Loading up cash on a credit card

c-m

I was just wondering with credit cards, say you have a balance of £0 and a £500 limit, but you pay £1000 onto the card, can you then withdraw cash and/or make purchases without incurring any fees?

[Deleted User]

Possibly, but only if you get away with it, as it breaches the t&cs and the money may be returned and your account closed. You also lose all purchase protection.

YorkshireBoy

There's no 'one size fits all'.

Some providers expressly forbid the deliberate creation of positive balances (eg Santander and HBoS). Others are more relaxed (eg Egg & MBNA). Some (eg Amex) limit the total purchase(s) per statement period to the limit on your card.

Tixy

Most cards it is against the T&C to put the account into credit, exactly how its treated seems to differ from lender to lender. Some would send a payment/cheque to your for the overpayment, some might allow you to make the purchases. I doubt any would allow you to withdraw cash from an ATM without fees.

Some will also close your account if they believe it is intentional rather than a genuine mistake.

lisyloo

Almost certainly against Ts&Cs.
I know anecdotally that Egg Money don't seem to mind it.
Your money may not be insured although that's open to some debate, so let's say MAY not.
Lender could send it back, might even close your card.
You wouldn't get charged interest but you would almost certainly get the cash advance fees (as you are using the ATMS facility whether it's your money or not).

It's not something I'd risk on holiday (if that's what you're planning) due to the risk of refund/closure.

c-m

Of right, I never knew that. Oh well i guess they want to make their money. Thanks.

Dave_the_Ginger_Cat

Some cards do allow customers to go into credit, especially those with an incentive or loyalty scheme. I have heard a friend telling me they pre-paid an account so they could put their kitchen on the card.

You may not be protected in the normal way by s75 as you are not using the card as a credit facility, and you'll almost certainly be charged for cash transactions

In days gone by, Nationwide used to allow this, especially when their card was attractive to holidaymakers, but unsure if they still allow it

lisyloo

Some cards do allow customers to go into credit, especially those with an incentive or loyalty scheme.

Do you mean it's a service they offer or they turn a blind eye?
From anecdotal reports Egg money turn a blind eye but it's stilll against the terms and conditions.

I have heard a friend telling me they pre-paid an account so they could put their kitchen on the card.

Just because someone did it does not mean it's a feature of the card.
It could be agaisnt the terms and conditions but they got away with it.
If their money had been stolen or card used fraudulently then they might have found they weren't insured by the lenders policy (as it's not the lenders money), so they could have potentially lost the money for their kitchen.

Some companies used to offer this facility.
For example it was definitely a feature of the egg Money card which was meant to be a hybrid debit/credit card.
You were meant to pre-load your card at the start of the month then use it as a debit card until you ran out of money and then it turns into a credit card (a bit like an overdraft).
That featuer has since been scrapped and I'm not aware of any companies that offer this facility.
That doesn't mean the feature doesn't exist, I'm just saying don't assume it's an officail feature just because one person or a few people got away with it. They could have been taking sigificant risks.

chattychappy

Allowing positive balances on CCs is deposit-taking. That takes the activity into a different regulatory domain.

Hence it's usually against T+Cs. The extent to which these are enforced is a matter for the CC concerned - but turning a blind eye puts them at risk.

Of course, that doesn't mean they can't do it - just the regulatory hassle makes it easier to keep the products separate.