the lowest is AIB.

"Taking out cash using your credit card has become very expensive and we urge consumers to use it as an absolute last resort," said David Kerr, of price comparison site Bonkers.ie.

"Interest is generally charged from day one, and this is compounded by the fact that the interest rate is exceptionally high." Mr Kerr noted that a pre-arranged overdraft should cut the cost of borrowing in half.

Credit card owners, he said, should also pay for purchases directly with their cards rather than first taking out cash to make the purchase. This is because purchases made with the card are far less heavily penalised than cash withdrawals.

They usually attract a lower interest rate, and no interest at all if the balance is paid off in full each month.


Save Time & Money

Hunting for the best deal can be tricky and very time consuming. We bring the best deals to you in one place and make comparing them a cinch!


About Us

Since we launched in mid-2010, we've won multiple awards (including Best Website in Ireland) so you can rest assured you're dealing with the best.


You Can Trust Us

We show all deals with the fullest of information so you can make your choice more quickly and more easily.

By using this website, you agree to be bound by our Terms of Use and consent to the use of cookies in accordance with our Cookie Policy.