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

firsttimestudent

Moggles wrote: »

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.

Just wondering about this academically - let's say you have a credit limit of £1000, and you over-credited your account such that you're £250 in positive balance.

Now, 2 scenarios:
a) You bought an item worth £500 - which means you effectively 'borrowed' £250 from your bank
b) you bought an item worth £150 - which means you effectively bought the item from your own money.

I perfectly understand that Section 75 will not apply to scenario b) above.

But, I thought Section 75 will still apply to scenario a) above - as it is analogous to the commonly accepted strategy of paying £100 with a credit card for a holiday and then the remainder with a debit card to both obtain Section 75 protection and reduce credit card charges isn't it?

Fairzo

On a slightly different point, I have just applied for the Santander fee free 0% BT card. At the same time I applied for a BT to another card, designed to all but clear the balance. Santander seem to be dragging their feet over the whole thing so if I end up having to pay another monthly payment to the first card then the BT, if it happens, will put me in credit on that card (hope that makes sense). Could that be a problem?

Ritchie74

This policy is mainly due to AML purposes, and also to stop cheque kiting. Cheque kiting: imagine a customer has a £1000 limit, he then loads his card with £10000 in cheques, these cheques are applied to the account, customer spend £11000, cheque bounces, bank is £11000 down. It used to happen a lot, with the last purchase usually spent on a plane ticket to 'certain places' in the world. Some cards do still allow a credit balance, but it is limited to a small amount.

Would make more sense for you to take your debit card, given you wouldn't have s75 protection either way.

hippey

Richie74 hit the point exactly, it does stop the old fashioned fraud.

There is no automatic rejection of an overpayment for instance, you have a zero balance and you get a refund for an item, then you would end up with a positve balance.

I also overpaid a Barclaycard recently and there were not any issues (only by £25 though).

However the online systems will generally prohibit overpayments either for fraud prevention or prevent customers making errors. Payments by phone will also be stopped when the operator realises you are overpaying. A credit card is just that, for credit, and overpayments can cause problems in the authorisation process albeit not like they used to!

ElkyElky

Well I think it is complete madness. A credit card that cannot go in to credit?!?! Heaven forbid. It is amazing banks can get away with such practices.

If only they were such a product like a credit card but will allow me to go in to credit.. hmm.. OH wait - there is!! A debit card.

bazster

My Barclaycard account has a small credit balance right now, due to an error on my part when paying off the last statement.

Use BACS (i.e. do it online from your current account), you can pay as much as you want into your account.

CLAPTON

ElkyElky wrote: »

Well I think it is complete madness. A credit card that cannot go in to credit?!?! Heaven forbid. It is amazing banks can get away with such practices.

If only they were such a product like a credit card but will allow me to go in to credit.. hmm.. OH wait - there is!! A debit card.

Why the sarcasm .. what does it contribute?

Some credit card do indeed allow modest credit balances, some used to encourage such balances and pay interest (egg money)


And anyway, a debit card can't go into credit (or debit for that matter); it merely facilitates a transaction on your current a/c

ElkyElky

CLAPTON wrote: »

Why the sarcasm .. what does it contribute?

Some credit card do indeed allow modest credit balances, some used to encourage such balances and pay interest (egg money)


And anyway, a debit card can't go into credit (or debit for that matter); it merely facilitates a transaction on your current a/c

If the OP wants an account that can have positive and negative balances, perhaps they should consider a current account with an overdraft feature.

Sounds like a credit card isn't for them if they do not wish to get in to debt.

CLAPTON

ElkyElky wrote: »

If the OP wants an account that can have positive and negative balances, perhaps they should consider a current account with an overdraft feature.

Sounds like a credit card isn't for them if they do not wish to get in to debt.

than wasn't the point of my post

and if you re-read the OP original post that wasn't his point either

it's clearly the case that (some) credit cards used to allow one to be in credit, some actually encouraged it and all allow it in some special circumstances
Many have fairly recently changed for various reasons.

lilac_lady

I have a credit card (Clydesdale Bank Gold) that I transfer £5 - £10 into each time I move money about using internet banking. When it gets to £100ish, I use it to buy theatre tickets or treat my grandchildren. I've never had any problem with this.