Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    Woodcote52
    Cash Advance Fee on CREDIT CARD
    • #1
    • 15th Jul 12, 9:25 AM
    Cash Advance Fee on CREDIT CARD 15th Jul 12 at 9:25 AM
    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?
Page 1
    • YorkshireBoy
    • By YorkshireBoy 15th Jul 12, 9:44 AM
    • 27,867 Posts
    • 15,747 Thanks
    YorkshireBoy
    • #2
    • 15th Jul 12, 9:44 AM
    • #2
    • 15th Jul 12, 9:44 AM
    Im going abroad for the first time and researched the best way of buying euros.
    Originally posted by Woodcote52
    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...
    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-cards/credit-card/interest-rates
  • rb10
    • #3
    • 15th Jul 12, 9:58 AM
    • #3
    • 15th Jul 12, 9:58 AM
    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?
    Originally posted by Woodcote52
    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.
    • YorkshireBoy
    • By YorkshireBoy 15th Jul 12, 10:11 AM
    • 27,867 Posts
    • 15,747 Thanks
    YorkshireBoy
    • #4
    • 15th Jul 12, 10:11 AM
    • #4
    • 15th Jul 12, 10:11 AM
    and will always be charged interest from the day of the cash advance.
    Originally posted by rb10
    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).
  • Woodcote52
    • #5
    • 15th Jul 12, 10:37 AM
    Cash Advance Fee on CREDIT CARD
    • #5
    • 15th Jul 12, 10:37 AM
    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.
    • davethorp
    • By davethorp 15th Jul 12, 10:43 AM
    • 1,401 Posts
    • 1,038 Thanks
    davethorp
    • #6
    • 15th Jul 12, 10:43 AM
    • #6
    • 15th Jul 12, 10:43 AM
    Because in one case you are obtaining goods and in the other case you are obtaining cash

  • Woodcote52
    • #7
    • 15th Jul 12, 10:57 AM
    Cash Advance Fee on CREDIT CARD
    • #7
    • 15th Jul 12, 10:57 AM
    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.
    • dzug1
    • By dzug1 15th Jul 12, 11:37 AM
    • 13,366 Posts
    • 6,123 Thanks
    dzug1
    • #8
    • 15th Jul 12, 11:37 AM
    • #8
    • 15th Jul 12, 11:37 AM
    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.
    • jonesMUFCforever
    • By jonesMUFCforever 15th Jul 12, 11:45 AM
    • 22,924 Posts
    • 10,346 Thanks
    jonesMUFCforever
    • #9
    • 15th Jul 12, 11:45 AM
    • #9
    • 15th Jul 12, 11:45 AM
    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.
    Originally posted by Woodcote52
    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
    • davethorp
    • By davethorp 15th Jul 12, 11:49 AM
    • 1,401 Posts
    • 1,038 Thanks
    davethorp
    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.
    Originally posted by Woodcote52
    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

    • InsideInsurance
    • By InsideInsurance 16th Jul 12, 12:57 PM
    • 22,232 Posts
    • 11,387 Thanks
    InsideInsurance
    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
Welcome to our new Forum!

Our aim's to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

703Posts Today

5,547Users online

Martin's Twitter