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Last Updated: Thursday, 4 January 2007, 08:25 GMT
HSBC raises card fees for betting
HSBC branch
Gambling for HSBC credit card holders will become more expensive
HSBC has become the latest bank to charge more for gambling transactions processed on its credit cards.

From 1 February its customers will be charged the cash advance rate rather than the normal purchase rate.

That means they will immediately pay interest at between 21.9% and 27.8% instead of between 15.9% and 22.9%.

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.

Varying policies

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 channelled 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.

Bad risk?

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.

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.

According to the Association of Payment Clearing Services (Apacs), people in the UK spent 1.51bn on gambling via their credit cards in the twelve months to June 2006.

That was just 0.8% of all credit card spending which amounted to 120.2bn.




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