Misunderstanding with HSBC

MathewMayes

Hi there,

I'm a long time lurker of this forum and always find the help I need before having to post myself, but this time I'm in a very sticky situation.

Basically, I'm 24 and graduated in 2008 with a maxed out overdraft (£1400 interest free on graduate account) and have been trying to pay it off since. I have student loan debt, but have never had any credit cards or store cards or any other debt. I've had 2 jobs with similar salary, the last one and this one giving me around £850pm. My current outgoings are between £750/£950, meaning that some months I have gone over my overdraft limit. This has meant I have incurred charges and interest, and I am now paying around £50-100pm in interest.

To combat this interest I have been toying with the idea of getting a 0% interest (for 15 months on balance transfers) card, transferring £1400 from the card in to my graduate account, putting me on 0, and giving me 15 months to pay off the credit card, with a direct debit of £100pm. I spoke to the bank, the accountant in my place of work and my family and friends and they all said this could be a good idea if I manage it properly. This month I am nearing my overdraft limit, and after reviewing the options, I applied for the HSBC credit card, because it offered 15 months interest free balance transfers, and is the same bank as my graduate account so is convenient. The plan was to transfer the money, set up the £100pm direct debit and put it in the draw and never use it again. In 15 months time I will have paid my overdraft off, and have a better credit rating which shows I can pay debts on time.

I got accepted and the card came yesterday. I went on online banking this morning and activated the card, it immediately gave me the option of transferring the balance from another card/account, so I transferred £1400. This afternoon the money still hadn't transferred and it was saying the card wasn't activated, so I called the bank to make sure. They informed me that the transfer I had made actually transferred the £1400 from my current account on to the credit card! This was not made very clear at the time of transfer. I explained to him what I was trying to do and he explained that it isn't possible to transfer money from a HSBC credit card in to a HSBC current account, and that he understands it was an accidental transfer and has put in a request to cancel the transfer, although I have to call on Monday morning to make sure they do cancel it. He also informed me that I am about to go over my overdraft anyway by £70 when other payments go through on Monday.

So this leaves me with a credit card that I have no use for. Possible further charges for my stupid error to come, as well as an overdraft I still can't pay off. I am not really sure of my options. Would it be possible to get a similar 0% on balance transfers card from another bank/company, and use that to pay off my HSBC current account overdraft? Or is this something that is still not allowed?

Apologies for knowing so little about credit cards!

Thanks in advance

pinkarsenalprincess

The only cards that will allow you to do this are Egg, MBNA and Virgin. Hindsight is a wonderful thing, you really should have checked the facilities on the HSBC card before applying.

There will be a fee for doing the balance transfer into your overdraft.

jonesMUFCforever

Can't you use the credit card for day to day transactions - using it this way keeps you under the overdraft limit and the interest will be much cheaper.

You still need a plan to get rid of the overdraft though - why not pop over to the debt free wanabe board?

MathewMayes

Thanks for your advice both!

So I'm thinking of applying for the Virgin card tomorrow. Which would give me between 12-14 months. Will applying for the HSBC card and my error harm my chances of getting the Virgin (or any other) card do you think?:(

I could use the HSBC card for purchases then. Or even pay off my overdraft with the Virgin card, then pay off the Virgin card with the HSBC one and cancel it.

SnowTiger

MathewMayes wrote: »

Thanks for your advice both!

So I'm thinking of applying for the Virgin card tomorrow. Which would give me between 12-14 months. Will applying for the HSBC card and my error harm my chances of getting the Virgin (or any other) card do you think?:(

Yes. Your income is relatively low, you're already struggling financially and you've just got a credit card with a £1,400+ limit.

I'd be surprised if you were accepted for another credit card.

pinkarsenalprincess

Why would you pay off the virgin card with the hsbc one? I don't understand that personally as it is just moving the debt from one card to another.
Ideally you should be clearing the overdraft with the balance transfer onto your virgin card and then reducing your outgoings to increase payments to the virgin card, therefore clearing it.

Any

I have to say this is a nice mess you got yourself into... and all because you didn't research the issue properly.

Balance transfer is from card to card. MONEY transfer is transfer that allows you to also transfer actual cash into your current account. HSBC is not one of those cards. So you picked the wrong card to start with. That is also the reason why you even assumed that you are transfering cash to current account and balance onto the credit card.

Before you start making purchases on the card in order to transfer spend your way (only purchases you would have made anyway!!) onto the card and out of overdraft, please have a look how many 0% interest months there is on PURCHASES. Just because card has x month for balance transfers does not mean it will have it for purchases. Or for the same length of time.

Virgin has something like 15 months 0% interest free on MONEY & balance transfers so why on earth would you then transfer the balance onto HSBC card??? There are fees applicable you know, so you would only incure more of those..

I think before you do anything you should do some reading up. Read Martin's articles (tabs on the top of the page). Hopefully you will then have a bit better idea what you are doing. If you have any further questions or need clarification, come back here and we will explain.

Good luck

MathewMayes

The Virgin card currently offers only 12 months at 0% on balance/money transfers if you transfer the money within the first 60 days, subject to a 2.98% handling fee. Whereas the HSBC card offers 15 months interest free on balance transfers only, and 3 months interest free on purchases. I doubt I will use either of these cards for purchases.

Original plan was to transfer £1400 from the Virgin card to the Current Account, then after a month, transfer £1400 from the HSBC card to the Virgin card. That way the current account it set to 0, the Virgin card is set to 0 (and cancelled), and the HSBC card has £1400 of debt, with 15 months to pay it off. This would mean instead of paying £117 a month back to the Virgin card over 12 months, I could pay just £100 a month back to the HSBC over a longer period of 14 months.

Now obviously the HSBC card policy states I have to transfer any balance within 30 days of starting the card to get the 0% introductory offer. So it would be about 14 months to pay it off. But I realised the 2.9% handling fee charged by both to transfer from the Virgin card to HSBC card is more than its worth for the extra 2/3 months. It would be convenient to be with HSBC as they are my bank and can manage the card on the same screen as my current account online, but would also make sense to pay it off quicker. I guess I was just trying to think of a use for this HSBC card now I have it.

This all rests on my ability to get the Virgin card, and fast. It says on their site that you just need to be over 18, living in the UK with a bank account, but they will obviously check my credit rating and probably be able to see I applied for a card last week. I have been naive with this, but with good reason. The lady in my local HSBC branch talked me through the process for over an hour, and I was shocked myself when she explained how easy it would be to get a credit card and pay off my overdraft, so I explained clearly over and over what I wanted to do with the card and she said this was possible. I have now lodged a formal complaint with HSBC about the lady in question, as she also provided incorrect details about my savings account so was clearly quite imcompetent.

My next step is to call Virgin today, explain my situation, and have a chat with them to see whether they think I would be eligible and if so, confirm I can do what I want with the card.