Increasing The Online Gambling Interest
Published: Thursday, January 04, 2007 Online-Casinos.com
INCREASING THE ONLINE INTEREST
HSBC penalises UK gambling card users
Banking giant HSBC has made a new year announcement that may give gamblers pause for thought; from February 1 credit card transactions that involve gambling will attract a higher interest rate.
Gambling transactions on bank credit cards are to be handled at the higher "Cash Advance" rate of interest rather than the normal credit purchase fee. The difference is significant - interest at between 21.9 percent and 27.8 percent instead of between 15.9 percent and 22.9 percent.
However, customers will not be charged a one-off fee, which is applied to other cash transactions such as buying foreign currency.
"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," an HSBC spokeswoman said.
The BBC reports that there is no uniform policy on charging for gambling across the UK credit card industry. Barclaycard and Lloyds charge such spending at their lower purchase rates. But MBNA and RBS/NatWest and Egg charge at the cash advance rate.
In 2004, the US bank Citibank decided to stop processing any internet gambling payments at all by UK holders of its credit cards.
It said at the time this was partly an anti-fraud measure and warned that online gambling might lead to some customers running up unmanageable debts.
One potential loophole in HSBC's strategy is that any payments channeled via the online payment service Paypal will be charged as a retail purchase, attracting a lower rate of interest.
HSBC said neither it nor any other banks could tell what the ultimate destination of a Paypal transaction money might be.
In the past year all the main banks have complained loudly that they have been racking up more bad loans in their credit card businesses across the board. Normally a decision by a bank to charge more would signify that it had seen an increased risk of losing money in that particular line of business.
But HSBC denied that customers who gamble using their credit cards are more likely to run up big debts and then default on them.
"We have not seen that as part of our customers' behaviour," said the HSBC spokeswoman.
HSBC's decision will apply to both internet and telephone gambling and thus covers online poker, internet bookies and betting exchanges.
However, it is illegal to use a credit card in a casino, while the betting industry has a policy of not accepting them in High Street bookies.
