The Age --- Page: 7 : 12 March 2008 Original article by John Kavanagh
LexisNexis Summary
Credit card issuers claim cash advances comprise less than 10 per cent of card transactions. However, with card issuers setting a rate for cash advances that is separate from the rate for purchases, it is important that card holders who do use cash advances check what they are paying. Denis Orrock, of InfoChoice, says that card issuers get away with charging a higher interest rate on a cash advance simply because the advances are not a commonly used facility. A credit card purchase generates income for the card issuer, because the shopkeeper pays a fee to process the transaction, some of which is passed on to the bank. There is no merchant transaction and no fee income involved in a cash advance. However, consumer advocates claim banks make up for the supposed "loss of income" involved with cash advances by charging interest from day one, as opposed to allowing interest-free days.
