Crazy new policy: You can't go into credit!

kieronshaw

The banks seem to have changed one policy quite insidiously and very subtly in the last month or two that has gone (to my mind) unreported. It's essentially this: You can't have a balance over £0.00 (i.e., in credit) on your Barclaycard or HSBC Mastercard any more. Possibily on others too.

I found this out when I tried to overpay my Barclaycard by £200 to cover any transactions I might make while on holiday in the following weeks, so I could be confident that future payments would be covered and I wouldn't incur any interest before I got back to the UK. My attempt to do this, online, was blocked: "Your account cannot be in credit" it told me online. I rang to confirm and was told that this is true. I can't put my credit card in credit.

With my HSBC Mastercard, it was the same but even worse. I have been told by HSBC that any credit on my card will be refunded to my current account. "You are not allowed to have a balance above £0" I was told by customer services – otherwise my card will be refused, they said, for being in credit!

Ludicrous. And it seems to have happened very recently. Their line is that it is for fraud prevention – clearly it is to try to encourage debt. No bank likes people who pay early and in full. I think it's scandalous.

walesrob

kieronshaw wrote: »

clearly it is to try to encourage debt.

eh :huh::huh:? Surely it would be easier to set up a DD to pay the whole amount for each statement, and in the meantime leaving that money in a savings account earning some interest. Credit balances on credit cards don't pay interest.

In your case, a better idea would be to get a pre-paid credit card if really don't want to get into debt?

Cash_Flow

kieronshaw wrote: »

The banks seem to have changed one policy quite insidiously and very subtly in the last month or two that has gone (to my mind) unreported. It's essentially this: You can't have a balance over £0.00 (i.e., in credit) on your Barclaycard or HSBC Mastercard any more. Possibily on others too.

I found this out when I tried to overpay my Barclaycard by £200 to cover any transactions I might make while on holiday in the following weeks, so I could be confident that future payments would be covered and I wouldn't incur any interest before I got back to the UK. My attempt to do this, online, was blocked: "Your account cannot be in credit" it told me online. I rang to confirm and was told that this is true. I can't put my credit card in credit.

With my HSBC Mastercard, it was the same but even worse. I have been told by HSBC that any credit on my card will be refunded to my current account. "You are not allowed to have a balance above £0" I was told by customer services – otherwise my card will be refused, they said, for being in credit!

Ludicrous. And it seems to have happened very recently. Their line is that it is for fraud prevention – clearly it is to try to encourage debt. No bank likes people who pay early and in full. I think it's scandalous.

Funny that I thought it was a "credit" card.

izools

Yes it has been a breach of terms and conditions to put credit card accounts into credit with some providers since they started out (Vanquis, Capital One).

As you've found out, others are following suit.

Credit cards aren't designed to hold a credit balance, and if you want a credit balance to use overseas you should consider a bank account that doesn't charge for overseas transactions for example, Nationwide.

If you do choose to use your credit card abroad, you can still do so and clear the balance in full to avoid interest charges if that is your aim.

Unfortunately, I don't share you're view that it is scandalous.

Credit Cards are accounts designed to lend money and hold a debit balance.
Bank accounts are designed to store money and hold a credit balance.

Simples

sharpy2010

kieronshaw wrote: »

The banks seem to have changed one policy quite insidiously and very subtly in the last month or two that has gone (to my mind) unreported. It's essentially this: You can't have a balance over £0.00 (i.e., in credit) on your Barclaycard or HSBC Mastercard any more. Possibily on others too.

I found this out when I tried to overpay my Barclaycard by £200 to cover any transactions I might make while on holiday in the following weeks, so I could be confident that future payments would be covered and I wouldn't incur any interest before I got back to the UK. My attempt to do this, online, was blocked: "Your account cannot be in credit" it told me online. I rang to confirm and was told that this is true. I can't put my credit card in credit.

With my HSBC Mastercard, it was the same but even worse. I have been told by HSBC that any credit on my card will be refunded to my current account. "You are not allowed to have a balance above £0" I was told by customer services – otherwise my card will be refused, they said, for being in credit!

