A recent report on BBC news website claims that HSBC will become the latest bank to increase its charges to customers who use their credit cards for gambling transactions.
This means that from 1 February, 2007, HSBC customers will be charged the cash advance rate rather than the normal purchase rate. This means that users will immediately pay interest at between 21.9% and 27.8% instead of between 15.9% and 22.9%. However, HSBC will not charge a one-off fee, which is normally applied to other cash transactions such as buying foreign currency.
There is no standard policy across the UK credit card industry with which banks charge customers who use credit cards for gambling. Currently Barclaycard and Lloyds charge such spending at their lower purchase rates, but MBNA, RBS/NatWest and Egg charge at the cash advance rate. US bank Citibank decided to stop processing any internet gambling payments at all by UK holders of its credit cards back in 2004.
One potential loophole in HSBC's strategy is that any payments made via the online payment service Paypal will be charged as a retail purchase, attracting a lower rate of interest. HSBC apparently said that neither it, nor any other banks could tell what the ultimate destination of a Paypal money transaction might be.