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Cash Advance Fee on CREDIT CARD
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# 1
Woodcote52
Old 15-07-2012, 9:25 AM
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Angry Cash Advance Fee on CREDIT CARD

Im going abroad for the first time and researched the best way of buying euros. I bought euros on line with my HSBC Mastercard. Days later I learnt from my card statement that Id been charged a cash advance fee by Mastercard. Wasn't expecting this!

I knew using a card abroad to withdraw cash incurred a charge. I wasnt aware that I would be charged in my own country for purchasing euros with a card.


Logic tells me youll get stung with a cash advance fee even if you physically purchase currency over the counter with a card in the UK.

To avoid a cash advance fee you would have to withdraw pounds from your bank (from the counter or through an ATM) and then physically carry a fortune in cash to a bureau de change!

I knew DEBIT card companies charged a cash advance fee for foreign currency purchases. But is it normal for CREDIT card companies (Mastercard in this case) to charge a cash advance fee?
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# 2
YorkshireBoy
Old 15-07-2012, 9:44 AM
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Quote:
Originally Posted by Woodcote52 View Post
Im going abroad for the first time and researched the best way of buying euros.
Your research should have begun with a look at your T&Cs. If T&Cs aren't your thing, then see your card's summary box...
Quote:
Charges

Cash Advances

(the Cash Advance charge is applicable to cash withdrawals, purchases of foreign currency and travellers cheques, but does not apply to gambling transactions)

2.99% handling fee, minimum 3

https://www.hsbc.co.uk/1/2/credit-ca...interest-rates
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# 3
rb10
Old 15-07-2012, 9:58 AM
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Quote:
Originally Posted by Woodcote52 View Post
I knew DEBIT card companies charged a cash advance fee for foreign currency purchases. But is it normal for CREDIT card companies (Mastercard in this case) to charge a cash advance fee?
It is HSBC who have charged you, not Mastercard.

Foreign currency from a credit card will always be counted as a cash advance - it's exactly the same as if you went to an ATM and withdrew sterling, you're just getting a different currency. As a result of this, you'll usually be charged a cash advance fee (with one or two exceptions, e.g. Halifax Clarity and Santander Zero), and will always be charged interest from the day of the cash advance.

Debit cards vary more widely - again, it's up to the individual bank whether there'll be a charge or not. Some do charge, others don't.
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# 4
YorkshireBoy
Old 15-07-2012, 10:11 AM
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Quote:
Originally Posted by rb10 View Post
and will always be charged interest from the day of the cash advance.
With (at least) a couple of notable exceptions:

Both Saga and Sainsburys Gold cards offer up to 50+ days interest free credit on cash withdrawals.

Saga has a cash advance fee, but the Sainsburys card is both fee-free and interest free...but you do pay a 5/month charge for holding the card (which gets you other benefits such as free family annual worldwide travel insurance).
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# 5
Woodcote52
Old 15-07-2012, 10:37 AM
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Cool Cash Advance Fee on CREDIT CARD

Many thanks for your replies!

Question:
If I buy goods on line from M&S with a credit card, M&S send me the goods, and the bill is charged to my card. HSBC do not add any fee for buying from M&S.

If I buy currency online from Moneycorp, Moneycorp carry out the transaction, send me the euros, and the bill is charged to my card. But HSBC charge me a cash advance fee.

Why the difference?

Last edited by Woodcote52; 15-07-2012 at 10:43 AM.
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# 6
davethorp
Old 15-07-2012, 10:43 AM
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Because in one case you are obtaining goods and in the other case you are obtaining cash
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# 7
Woodcote52
Old 15-07-2012, 10:57 AM
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Cool Cash Advance Fee on CREDIT CARD

OK.

But it's not HSBC who carried out the currency transaction.

Moneycorp carried out the exchange and just sent their bill to HSBC for my order.

How can HSBC justify a cash advance fee when they didn't carry out the work?

If I went into an HSBC branch and carried out the currency exchange on their premises I can see they would be entitled to levy a charge.
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# 8
dzug1
Old 15-07-2012, 11:37 AM
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Easy answer - they don't have to 'justify' it

Longer but still oversimplified:

Moneycorp send their 'bill' to HSBC who pay it less the retailer's commission

HSBC have an agreement (direct or indirect) with the retailer that cash transactions will be treated like debit cards - ie a nominal fee rather than a percentage of the transaction. You can be sure moneycorp won't be paying them 3 to 5% when their margin is less than this.

HSBC want their full commission though - so charge their customer.
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# 9
jonesMUFCforever
Old 15-07-2012, 11:45 AM
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Quote:
Originally Posted by Woodcote52 View Post
OK.

But it's not HSBC who carried out the currency transaction.

Moneycorp carried out the exchange and just sent their bill to HSBC for my order.

How can HSBC justify a cash advance fee when they didn't carry out the work?

If I went into an HSBC branch and carried out the currency exchange on their premises I can see they would be entitled to levy a charge.
Because you used their card and did not read/understand the process of ordering cash by credit card.
What goes around - comes around
give lots and you will always receive lots
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# 10
davethorp
Old 15-07-2012, 11:49 AM
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Quote:
Originally Posted by Woodcote52 View Post
OK.

But it's not HSBC who carried out the currency transaction.

Moneycorp carried out the exchange and just sent their bill to HSBC for my order.

How can HSBC justify a cash advance fee when they didn't carry out the work?

If I went into an HSBC branch and carried out the currency exchange on their premises I can see they would be entitled to levy a charge.
The fee HSBC is charging isn't in any way related to the foreign exchange process. It is because you have used your card to withdraw cash (albeit cash in a different currency) and this will attract a fee on any credit card (with one or two exceptions) regardless of whether you draw that cash out of an ATM, a branch or a bureau de change
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# 11
InsideInsurance
Old 16-07-2012, 12:57 PM
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People relying on a credit card for cash (irrespective of the currency) is a warning sign of potential financial issues. Due to the higher risk this therefore represents almost all credit card companies have different terms for it - eg fees and no interest free period - to compensate for the risk
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