According to the BBC, although HSBC customers will now immediately pay interest of between 21.9% and 27.8% instead of the previous charge of between 15.9% and 22.9%, they will not be charged the one-off fee applied to other cash transactions such as the purchase of foreign currency.
The BBC reported that, in the last year, all major banks have protested about increasing numbers of bad loans within their credit card businesses. It commented, however, that HSBC’s decision has not come as a result of fears that customers who use their credit cards to gamble are more likely to amass debt that they cannot pay.
The HSBC spokeswoman told the BBC: We have not seen that as part of our customers’ behavior. Instead, she stated: This is one of a number of changes we have made to our credit card offering recently to bring us in line with the competition.
At present, the UK credit card industry does not have a standard policy regarding gambling charges. While Barclaycard and Lloyds charge at their lower purchase rates, MBNA, Royal Bank of Scotland and Egg charge at the cash advance rate.
According to the BBC, there is, however, a loophole in HSBC’s strategy as payments that are channeled via the online payment service Paypal will still be charged as a retail purchase and therefore continue to attract a lower rate of interest.
According to the Association of Payment Clearing Services, credit card gambling carried out by UK consumers in the year up to June 2006 accounted for just 0.8% of all credit card spending.
