Cash Advance Fee on Debit Card

Rafter

virgin_moneysaver wrote: »

I noticed on the BMI baby site that they now charge 1% for debit cards which used to be free, & 2% for credit cards - the only card exempt from fees was visa electron

I think these charges are mainly to do with the costs of the protection afforded by the consumer credit act that make banks jointly responsible with the suppliers if they fail to deliver the goods or services as promised - sometimes called Section 75 protection.

Because a debit card is usually attached to an account with overdraft facilities, the protection often applies to both debit cards and credit cards.

Visa electron is an account which cannot be overdrawn, therefore there is no credit offered by the bank and therefore no protection under S75 if something goes wrong.

Regarding transactions in foreign currencies, Visa charge the bank who issues the card a fee to cover their foreign exchange costs. Often the banks add a further profit element and charge up to 3% for conversion. Nationwide is a rare exception who bear the Visa charges themselves and choose not to pass them on.

As a consumer you have a choice. Move to Nationwide and let them lose money on your account and charge other customers more in interest to cover the losses. Or..... recognise that there is no such thing as a free lunch and that even using an ATM costs something for which you have to pay somehow, so modest charges are not necessarily a bad think. The Co-op for example is owned by its customers, so no money grabbing shareholders involved. It has no incentive to rip off its own owners so the charge probably reflects their costs and means they aren't having to subsidise you by charging other customers more than they would otherwise need to.

R.

Biggles

Heng_Leng wrote: »

I'm not.They are two different charges.

One is for a cash advance fee.
One is for conversion from another currency.

If a Visa Debit holder uses an ATM in the UK which is not part of the LINK network, or draws GBP over the counter of another bank they will get charged the same fee.

If they do either of the above not in GBP they will get charged this AND the loading.

The former is usually 1.5%, and the later is usually 2.75%

All the major banks ,who issue Visa Debit cards, will charge for UK Bureaux de Change card transactions bar Nationwide. Maestro card issuers don't

Yes, it's important to keep the two charges separate.

I can see that this is the case with regard to the cash advance fee; I had understood the usual advice to be to buy foreign currency (in this country)with your debit card but it looks like that doesn't apply to most Visa debit cards.

But there won't be a foreign currency charge if you're charged in GBP in this country, only if you draw it our of an ATM abroad (and don't have a Nationwide debit card!).

ScoobyZ

these are the low life banks that do it.

I have just been charged and if I dont get it back im off to Halifax.

http://www.thisismoney.co.uk/saving-and-banking/article.html?in_article_id=414877&in_page_id=7

wyebird

I got half of mine back...£2, of the £4. I think they just wanted to get rid of me in the end, can't be very cost effective to have a daily e mail corrspondence with someone arguing over 4 quid!

If you do go to halifax don't use your card abroad though as they have a withdrawal fee on every machine transaction.

Mikeyorks

ScoobyZ wrote: »

these are the low life banks that do it.

Already advised on this site :-

http://travelmoney.moneysavingexpert.com/

---- towards the bottom of this article.

gilesb

The problem appears to be acused because Visa requires these companies to either pay commission on debit card transactions or go through the cash advance routine. They don't do the same to other people like supermarkets, that's unfair. Then the banks no doubt multiply the charge they get from Visa several fold. How does Maestro fare now it has become Mastercard debit?

masonic

gilesb wrote: »

The problem appears to be acused because Visa requires these companies to either pay commission on debit card transactions or go through the cash advance routine. They don't do the same to other people like supermarkets, that's unfair.

The same fee would be applicable for cash withdrawals at the supermarket if you didn't also buy something. Any retailer can give you cashback without the fee if you are paying for goods and services. However, I don't think they can pay your cashback in euros or dollars.

gilesb

masonic wrote: »

The same fee would be applicable for cash withdrawals at the supermarket if you didn't also buy something. Any retailer can give you cashback without the fee if you are paying for goods and services. However, I don't think they can pay your cashback in euros or dollars.

Thank you. Why do Travelex treat the transaction as a cash advance when you have actually bought something from them? Look at it another way why do they not classify Prepaid Mastercards, from which they can make a profit as every transaction with the prepaid mastercard attracts a fee, as 'something'. Or Foreign cash for that matter on which they make a profit from the exchange rate they use.

masonic

gilesb wrote: »

Thank you. Why do Travelex treat the transaction as a cash advance when you have actually bought something from them? Look at it another way why do they not classify Prepaid Mastercards, from which they can make a profit as every transaction with the prepaid mastercard attracts a fee, as 'something'. Or Foreign cash for that matter on which they make a profit from the exchange rate they use.

Travelex do not choose how the transaction is regarded. That's down to Visa/Mastercard etc to decide. In this case it falls on the bank to either pass it on to the customer or recoup the cost in some other way (eg lower credit interest rates or higher charges).

But every transaction attracts a charge. There are still a few credit cards that pay cashback on all purchases. That money comes out of the fees they charge retailers to process the transactions.

If you look deep down in the T&Cs of supermarkets you'll see that a surcharge is added onto the price of every item to cover the cost of the card transactions made at their tills.

It's not so much a question of whether or not Visa/Mastercard etc impose a charge for a transaction, rather whether or not that charge is passed on from the bank/retailer to the customer. If it isn't passed on explicity, you may still be paying for it through higher cost of goods.

gilesb

masonic wrote: »

Travelex do not choose how the transaction is regarded. That's down to Visa/Mastercard etc to decide. In this case it falls on the bank to either pass it on to the customer or recoup the cost in some other way (eg lower credit interest rates or higher charges).

But every transaction attracts a charge. There are still a few credit cards that pay cashback on all purchases. That money comes out of the fees they charge retailers to process the transactions.

If you look deep down in the T&Cs of supermarkets you'll see that a surcharge is added onto the price of every item to cover the cost of the card transactions made at their tills.

It's not so much a question of whether or not Visa/Mastercard etc impose a charge for a transaction, rather whether or not that charge is passed on from the bank/retailer to the customer. If it isn't passed on explicity, you may still be paying for it through higher cost of goods.

I see. Thanks a lot. So every transaction attracts a charge to the retailer and that varies by the type of card. Presumably the smallest is Maestro as Travelex don't pass any of it on.

In Thomas Cook they have machines at their Foreign Exchange counters for which Cash Advances apply and machines at their travel counters for which they don't. I once bought a timetable and was charged on the foreign exchange counter as a cash advance which I thought strange, presumably it was them that chose to process the transaction that way.