Halifax redefines Cash Advance definitions? What the heck is that about??

Firsttimebuyer_4

I'm reading a letter my other half got from Halifax regarding her credit card. She never reads these kinds of letter where as i get great pleasure in reading the "small print" to see what new ways they are trying to con us.

"In condition 6 we have changed the definition of cash advance to include finance payments, money transfers and gambling transactions, all of these will be charged interest rate at the rate for cash advance, and, except for gambling transactions, will incur the cash handling fee"

So let me recap:

1. If my other half was to gamble online (not that she ever will) she will now be the cash advance interest from the day she deposits money in her online account. Currently this is 20% which is quite low for being cash advance (her purchase rate is 9%"

2. If she was to pay off one of her payments of her car with her credit card she will be charged the cash advance interest rate AND the handling fee.

3. What the heck is a "money transfer"?

The card companies are getting more and more cunning in how they screw us for money. There should be a law that forces bank to put all their charges on a sheet of paper and explain them in simple laymans terms.

red_flump

Just checked the letter from Sainsbury's Bank Visa card which has the same amendment (It's another HBOS card). I've phoned them to confirm that Paypal purchases are OK, they said these will not be classed as cash advances as reported on an earlier thread. However I will be watching this one closely.

Sim

Astaroth

To be honest it doesnt sound that bad to me... gambling is not a purchase so really shouldnt be counted as such.... repaying finance is moving debt around and not actually paying it off, something that is being increasingly frowned upon by "society" and so banks will increasingly be pressured to discourage these behaviours.

Paypal is more of a tricky one as it can be used either to make purchases or take cash advances.... I would have thought that pressure would be put on paypal to split these two services out (behind the scenes) so that card companies can distinguish between the two.

Firsttimebuyer_4

But why should cash advance fetch a higher interest than a purchase? That makes no sense to me. And the fee, i understand that the credit card companies charge 2.5% (or around there). So when it comes to getting money out of the hole in the wall i can understand the fee, but not when paying for financings for instances as the fee is covered by whoever facilitates the payment.

The 2 cards i've got charge the same interest for cash advance and purchases (AMEX and CO-OP).

And don't tell me it's to encourage people not to take cash out with their credit card. It most definately is not. The know full well that people who are stuck for cash will use the credit card to get cash and therefor charge them more. They also know that most people have no idea they pay more for taking cash advance than for purchases. Simply because all advertising focuses on the purchase rate and never ever mentions the cash advance rate and fee.

Daft_Monkey

Firsttimebuyer wrote:

And don't tell me it's to encourage people not to take cash out with their credit card. It most definately is not. The know full well that people who are stuck for cash will use the credit card to get cash and therefor charge them more. They also know that most people have no idea they pay more for taking cash advance than for purchases. Simply because all advertising focuses on the purchase rate and never ever mentions the cash advance rate and fee.

There shouldn't really be any difference in the rates for cash advances and purchases. It's unfortunatelly another way for the banks to make extra money, Few years back, cash advances were treated as purchases (apart from the higher interest rate) with the same interest free period. So apart from the cash advance fee, there was no interest to pay if the balance was paid in full at the end of the month. Now, we pay interest on cash advances regardless of the balance being paid in full or not. Some of them (if not all) want to apply interest from the day the transactions took place and not from the day the credit card company paid for the goods bought. Making them yet extra profits. I get so annoyed when people are saying : "Oh we have to pay for people claiming charges back etc." Banks and credit cards, don't need an excuse to screw us over with charges, higher interest rates etc. If they can find a way to make extra money, they'll do it. Prime example was Capital One, that applied payments to purchases made after the statement was issued, so that even if you paid up in full, but had a cash advence in your last stsatement you were still paying for it a few months down the line.
Anyway I'm veering of the subject again ( I tend to do that...:)). What I wanted to say is that although I agree with you with most of the things you say, I must point out that a little box was introduced for comparison purposes that all cards display clearly in their terms and conditions and websites, containing the interest rates for purchases, cash advances, balance transfers etc. So unless people don't pay attention when applying for a card, or don't look at the terms and conditions , are impossible to miss. The rates and charges are clearly visible and although it hurts me saying that, it's our fault if we don't read the stuff properly, especially now that things are made so much easier to spot.

Rafter

I guess there is some justification for charging for cash advances, as the bank isn't getting any income from a retailer to fund the cash advance.

However, agree with others that there is no justification for charging a higher rate, just charging interest straight away or a modest withdrawl fee to cover costs.

Paying off purchases first to keep the most expensive cash advance debt sat there is certainly imoral.

If the people who are making cash advances are 'high risk' the bank should either:

1) Charge them the same higher rate for all transactions.

2) Block the card from making cash withdrawls.

or.... and how about this for a brainwave......

3) Not give credit to people who cannot afford to repay it as they are obliged to do under consumer credit law and their voluntary banking code!!!!

R.

King_Of_Fools

Firsttimebuyer wrote:

The card companies are getting more and more cunning in how they screw us for money. There should be a law that forces bank to put all their charges on a sheet of paper and explain them in simple laymans terms.

Unfortunately, this is just a response to certain "cunning" people who had previously discovered that they could take out a 12 month 0% purchases card use the card to "purchase" a large gambling stake on day one, then withdraw all the money and earn interest on it for a year.

YorkshireBoy

Firsttimebuyer wrote:

3. What the heck is a "money transfer"?

Known in stoozing circles as a Super Balance Transfer (SBT), it's a transfer of funds from your credit card to another financial institution or product (usually a current account, but could also be a loan etc), but not a credit card - which would of course be classed as a balance transfer.

Companies advertising these Money Transfers include the RBS group (RBS, NatWest, Mint, etc - who also apply an 'advance' limit, which is 50% of your credit limit) and the MBNA run cards (excluding Virgin).