Paying off a cash advance on a credit card

josephineparis

Well, I am totally confused, I am charged separate interest for cash advance and purchases, yet when I want to pay the cash advance off in full, guess what I have to pay the purchases off first. I think this is unfair and I am in dispute with HSBC AND will take it to the Financial Ombudsman as I thing it is most UNFAIR and a subtle way of getting money for old rope so to speak. Has anyone else had this problem.

exel1966

Poor old you, what with your bolier problems too ! :rotfl:

Go away TROLL !

josephineparis

Hi - I am a pensioner so do not really find the funny side of your reply. |I was not told that I could not pay the full amount back when I told them I would be doing. So someone did not give me the correct information.

nomoneytoday

A serious answer is it's called a negative payment hierarchy. With the exception of a few lenders such as Nationwide, the card company always pays off the cheapest debt first.

Say you had a debt of £1000 cash advance (30% APR) and £500 shopping (20% APR), and paid off £1000, the £500 shopping would be paid off first, and then £500 off the cash advance.

The payment hierarchy will be either in the T&C or on the back of your statement and is legal.

The best way round it is to never draw cash on a credit card, to pay off the balances in full and/or do a balance transfer elsewhere.

benroles

They gave you the information in your terms and conditions which you will have read, understood and agreed to at outset.

This document would have made it clear with regards to the order in which your payments are used (usually under a heading along a similar line - "the way we use your payments" etc.)

It's standard that credit card companies put your payments to work in reverse order of APR (interest rate) of card usage - e.g.

balance transfers
purchases
cash advances
etc.

Example. You make a £50 purchase at 22% APR, a cash advance of £30 at 30% APR and a balance transfer of £10 at 2%.

Regardless of the amount or the timeframes for what you did, any payments will firstly go aginst the 2% balance, then the 22% balance then the 30% balance.

The only way to stop incurring the high interest charge is to fully pay off your balance (i.e. clear any lower interest rate balance and then the actual cash advance balance).

B.

josephineparis

Thank you - I still feel it is unfair and Banks are making money from us. It is the first time I have ever had a cash advance from a credit card - my gas boiler broke down so I had to have it replaced. If I went to say a Virgin credit card would I be paying interest after 16 months on just one amount or the transfer of cash and purchases?

benroles

If you keep the balance where it is the rules myself and nomoneytoday wrote will always apply until the blance is cleared.

HOWEVER, You could get a new card with a balance transfer deal and move the whole balance over. That way the balance shifts cards and the new card see the whole amount as a balance transfer (at the balance transfer rate, which hopefully will be a low one!)

pre123

josephineparis wrote: »

Well, I am totally confused, I am charged separate interest for cash advance and purchases, yet when I want to pay the cash advance off in full, guess what I have to pay the purchases off first. I think this is unfair and I am in dispute with HSBC AND will take it to the Financial Ombudsman as I thing it is most UNFAIR and a subtle way of getting money for old rope so to speak. Has anyone else had this problem.

Yep, have before but it will be in your t+c, both the interest and allocation of payments, and interest for me was double compared to purchases too, 14.9 compared to 29.99:mad: plus fee you have to pay

After i paid my card off, i still had more to pay because of the way the interest is worked out on cash advances (believe its each day whereas purchases is monthly)

GOLDEN RULE:money:
NEVER EVER WITHDRAW CASH ON C/C

benf90

josephineparis wrote: »

Banks are making money from us.

With all due respect, they're businesses and we're their customers. I think they're entitled to make money from us.

As you're new here I would just suggest that it's best not to create brand new threads discussing exactly the same thing that you've previously created a thread for.

If you have more to add then it's best to reply to your original thread, ie the 'How do they get away with it' thread.

This is why exel1966 called you a 'troll'.

If you didn't know already:

"An Internet troll, or simply troll in Internet slang, is someone who posts controversial, inflammatory, irrelevant or off-topic messages in an online community, such as an online discussion forum or chat room, with the primary intent of provoking other users into an emotional response or to generally disrupt normal on-topic discussion."