CREDIT cards with the lowest rates of interest are the cheapest, right?

Well, think again if you consider that statement to be the whole truth, because the real cost of a credit card depends on a range of factors.

Just as important as the interest rate on outstanding balances are penalty fees, unpaid item fees and charges for non-euro purchases. These are just some of the sneaky tricks credit card companies use to extract cash from customers.

And the higher these charges, the poorer the value of the credit card. So don't be fooled by the credit card trick of a lower interest rate when the other charges are sky high.

By failing to fully check out penalty fees, you risk turning your credit card into a WMD - weapon of money destruction.

We have surveyed credit card companies in Ireland. Here are a selection of the penalty fees you should watch out for:

Late-payment fees:

The highest charges for being late with a payment are charged on the MBNA Gold and Platinum, One Direct Gold and Platinum cards, and the EBS Member.

The late payment fee on all of these cards is €15.24. In the case of the Amex (American Express) Blue card, the charge is €12.70.

Bank of Scotland charges €7 for late payments on its Plastic card, while Barclaycard charges €5. The EBS Standard card charges €3.81.

A charge of €8.50 is levied by National Irish Bank, First Active and Ulster Bank.

Tesco's card has a fee of €6.35. Next up is AIB, with just €3.81 charged for late payments for its 'be' Visa, MasterCard and Platinum Visa cards.

At the other end of the scale, Permanent/TSB and Bank of Ireland come out tops. There is no charge for late payments with the PTSB Ice card, and with Bank of Ireland's three cards - the Standard Advantage, Gold Advantage and the Platinum Advantage.

This is important if you are the sort of credit card user who is late some months, or every month, with your payments.

Over-credit-limit fee:

Heading the list of expensive cards for over-the-limit fees are One Direct's Gold and Platinum cards, MBNA's Gold and Platinum cards, and EBS's Member cards.

A fee of €12.70 is applied on these cards.

The Amex (American Express) Blue card has a fee of €10.16, while the First Active MasterCard, the Ulster Bank Standard and the Ulster Bank Zinc cards charge €8.50.

Bank of Scotland (Ireland) has an over-the-limit fee of €7, Tesco levies €6.35 and Barclaycard charges €4.

Charges of €2.54 apply to AIB's 'be' Visa, MasterCard and Platinum Visa cards.

But the winners on the over-credit-limit fee are the Bank of Ireland Standard Advantage, Gold Advantage and Platinum cards, the EBS Standard card, the National Irish Bank Standard, Gold and Platinum cards and the Permanent TSB Ice card.

Unpaid-item fee:

This is the charge when a cheque used to pay off a credit card balance bounces or a direct debit is not paid because there is not sufficient funds in the bank account.

Failing to pay up can be costly. The same card issuers head the list here. MBNA's Gold and Platinum, One Direct's Platinum and Gold and the EBS Member cards all charge €19.05.

Bank of Scotland charges €7, Barclaycard €5, Amex Blue €5.08, EBS Standard and Tesco €4.44, the Bank of Ireland cards charge €3.17, while First Active and Ulster Bank impose a €3.00 charge. But NIB charges nothing on its Standard, Gold and Platinum cards, putting it ahead of the pack.

Non-euro purchases

If you are using the plastic to pay for goods in Britain or the US, you can expect to pay 2.75pc of the value of the transaction for AIB 'be' Visa card and AIB Platinum Visa card transactions outside Europe.

A fee of 2.65pc of the value of the transaction with MBNA's Gold and Platinum, One Direct's Platinum and Gold and the EBS Member cards. Ulster Bank and First Active charge 2pc.

But the best value is available from NIB, Bank of Scotland, Permanent TSB, Tesco and Bank of Ireland, all of which charge 1.75pc.

Pay dearly for withdrawing cash on credit cards

CRIPPLING charges for withdrawing cash are a feature of some credit cards. The advice is to avoid using your credit card to draw down cash - use your debit card instead.

If you use a credit card to withdraw cash, you can end up paying an even higher interest rate than you would on purchases.

Top of the charges league for cash advances is Ulster Bank Standard MasterCard with an interest rate of 19.7pc. Compare this with the rate on purchases of 17.9pc.

Also expensive is the American Express Blue card with a 19pc interest rate. This compares with its interest rate on purchases of 18.9pc.

The First Active MasterCard has a charge of 17.7pc, with 17.1pc charged on Bank of Ireland's Standard Advantage card.

In addition to these interest rates, there is a fee known as a cash-handling charge.

In the case of Ulster Bank's Standard MasterCard this fee is 1.5pc of the amount withdrawn, with a minimum of €2.54 imposed. A similar cash-handling fee is imposed by Amex Blue, and First Active MasterCard.

The only way to avoid these penal interest rates for withdrawing cash is to load up your credit card with funds, especially before you are going on holidays.

Not on your nanny, says canny Gemma

GEMMA Cooper describes herself as a sensible credit card user, because she is careful to clear any outstanding balance as it comes due.

Paying high interest rates and penalty charges are not something she wants to do on her AIB Visa card.

The Cork-born event organiser is a heavy user of her credit card, buying clothes and other items on the plastic as she does not have a laser or debit card.

Her card has a credit limit of €6,000, but as a internet banking customer she goes on line every month to clear her outstanding credit card balance.

A home owner, she lives in Co Clare, having recently relocated there from Dublin. Gemma is currently studying law and may become a solicitor some day.

"I use my credit card a lot but I am not a shop-aholic. I tend not to buy on impulse. But I will buy after thinking about it and checking out the best deals."

She considers the penalty charges on credit cards to be high and is determined not to end up handing over money for these to her card provider.

CHARLIE WESTON