Unfair cash interest upon cash transaction?!

janchng

Dear all,

I would like to share my frustration about how HSBC charges interest on the cash transactions. Basically, whenever I withdraw cash from either UK or overseas using my credit card, the bank charges me daily interest from the day the transaction is made till the day I paid and they do this even if I always pay back in full within the month.

To put the icing on the cake, about 2 months after I made my latest cash transaction, I notice that they are still charging me interest based on some cash transaction. So I queried them about it and I got the reply (see below) basically saying that they are still charging me interest on the interest from previous month... how convoluted is this and I have already cleared the transaction a month ago... I found out from my colleague that Barclays doesn't do that, so this is only HSBC's practice? Could someone please also share your experience on this and whether there are other banks that do this?

Reply from HSBC: "As you have undertaken a 'cash' transaction then even if you settle the resulting statement balance in full, or indeed, if you were to pay more than the required full balance, interest would still be charged. Unlike 'normal' transactions, interest is charged from the day the transaction is posted to your account. Consequently, even if you pay the full amount, interest will have accrued on the 'cash' transaction amount from the date it was posted to your account until the date that you make payment although only the interest charged between the posting date of the transactions and the statement date will show on that statement.

Interest will be charged on the full cash advance amount until you make payment and then only on any amount that is then left outstanding. Obviously, if you have made full payment, the 'cash' transaction amount will have been cleared. However, your following statement will include the cash interest on the 'cash' transaction from the statement date as mentioned above to the date your full payment was made. In addition to this, as the cash interest itself is effectively treated as a 'cash' transaction, it does mean a small amount of cash interest will be shown on the following statement - even if no further 'cash' transactions are undertaken. Depending on the amount of the initial 'cash' transaction, even a smaller amount of cash interest may appear on the statement after that."

dazza.mk

janchng wrote: »

Dear all,

I would like to share my frustration about how HSBC charges interest on the cash transactions. Basically, whenever I withdraw cash from either UK or overseas using my credit card, the bank charges me daily interest from the day the transaction is made till the day I paid and they do this even if I always pay back in full within the month.

To put the icing on the cake, about 2 months after I made my latest cash transaction, I notice that they are still charging me interest based on some cash transaction. So I queried them about it and I got the reply (see below) basically saying that they are still charging me interest on the interest from previous month... how convoluted is this and I have already cleared the transaction a month ago... I found out from my colleague that Barclays doesn't do that, so this is only HSBC's practice? Could someone please also share your experience on this and whether there are other banks that do this?

This is pretty much standard with all banks, there is no interest free period on cash withdrawals, therefore even if you pay off your statement in full by the due date you will have incurred interest on the cash transaction between the statement date and your payment date that will be applied to the next statement (Barclaycard operate in exactly the same way, has your colleague made cash withdrawals on their card?)

Reply from HSBC: "As you have undertaken a 'cash' transaction then even if you settle the resulting statement balance in full, or indeed, if you were to pay more than the required full balance, interest would still be charged. Unlike 'normal' transactions, interest is charged from the day the transaction is posted to your account. Consequently, even if you pay the full amount, interest will have accrued on the 'cash' transaction amount from the date it was posted to your account until the date that you make payment although only the interest charged between the posting date of the transactions and the statement date will show on that statement.

Interest will be charged on the full cash advance amount until you make payment and then only on any amount that is then left outstanding. Obviously, if you have made full payment, the 'cash' transaction amount will have been cleared. However, your following statement will include the cash interest on the 'cash' transaction from the statement date as mentioned above to the date your full payment was made. In addition to this, as the cash interest itself is effectively treated as a 'cash' transaction, it does mean a small amount of cash interest will be shown on the following statement - even if no further 'cash' transactions are undertaken. Depending on the amount of the initial 'cash' transaction, even a smaller amount of cash interest may appear on the statement after that."

Not sure about the above the HSBC website suggests standard terms, ie that you would need to clear the balance of the statement after the statement showing the original cash transaction to stop incurring interest, I would be surprised if you hadn't been given the wrong info by email.

"
Interest is charged from the date transactions are applied to your account until payment is received (unless the interest free period applies). For Cash Advances and Balance Transfers, any interest charge for the period from the previous statement to the date of full repayment will be debited the following month. Interest will not be charged on Default Charges.
"

Inactive

Use a Nationwide Debit Card, they do not incur charges and give a very good exchange rate overseas.

CLAPTON

It's standard for all CC to charge this way... to stop interest you need to pay the balance in full for two consecutive months...

And indeed, its very expensive to draw cash from a CC in the UK and even more so abroad; so use a debit card instead... better use nationwide's debit card and there is no overseas charge

normanmark

It's all in the terms & conditions.

simongregson

The only credit card that doesn't clear cash last from the balance is Nationwide, and they still charge interest from the date of withdrawal. If you think about it, it is fair to pay interest, after all you've borrowed the money for the month, even if you pay it off in full. Card companies only have a grace period on purchases to encourage people to spend on their cards and (hopefully) not pay them off in full.

YorkshireBoy

simongregson wrote: »

The only credit card that doesn't clear cash last from the balance is Nationwide...

Nationwide are not unique in offering this favourable order of payments. The Saga Platinum card has the same benefit...

http://www.saga.co.uk/money-shop/credit-card/

janchng

Thank you all. I only checked the replies as I had been overseas. This time, I used my debit card. The annoying thing is that it's for work, so I would rather have used credit card so that I won't have to use my own money. I will look into Nationwide and Sage offerings. Many thanks to all!

simongregson

Add the interest to your expense claim, along with the cash advance charges. You have incurred the expense whilst doing your job. If they don't like it, tell them to give you an advance in cash next time :-).

withnell

You have to remember that on a purchase transaction the merchant is charged a fee, while for the cash withdrawal HSBC have probably had to pay a fee to the owner of the cashmachine - they have to recover this somehow.

Robert_Sterling_3

Use a debit card that will show them.