Credit card company charging "Cash advance fee" + interest for buying a physical product

woter324

Hi,

I am sure my Google Foo is off today as I cannot find any reference to this new practice and I am sure there is lots of talk about it on here and a Government Petition calling for a ban on this new practice will have been created.

I recently bought a phone, direct from Samsung on an interest-free deal. I used my John Lewis (NewDay) credit card to make the initial payment. Reviewing my statement, I found an interest charge I found a  "cash advance fee". NewDay told me these transactions were related to the Samsung transaction.

As far as was concerned I didn't withdraw cash and was buying a physical product, so IMHO, the banks have found a new way to extract our hard-earned money and like so many of their underhand tactics that have gone before, this is another one that needs nipping in the bud.

I need to get on my high horse and open a complaint to the FOS and write to my MP. I'll open or sign the .gov.uk petition, but I'd like to do some fact-gathering first and would appreciate any insights from the experts.

My thoughts:

1. Has there been a change to a law that has allowed them to do this? 
2. Who is profiteering from this? The credit card company, the card handler (VISA / Mastercard) or the merchant?
3. As it's no longer defined as pulling cash from an ATM, what constitutes a "cash transaction" and how does one know whether they'll be charged?
4. Any links to existing discussions on this topic?
5. Any link to the Government Petition?
6. Am I late to the party and everyone knows about this practice?
7. Is this just NewDay or are they all at it?

Any insights, references or support will be gratefully received.

Many thanks

W.

MorningcoffeeIV

woter324 said:

I need to get on my high horse and open a complaint to the FCA and write to my MP. 

The FCA don't take customer complaints, no matter what size horse you arrive on.  You're thinking of FOS.

Cash transactions aren't just physical cash withdrawal and haven't been for many, many years.  Check exactly what you signed up to - it sounds as if Samsung are using a cash code, as you've effectively bought a credit product. 

born_again

If payment was a deposit on a finance agreement, then in effect it is a cash payment. Not a physical purchase.

Any complaints have to go through Newday before you could go to FOS.

la531983

It's also not a "new practice". 

woter324

Hi,

Thanks, yes. FOS. Updated.

I have regularly used credit cards to pay for "cash payments" in the past and have never been charged. I bought a phone for my wife from Google. Interest-free, paying the first payment on this very credit card, this time last year. No sign of any interest or "Cash Transaction Fee".

If the others have been doing it for years, NewDay must have changed something in the last 12 months. Unlike them to miss such a trick!

Thanks again,

W.

DullGreyGuy

woter324 said:

Hi,

I am sure my Google Foo is off today as I cannot find any reference to this new practice and I am sure there is lots of talk about it on here and a Government Petition calling for a ban on this new practice will have been created.

I recently bought a phone, direct from Samsung on an interest-free deal. I used my John Lewis (NewDay) credit card to make the initial payment. Reviewing my statement, I found an interest charge I found a  "cash advance fee". NewDay told me these transactions were related to the Samsung transaction.

As far as was concerned I didn't withdraw cash and was buying a physical product, so IMHO, the banks have found a new way to extract our hard-earned money and like so many of their underhand tactics that have gone before, this is another one that needs nipping in the bud.

I need to get on my high horse and open a complaint to the FOS and write to my MP. I'll open or sign the .gov.uk petition, but I'd like to do some fact-gathering first and would appreciate any insights from the experts.

My thoughts:

1. Has there been a change to a law that has allowed them to do this? 
2. Who is profiteering from this? The credit card company, the card handler (VISA / Mastercard) or the merchant?
3. As it's no longer defined as pulling cash from an ATM, what constitutes a "cash transaction" and how does one know whether they'll be charged?
4. Any links to existing discussions on this topic?
5. Any link to the Government Petition?
6. Am I late to the party and everyone knows about this practice?
7. Is this just NewDay or are they all at it?

So your title is wrong... you bought a physical product with a loan and have tried to pay the loan by credit card.

1) No, paying off a loan by credit card has always counted as a cash transaction
2) Your card issuer will be the one receiving the fee
3) A cash like transaction is anything where you are not buying a product or service but attempting to pay something that would normally require cash... eg repaying a loan, paying a government fine or fee, buying non-UK currency etc. 
4) No, most know paying a loan by credit card is a cash transaction
5) No
6) Yes
7) All will count loan repayment as cash

adamp87

Regardless of your experience in the past you’ve used credit to pay for credit - most card companies would class this as a cash payment and if they haven’t before it sounds like now they’ve caught wind of it or changed their system to catch it.

A complaint will do you no good really the fault is yours

sausage_time

I'm buying a phone from Amazon on a similar deal, charging the payments to my Amex credit card.  No interest charges (currently at month 7 of 12) and cashback on the transaction. 

DullGreyGuy

sausage_time said:

I'm buying a phone from Amazon on a similar deal, charging the payments to my Amex credit card.  No interest charges (currently at month 7 of 12) and cashback on the transaction. 

Is your finance from Amazon or Barclays? 

My guess is its Amazon and they don't have a separate merchant ID for their finance as their products and so AmEx don't realise its paying a loan rather than buying goods/services. 

sausage_time

DullGreyGuy said:

sausage_time said:

I'm buying a phone from Amazon on a similar deal, charging the payments to my Amex credit card.  No interest charges (currently at month 7 of 12) and cashback on the transaction. 

Is your finance from Amazon or Barclays? 

My guess is its Amazon and they don't have a separate merchant ID for their finance as their products and so AmEx don't realise its paying a loan rather than buying goods/services. 

Fair point - it shows as Amazon.  

[Deleted User]

DullGreyGuy said:

sausage_time said:

I'm buying a phone from Amazon on a similar deal, charging the payments to my Amex credit card.  No interest charges (currently at month 7 of 12) and cashback on the transaction. 

Is your finance from Amazon or Barclays? 

My guess is its Amazon and they don't have a separate merchant ID for their finance as their products and so AmEx don't realise its paying a loan rather than buying goods/services. 

Where it's offered, Amazon effectively allow you to pay in instalments but you're not using an intermediate credit product like you're suggesting.