Ludicrous. And it seems to have happened very recently. Their line is that it is for fraud prevention – clearly it is to try to encourage debt. No bank likes people who pay early and in full. I think it's scandalous.

Also, you will be aware that if you spend money on your credit card, the item you purchased is protected under credit card rules. The bank has given you a set credit limit, which partly is to do with the amount they wish to lend you, and partly to do with the amount they wish to cover you for. If you put your card into "credit" then and then spend the whole amount, you are forcing them to protect your purchases for a larger amount than they wanted to. You cannot expect them to do this.

chattychappy

kieronshaw wrote: »

Their line is that it is for fraud prevention – clearly it is to try to encourage debt.

Er... not to clear to me. Not allowing a positive balance isn't encouraging a negative balance.

Banks offer credit cards on the basis you borrow on them within the agreed terms. Those terms include not maintaining a positive balance just as much as keeping to the credit limit. If you don't like the terms, you don't have to have them.

Going into the black creates a number of regulatory problems - the banks become deposit takers (different rules apply), there are money laundering risks, fraud risks and just general hassle.

kieronshaw wrote: »

I think it's scandalous.

I think you're joking.

Moggles_2

As others have said, there's nothing new about this.

Pity you didn't ask us to verify your assumptions before you acted. You would have been strongly advised against it, particularly prior to a trip overseas.

Most lenders are relaxed about modest sums that arise temporarily (due to a refund, for instance, or making a one-off manual payment too close to your direct debit payment date). That said, those same lenders may take a dim view if you breach your Ts & Cs and set out to put the account in credit deliberately.

The outcome certainly depends on the lender involved and their interpretation of anti-money laundering procedures. If you do this with some credit cards, their fraud dept may put a stop on the card and you wouldn't be able to use it at all. From feedback here, these issues are not resolved quickly, so it pays to keep within your Ts & Cs.

You cannot normally spend more than your entire credit limit in one day regardless of your actual balance (exceptions to this would be lots of transactions under floor limit). You can't do it as the limit on the card is the maximum that can be spent in any statement cycle, even if you did pre-load the card.

Additionally, section 75 wouldn't apply if you spent from a positive balance, because technically it's not credit. Also, if your card were stolen, you wouldn't be covered for fraudulent transactions.

kieronshaw

Wow. Active messageboard. Thanks everyone. Let me respond:

walesrob wrote: »

eh :huh::huh:? Surely it would be easier to set up a DD to pay the whole amount for each statement, and in the meantime leaving that money in a savings account earning some interest. Credit balances on credit cards don't pay interest.

Yes, and I have now done this (set up a DD for the full amount). So no great shakes. One other simple answer, obviously, would also be to be more efficient with managing my money. Unfortunately, it's not always the case , so I was trying to err on the side of caution. I was irritated that this was not possible.

izools wrote: »

Yes it has been a breach of terms and conditions to put credit card accounts into credit with some providers since they started out (Vanquis, Capital One).

As you've found out, others are following suit.

I didn't know this. Thanks.

izools wrote: »

Credit cards aren't designed to hold a credit balance, and if you want a credit balance to use overseas you should consider a bank account that doesn't charge for overseas transactions for example, Nationwide.

I've done this now. I just got a Zero card from Abbey. And yeah, I know they're not designed to hold a credit... it just seems petty that I can't cover myself by even 1p.

sharpy2010 wrote: »

Also, you will be aware that if you spend money on your credit card, the item you purchased is protected under credit card rules. The bank has given you a set credit limit, which partly is to do with the amount they wish to lend you, and partly to do with the amount they wish to cover you for. If you put your card into "credit" then and then spend the whole amount, you are forcing them to protect your purchases for a larger amount than they wanted to. You cannot expect them to do this.

I hadn't considered this.

chattychappy wrote: »

Er... not to clear to me. Not allowing a positive balance isn't encouraging a negative balance.

No, but if I'm not in credit, there's a chance they won't be able to charge me interest on purchases, or that I won't pay off my balance in time. I have had this before - credit card companies not interested in you if you actually pay them.

