Paid a debt via credit card, but it was taken as *cash*, with fees plus interest 28 June 2022 at 3:08PM in Credit cards 12 replies 951 views

Zarniw00p

Hello,

I was late with service charge payments on my flat to the management company.  It went to propertydebt.co.uk, and additional fees totalled over £400. I agreed with them to pay off the total of £3,300 in two monthly instalments via credit card.

My card statements now show two related *cash fee*s totalling almost £100, and the two payments are being treated as *cash advances*, with interest of 23%.

I expected them to just be normal payments, not to put me further into debt.

I called NatWest and they explained that as it's a financial services company then it's effectively cash payments (even though at no point did I use my card in an ATM).

I'm not going to argue the financial rules, but surely propertydebt.co.uk should have told me that it would be taken as if it were a cash advance?  I didn't even know that it was possible!  I would have arranged to pay directly if I'd known and avoided the fees plus interest.

So, were propertydebt.co.uk duty-bound to tell me that by paying by credit card it would be treated as a cash advance, or am I expected to have known that already?

Thanks,

Paul

[Deleted User]

The person you spoke to is unlikely to have know the merchant code that NatWest had given them. Ask NatWest if they would waive the fees on this occasion as goodwill, as you wouldn't normally expect cash fees on such a transaction.

Also remember, you don't need to go anywhere near an ATM to make a cash transaction, so that you don't get caught out again.

Albermarle

I have checked the T's & C's of my credit card ( not NatWest) recently about cash withdrawals . They class any transaction connected to gambling as a cash withdrawal . Includes bookmakers, casinos, lottery tickets and even share trading, but no mention of paying off debts.
I would contact them as it maybe a mistake/misunderstanding.

Sandtree

Albermarle said:

I have checked the T's & C's of my credit card ( not NatWest) recently about cash withdrawals . They class any transaction connected to gambling as a cash withdrawal . Includes bookmakers, casinos, lottery tickets and even share trading, but no mention of paying off debts.
I would contact them as it maybe a mistake/misunderstanding.

The OP has taken a loan and then attempted to pay the loan with a credit card, this typically is considered a cash like transaction same as buying FX, gambling, buying shares.

Deleted_User said:

The person you spoke to is unlikely to have know the merchant code that NatWest had given them.

Merchant code is set by the merchant's bank not the OP's 

The_Urbanite

Natwest decide which merchant categories they will class as cash advances. But banks don't publish clear information on all of the merchant categories classed as such, so it's a bit of a lottery. I don't know why banks are so cagey about this information.

Most other card providers don't class the propertydebt.co.uk merchant category as a cash advance.

Zarniw00p

Thanks all for your clear and helpful replies.

So I've learnt a couple of things:

1. "you don't need to go anywhere near an ATM to make a cash transaction" <-- Wow, I had no idea about this!  It doesn't seem intuitive to me at all, but I guess it's in the small print.

2. Different banks set slightly different rules on what is classed as a cash advance.  <-- Again, this is surprising to me; leaves consumers in the dark a bit (or constantly needing to consult Ts&Cs).

**********************************************************************************

Regarding the post saying it was a loan, I don't think it's been handled quite like that.  I know for certain that the debt company only paid the management firm after each transaction I made.  If it were actually a loan then they'd pay the full amount immediately and then I'd gradually reimburse the debt company, right?  Also I didn't sign any loan agreement - it was all handled verbally in phone calls.

I spoke to the debt company but the agent didn't seem to grasp what I was talking about so asked me to email them, which I have.

I also emailed the management company (who I had been late paying), as an FYI to what can happen.  They said their arrears dept would look into it.

**********************************************************************************

Regardless of my prior ignorance on all this, these two thoughts still strike me:

1.  A company called propertydebt.co.uk is probably dealing mainly with people who are struggling financially.  What I ended up paying was the original amount plus about £400 in various fees as it was late.  Given all this, surely they have a responsibility, when advising people like myself on the phone, to clearly state that paying by credit card will very likely result in cash advance fees and interest with the card company.  In this case it's an *extra* £100 in fees, and 23% interest on £3.3k.  They *know* that their 'customers' (I don't know the correct term) are in difficult financial situations, yet recommend a route which will considerably worsen their position!

