HSBC Premier Credit card started charging Cash Advance Fee for paying Freetrade subs

DullGreyGuy

The merchant wont know, there are hundreds of different credit cards available in the UK and then all the legacy products too... they cant hope to keep on track of each and every bank's T&Cs for each and every product... then there are the thousands of overseas cards. Similarly they are unlikely to know exactly what product you have, most people will say they have a Capital One card, not know its a legacy Capital One Aspire Elite retired in 2015.  They could speak in generalities but you cannot rely on generalities

Your bank is the only one that can say but to be able to tell you they'd need to know the MCC the transaction will come through on and as we discussed and agreed earlier, your average employee wont have a clue what an MCC is let alone which one their machine is going to assign when they metaphorically swipe your card.

The rules are broad brushstroke in nature, if a company has a single MID then they have a single MCC and it will be based on what the majority of their business is. This does mean a small casino could be having cash like transactions for people buying drinks with a credit card but most casinos will have separate machines for buying chips and buying crisps so only the gambling element goes against the gambling MCC. 

The T&Cs however are about what the transaction is for, the MCC is just the implementation. So back to our tiny casino with just one card machine, you could subsequently get the fees reversed because you have a receipt to prove that the purchase was drinks therefore material goods and not a cash like purchase. 

Ultimately it all points to the general best practice anyway of keeping receipts and checking your statements regularly.

born_again

@Ulrcih

Are the fee's in GBP?

Ulrich

DullGreyGuy said:

 
Ultimately it all points to the general best practice anyway of keeping receipts and checking your statements regularly.

I have all emails from Freetrade with "Thanks for paying your monthly subscription" and they have a description of each subscription on their website so it's clear that the money are not going to my trading account but are a fee to have access to some additional features of their platform.

Checking statements is one of the rules but it's not always easy. As I wrote here, initially I thought that the cash advance fee and interest was related to a payment I made in August to my Revolut current account, and only started digging deeper when the next statement brought another fee and cash interest. They don't specify reason for that fee, do they? So one need to do their own research as often HSBC customer service has no clue..

born_again said:

@Ulrcih

Are the fee's in GBP?

Yes they are, it's a UK company.

bozo007

This change happened with my Halifax card almost a year ago - they sent a letter detailing the change and in the examples shared, they clearly mentioned that paying any investment broker would henceforth be counted as a cash transaction. I also use Freetrade Plus and was using my Halifax Clarity card to pay the subscription fees but then changed to use the bank debit card where these extra fees don't apply. The only solution is that Freetrade (and its bank) needs to separate fees from investment related cash transactions and get them to be treated differently.

Ulrich

@bozo007 I'd love to see a similar letter from HSBC but haven't received any yet..

I wasn't aware of all these different payment types until this issue - it's a very complicated area and honestly, ordinary people should not be aware of that and it's down to both brokers and banks to explain to their clients any consequences of using credit cards in these circumstances.

However, as there's no legal requirement, they usually do nothing, which is perhaps pretty profitable (at least for banks) giving the amount of new traders/investors and just ordinary people who don't always read or understand their statements fully.
That's sad.

Ulrich

Thanks all for your replies.

It turned out that HSBC sent me an email (only!) about the situation in September but it went to a deep spam folder
Here's what they wrote:
"We’re getting in touch as you’ve previously used your credit card to make what we describe as ‘cash related payments’. We’re explaining what they are, and how we treat them.

Buying travellers’ cheques, foreign currency or money orders are classed as cash related payments. They can also include things like using a specialist service to send a money transfer or trade stocks or other securities.

Up until now, we haven’t applied these charges for some types of cash related payment. This means you may have made these payments before without being charged a fee, or with a lower rate of interest.

In future, if you use your card for cash related payments, the above charges will apply. We’re letting you know so you can check the fee and interest rate that apply before using your card in this way."

That's exactly what I expected them to write and the only question is why they didn't send me a letter as they normally do? With emails a lot of things can happen on different levels (of course, sending by post is at risk as well but emails are more vulnerable I think).

Anyway, they agreed to refund me so I'm happy with the way they handled the case.

Apart from that, I asked Freetrade about why they didn't let their customers know whey they put an advisory message about using credit cards on "Change payment card details" page and here's part of their answer that sheds more light:
"Unfortunately some issuers (not all) will charge extra fees for certain types of transactions and we sadly don't have visibility on these fees, as they sit with the issuer and are deducted after we process the transaction. 😞

We've spoken to our payment provider that handles these transactions and unfortunately, they have stated that they would be unable to change the way the fee is applied, as service fees and other costs related to security or brokerage transactions must be classified under MCC - 6211 (this is a merchant category code used for security brokers and dealers)."

Any comments on that? To me it's clear that they use just one MCC so everything going to them will be treated as cash related payments.

phillw

Ulrich said:

That's exactly what I expected them to write and the only question is why they didn't send me a letter as they normally do? With emails a lot of things can happen on different levels (of course, sending by post is at risk as well but emails are more vulnerable I think).

I normally set accounts so they never email me anything for that reason, if you did the same then I would complain on the basis they used a communication method that you had not agreed to. If you did not, then I'd ask for everything (including statements) to be sent by post if you can.

However I would still complain about it and ask them to explain why the change was made and whether they will waive the charges as a good will measure just this once. In these cases it comes down to whether a couple of hours on the phone is worth it to you.

Although I now see you did complain and they refunded you.

Moving forward, I suspect that they had situations where companies were evading paying the cash handling fee by purposefully misidentifying the transaction (or at least they were scared they could). It's easier for them to assume that everything is a cash advance. You need to use a debit card.

DullGreyGuy

phillw said:

Ulrich said:

That's exactly what I expected them to write and the only question is why they didn't send me a letter as they normally do? With emails a lot of things can happen on different levels (of course, sending by post is at risk as well but emails are more vulnerable I think).

I normally set accounts so they never email me anything for that reason, if you did the same then I would complain on the basis they used a communication method that you had not agreed to. If you did not, then I'd ask for everything (including statements) to be sent by post if you can.

Each to their own, a letter sitting on my doormat for 3 months when I'm travelling does nothing for me whereas I can access email from anywhere. A former client used to send all important comms by post and still people said they didn't get it and must have assumed it was marketing etc so threw it unopened.

Clearly you should be adding your bank, insurers etc to your safe senders list so it doesn't go into your spam folder... maybe if you aren't so good with tech then paper mail is better for you but it seems to have the same issue of being treated as junk

Ulrich

Yeah, good points from both sides.
I know a lot of people throwing away paper mail or emails unopened because a) it's usually spam or b) there's so much of it they couldn't be bothered.
There's no silver bullet yet for it.