Let me explain further. This originally arose because I went onto the Barclaycard site on, like, 18 Jan and it said I had £185 in "Pending transactions" or some such ("These are transactions that will appear on your next bill" I think it said next to it). Given that I was about to go away and didn't know if I would be able to pay manually while away, I tried to pay it off (as that next bill would come out 2 days later anyway, on 20 Jan). My attempt to pay off this £185 was declined on the basis that "Your account can't go into credit". Even though it was right there, on the site, that this was going to be on my next bill. I simply wanted to pay my bill ahead of time.

With HSBC, I simply wanted to put a little money on there, so that my overseas transactions wouldn't be subject to daily interest.

But, to reiterate, I'm less convinced by their "fraud" explanation than that they simply want to set up a system whereby it's easier for them to charge me.

chattychappy wrote: »

Banks offer credit cards on the basis you borrow on them within the agreed terms. Those terms include not maintaining a positive balance just as much as keeping to the credit limit. If you don't like the terms, you don't have to have them.

Going into the black creates a number of regulatory problems - the banks become deposit takers (different rules apply), there are money laundering risks, fraud risks and just general hassle.

I think you're joking.

All good stuff – although this was not the basis for credit cards that I (or any of the other lay people I've spoken to about it) understood it to be. I think you're not understanding that most people don't view credit cards that way (even if those people are wrong). I certainly didn't and don't. Perhaps this is the modern malaise.

But I certainly was not joking.

kieronshaw

Moggles' reply came in while I was typing in response to the others...

Moggles wrote: »

As others have said, there's nothing new about this.[...]

The outcome certainly depends on the lender involved and their interpretation of anti-money laundering procedures. If you do this with some credit cards, their fraud dept may put a stop on the card and you wouldn't be able to use it at all. From feedback here, these issues are not resolved quickly, so it pays to keep within your Ts & Cs.

You cannot normally spend more than your entire credit limit in one day regardless of your actual balance (exceptions to this would be lots of transactions under floor limit). You can't do it as the limit on the card is the maximum that can be spent in any statement cycle, even if you did pre-load the card.

Additionally, section 75 wouldn't apply if you spent from a positive balance, because technically it's not credit. Also, if your card were stolen, you wouldn't be covered for fraudulent transactions.

Then I withdraw my scandalisation from its previous heights. It sounds, from the lot of you, that these are fairly standard terms, only recently applied at HSBC and Barclays. And, like most people, I suspect, it's no use you all quoting back at me my T&C as I have only a passing acquaintance with them. I'm not advocating that approach; it's just the truth.

But what you say, Moggles, is true – I have been in credit from time to time on these cards in the past, for small amounts overpaid, and it's never been a problem. Then, suddenly, in the last month, both card companies have told me it's "not allowed". Hence the posting.

You all seem to know more than me. But you all seem to be far more trusting of credit card companies' motives than I will ever be. Not allowing me to pay my next bill a couple of days early (Barclaycard), or telling me that my card will actually be refused in stores for being in credit (HSBC) – much as I understand your explanations, and offer a genuine thanks to you for offering some clarity and perspective on them – both seem to bear the whiff of credit companies looking for ways to make being in the black that little bit harder...

izools

TIP: You can pay your Barclaycard whenever you please, just pay as a bill payment / standing order from your bank account on your online banking, rather than paying via Barclaycard's telephone or online account servicing

chattychappy

Especially if you're travelling outside Europe, you've done a good thing getting Abbey Zero.

It is the only way I know of getting cash "free". No foreign currency loading, AND no cash advance fee or other fees. You do pay interest from the day of the transaction - but it amounts to peanuts if you watch the transaction go through online and then immediately send payment. Delay more than a week or so or if staying inside Europe and you're better off on Nationwide debit. If you're mixing in purchases on Zero then best to clear the whole lot to be sure the payment is applied the way you want it to be OR put the purchases on the Post Office (anywhere) CC OR Nationwide Visa (within Europe). If you follow that...!