HSBC CC/Nationwide in America advice...

xguybrushx

Hi guys

I have a Nationwide Debit card I'm going to be taking abroad to America for a month with my holiday savings on. Will I incure any kind of charges when spending on this? I know they say it's free to use abroad but are there any hidden costs?

I also have a HSBC Mastercard Credit Card with £1000 on it. My question is what is the best way to use the HSBC card whilst in America? Am I better to just transfer money from it to my Nationwide account before I leave and incure a 2.5% charge on the total transfer or stick with the card and use it when in America? What kind of charges will I incure if I use it in the States? Also... is there a difference in using it to pay for goods using chip and pin in the shop rather than drawing money out of it using an ATM? Can anyone help me understand this?

Thanks!

chattychappy

Nationwide Debit will charge 1%, though they say this is "the charge they pay on your behalf", blah blah blah.

I don't know what you mean by saying you have an HSBC credit card with £1000 "on it". If you mean as a limit, then for purchases you're probably better off using this despite the 2.75% exchange charge (or whatever) than doing cash advances.

If you have time consider getting Santander Zero or Post Office credit cards, (both 0% on foreign spend) or the Nationwide Visa card (1%).

chattychappy

Just to emphasise, getting cash in the US on an HSBC credit card will be nightmarishing expensive. They'll probably charge you 2.75% forex charge, and 2.5% cash advance fee, plus interest from the date of the transaction, plus maybe even another fee for using the ATM (not sure).

I don't use HSBC.

The only credit card on which it can make sense to get cash out of a foreign ATM is Zero. You still pay interest from day one, but no forex fee or cash advance fee. If you pay off within a few days (ie don't wait for the statement), this can work out cheaper than Nationwide Debit.

xguybrushx

Yeah sorry... I meant with a £1000 limit on the CC.

Could you explain a little more about the HSBC credit card? Is it 2.75% on all transactions abroad standard rate... or is there some kind of difference in paying for goods with it directly rather than drawing money from ATM's and then using that? I've never used my card abroad so I have no idea what to expect.

And... are you saying I'd be better keeping the credit card funds in the cc account because I'd end up paying 3.5% overall after incurring the 2.5% HSBC Credit Card transfer fee and then the 1% abroad fee from Nationwide?

lisyloo

Nationwide Debit will charge 1%, though they say this is "the charge they pay on your behalf", blah blah blah.

This is a VISA charge that Nationwide make.

xguybrushx

Ahh okay thanks for your help.


I might just bite the bullet and transfer the funds while I'm in the UK and incur the 2.5% charge now before I go. At least I know how much I'm going to be wasting rather than suffering the possible hidden costs of paying ridiculous percentages using it at ATM's or wherever. Does anyone have any first hand experience of using a HSBC cc abroad? It's about 3 years old now so I don't have any kind of interest free period to play with.

I'm going next week so I doubt I've got time to set up a new CC. I've set up my Nationwide account to use while I'm over there so hopefully I've saved a bit of money at least.

chattychappy

xguybrushx wrote: »

Could you explain a little more about the HSBC credit card? Is it 2.75% on all transactions abroad standard rate... or is there some kind of difference in paying for goods with it directly rather than drawing money from ATM's and then using that?

Most credit cards apply a loading on forex transactions. 2.75% is pretty standard. I think my MBNA card is 2.98%. Only a few cards are substantially less than this. Nationwide (0% in Europe, 1% outside Europe), Post Office and Abbey/Santander ZERO (0%).

This is JUST the forex loading. It is usually the same whether you get cash out of a machine or pay for stuff in a shop. (But see DCC note below.)

Then as with UK credit card transactions, a different regime applies depending on whether you are making purchases or drawing cash. With purchases, if you pay off your balance each month then generally you have nothing extra to pay. If you draw cash (at an ATM, over the counter, bet online, buy travellers cheques etc) then you will pay a fee for this and typically pay interest from the date of the transaction. No interest free period applies.

The upshot of all this is that if you stick an HSBC credit card into an ATM overseas, you will be hit 3 times:

1) forex fee - eg 2.75%
2) cash advance fee - 2.99% on HSBC (just checked their site - perhaps you're on a different deal)
3) interest on the transaction - likely to be 1% to 2% per month

That is before any locally applied charges - just as with some ATMs in the UK (eg in pubs), some foreign ATMs charge too.

DCC: "dynamic currency conversion" - some retailers will offer (or almost insist) to put a transaction through in £. The idea is you save the forex fee. But almost certainly the exchange rate they offer will never be as good as the VISA/Mastercard rate and you will lose out.

xguybrushx wrote: »

And... are you saying I'd be better keeping the credit card funds in the cc account because I'd end up paying 3.5% overall after incurring the 2.5% HSBC Credit Card transfer fee and then the 1% abroad fee from Nationwide?

Well you refer to keeping the "credit card funds in the cc account" almost as if you are talking about a positive deposit held with them. It's just a borrowing facility.

For PURCHASES, probably best to use the HSBC card directly. You'll lose 2.75% on the forex conversion, but that will be all and you will still get some free credit if you pay your balance immediately. (If not you're pay the purchase rate of interest.) If instead you transfer some money to the Nationwide account (are you sure you can do that??) then you will pay a fee - 2.5% ?? + interest immediately + 1% when you spend it out of Nationwide.

For CASH, then it's a closer run thing, but probably cheaper to transfer to Nationwide as you will be paying 1% on forex rather than 2.75%. Either way HSBC will rook you for cash advance/transfer fees and interest. The only thing is that interest might be slightly more because if you transfer to Nationwide beforehand you will be paying interest for longer than if you withdraw it as and when you need it once in the US.

xguybrushx wrote: »

I might just bite the bullet and transfer the funds while I'm in the UK and incur the 2.5% charge now before I go.

But you will also pay interest - it's an expensive idea to get cash / "transfer funds" from a credit card unless you have a special deal. Personally I couldn't enjoy a holiday knowing I was financing it this way. If you must go ahead, try to transfer no more than you need for cash purposes. Aim to make as many of your purchases as possible using the credit card directly.

Are you really sure you can transfer funds from HSBC credit card to your Nationwide current (flex) account? Not many cards allow this.

It might be cheaper to ask Nationwide about an overdraft or consider a personal loan. It might be possible to get this organised in time for your departure.

xguybrushx

Chattychappy... thanks for all your help.

Well if I was going to transfer some of the credit from the HSBC CC into my Nationwide account I would have to do it via my HSCBC current account and pay the 2.5% balance transfer fee so I would only be paying the 2.5% but like you mentioned, the interest fees might change that considerably.

You've convinced me to stick to using the money in my Nationwide account unless I really need more. I know it's not an ideal to finance a holiday using a CC but if I really need more money to do something and my HSBC card is the only option I'll use it as a last resort. Thanks for your help!