More than 70 per cent of the debt on credit cards is accruing interest.
If the debt is not paid off in full by the due date each month, the interest applies to the debt going back to the purchase date, rather than from the end of the interest-free period. With a cash advance, the interest rate applies from day one.
Interest rates on credit card purchases are generally between 14 per cent to 20 per cent a year, but can be higher. The only way to avoid paying interest is to pay off the credit-card debt in full by the due date and avoid making a cash advance.
Source: Sydney Morning Herald