Cash advance and interest question

Tigger64

Hello,
I have a question about cash advance and interest. We took out a HSBC credit card with 0% interest for 12 months. We used it for our holiday in the USA and did use it for some cash advances as we knew we would be paying off MORE than the cash the very next month. We have done this with previous 0% interest credit cards and never been charged interest as we always paid off more than the cash advance as soon as we get home. Well to our suprise HSBC have charged us £6 in interest. We called them up and they said their terms and conditions say they pay off purchases first and cash advances secound. I thought credit card companies all paid off cash advances first? Well we asked them to send us another copy of their terms and conditions and there is nothing about cash advances or how payments are applied. Before we call them again has anyone had this trouble with HSBC before?
Thanks

lisyloo

Well Martins advice is NEVER NEVER NEVER spend on a balance transfer card for precisely this reason.

Money you pay off is usually allocate to the 0% balance transfer and then you have to pay interest on the other bit until you've cleared ALL the capital.

I'm suprised you got away with it before, but even if you did, making assumptions is not a good plan. You need to acquaint yourself with the order of allocation of payments up front and not assume it will work like any other card you've had before (there is no reason why any lender has to do it the same as any other).

YorkshireBoy

I seem to remember that HSBC *did* have a favourable 'allocation of payments' hierarchy, but that was changed some time ago (2 years?) and you will, if you held the card then, have been notified of the change. I believe that only the Nationwide card now has the 'most expensive debt repaid first' order.

From the HSBC summary box...

Your payment is allocated to promotional rate Balance Transfers, then Purchases and standard rate Balance Transfers, and lastly to Cash Advances (full details are set out in Other Financial Information in the Agreement Terms).

http://www.hsbc.co.uk/1/2/interest-rates/credit-cards;jsessionid=0000bIbDfaGhxPC4HWKzDSTZoJ3:11j5bfvdu

...so calling them will be a waste of time.

Tigger64

Thanks guys,
Guess we were lucky with our Sky card last year as cash advance was paid off first with purchases secound. We have the money in savings to pay it off it just seems to be a waste of 0% interest when we could be making interest leaving it in the bank. Will check more closely beofre we take out another credit card.

YorkshireBoy

Tigger64 wrote: »

Will check more closely beofre we take out another credit card.

Look no further than Nationwide for use abroad...

Credit card for purchases.
Debit card for cash withdrawals.

No foreign exchange loading on either product.

smithja

Hi

Take a look at this, there is a bit of reading but it could be a way of turning the tables on the banks.

http://www.publications.parliament.uk/pa/ld200506/ldhansrd/vo060118/text/60118-23.htm

and

http://en.wikipedia.org/wiki/Rule_in_Clayton's_Case

Apparently a 150 year old rule never repealed allows us to inform the lender what we want a payment made to a credit account to pay off. It seems in a future version of the Consumer Credit Act we are going to be given the ability in that to do the same (thats what is in Hansard), and inform the lender the order we want payments applied and not the other way around.

James