Credit cards UK: the sky-high costs of the little-known bad credit mistake you're probably making

• Millions of Brits risk damaging their credit scores by using credit cards like debit cards
• Withdrawing cash on credit cards can incur hefty fees of up to 5% per transaction
• Frequent cash withdrawals may lead to loss of perks, such as payment plan options from providers like Amex
• Lenders see cash withdrawals as a warning sign of financial trouble, harming loan or mortgage chances
• Experts advise using credit cards only for large purchases, not everyday spending or cash withdrawals

Millions of Brits could be unknowingly damaging their credit scores and racking up steep fees simply by using their credit cards like debit cards, a top payments expert has warned.

Richard Carter, founder of Lopay – the UK’s highest-rated, lowest-cost payment app – says withdrawing cash on a credit card is one of the most damaging mistakes people make with their finances.

“Every cash withdrawal makes the next payment that little bit harder,” he said. “There’s a time and place to use a credit card – and a cash machine is not one of them.”

His “rule for life”? Simple: “Never use a credit card for cash. End of.”

With more than 58 million credit cards in circulation across the UK, that’s more than one for every adult – and Carter believes too many people are putting their financial future at risk by using them carelessly.

Here’s why swiping for cash is such a costly mistake

• Hefty fees: Withdrawing cash on a credit card often comes with charges of up to 5%, meaning a quick £200 ATM withdrawal could cost you an extra £10.
• Damaged credit scores: Lenders view cash withdrawals as a red flag, suggesting you may be struggling financially – and this can harm your chances of getting a mortgage or loan.
• Loss of perks: Some providers, like American Express, may cut off benefits such as their “PlanIt” payment plans if they detect frequent cash withdrawals.

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Instead, Carter recommends using credit cards only for large purchases on goods or services, and avoiding day-to-day spending where possible.

“A credit card can be a brilliant tool – there are perks, rewards, and protections,” he said. “But treat it with care. Used wrong, it can bring chaos to your finances.”

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