2.  If propertydebt.co.uk is classed as a financial company, then would it be regulated by the FSA, and would there then be rules saying that they *must* disclose potential issues like this?

Thanks for the all the advice given :-)

Paul

[Deleted User]

Zarniw00p said:

If propertydebt.co.uk is classed as a financial company, then would it be regulated by the FSA, and would there then be rules saying that they *must* disclose potential issues like this?

No. They're not regulated by the Food Standards Agency., 

They're just a debt collection agency, collecting payments.

born_again

They are, Authorised and regulated by the Financial Conduct Authority No: 708534. But they will not know exactly which card providers charge.


It is always best to take it that paying for any financial product, especially a debt is going to be classed as "Cash"

Sandtree

Zarniw00p said:

Thanks all for your clear and helpful replies.

So I've learnt a couple of things:

1. "you don't need to go anywhere near an ATM to make a cash transaction" <-- Wow, I had no idea about this!  It doesn't seem intuitive to me at all, but I guess it's in the small print.

2. Different banks set slightly different rules on what is classed as a cash advance.  <-- Again, this is surprising to me; leaves consumers in the dark a bit (or constantly needing to consult Ts&Cs).

**********************************************************************************

Regarding the post saying it was a loan, I don't think it's been handled quite like that.  I know for certain that the debt company only paid the management firm after each transaction I made.  If it were actually a loan then they'd pay the full amount immediately and then I'd gradually reimburse the debt company, right?  Also I didn't sign any loan agreement - it was all handled verbally in phone calls.

I spoke to the debt company but the agent didn't seem to grasp what I was talking about so asked me to email them, which I have.

I also emailed the management company (who I had been late paying), as an FYI to what can happen.  They said their arrears dept would look into it.

**********************************************************************************

Regardless of my prior ignorance on all this, these two thoughts still strike me:

1.  A company called propertydebt.co.uk is probably dealing mainly with people who are struggling financially.  What I ended up paying was the original amount plus about £400 in various fees as it was late.  Given all this, surely they have a responsibility, when advising people like myself on the phone, to clearly state that paying by credit card will very likely result in cash advance fees and interest with the card company.  In this case it's an *extra* £100 in fees, and 23% interest on £3.3k.  They *know* that their 'customers' (I don't know the correct term) are in difficult financial situations, yet recommend a route which will considerably worsen their position!

2.  If propertydebt.co.uk is classed as a financial company, then would it be regulated by the FSA, and would there then be rules saying that they *must* disclose potential issues like this?

Thanks for the all the advice given :-)

Paul

The Food Safety Authority doesn't have much say in financial services these days... they are however registered to the Financial Conduct Authority.

I had slightly misunderstood the circumstances and thought you'd gone to the company and therefore it'd be some form of loan rather than your freeholder having passed the debt to them. 

The merchant will have a MCC code assigned to it based on the products/services it offers, though some large global companies have their own. Its a US resource but you can see some examples of MCCs at https://usa.visa.com/content/dam/VCOM/download/merchants/visa-merchant-data-standards-manual.pdf 

The merchant should know what its MCC is, though not necessarily the front line staff. Its then down to your card issuer to decide how it treats each code. Its how promos like "double MR points on supermarket spend" is worked out but also how cash like transactions are dealt with. The merchant will be unaware how your particular bank is treating them and there will be no feedback loop from your bank to them if they decided to change how they treat a certain MCC.

SusieT

It may be worth thinking that there is a possibility of something being classed as a cash transaction if it is not for what could be classed as goods (or some services) so shopping, petrol, magazines, subscriptions, holidays etc. That way you are less likely to be caught out and could check before you use the card to pay. Obviously there are times when you need to pay something straight away, but its how I tried to think when I use a card for something.

MrFrugalFever

Paying debt with debt is never a wise move (I’ve learnt the hard way too). I wouldn’t waste time complaining as you have no grounds. Take it on the chin as a lesson learnt.