Banks deciding they don't want people to use Credit Cards as much anymore? (Letter from Bank)

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Forums › Finance and wealth management › Banks deciding they don't want people to use Credit Cards as much anymore? (Letter from Bank)

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SirHumphreyAppleby

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#2842044 2-Jan-2022 18:46

eracode:

So yes, I’ll take a bet that those transactions those won’t be caught in this net.

That's not the criteria.

Alcohol and cigarettes can easily be turned into cash. The current pool of people who can't buy these products is small and they generally don't have much cash to pay a premium, but the proposed smoking laws would see plenty of people with disposable income looking for their fix.

eracode

Smpl Mnmlst
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#2842045 2-Jan-2022 18:54

Yeah well I’ll still take a bet that fast food and alcohol won’t be caught by Westpac’s policy on quasi-cash transactions - which is what old3eyes was surmising on and is all I was commenting on.

Sometimes I just sit and think. Other times I just sit.

colinuu

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#2842138 2-Jan-2022 22:12

It's difficult to see how my Mylotto transactions are seen as being easily turned into cash (quite apart from me seeing them as charitable donations). Once a week on Friday, Mylotto transacts on my CC an amount as required to purchase tickets as per my subscription, topping up my account. They then immediately purchase the tickets for me leaving the account net zero. I have no opportunity to get my hands on that cash. But I now notice that when the transaction is processed 3 days later it is classified as cash withdrawal, not purchase as in the past.

Which leads to a question: When does the interest start getting charged. On the transaction date, or the processed date? I presume that trying to pay it off before the processed date would only reduce against oldest purchases, as no cash withdrawal exists until then?

rugrat

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#2842145 2-Jan-2022 22:27

colinuu:

Which leads to a question: When does the interest start getting charged. On the transaction date, or the processed date? I presume that trying to pay it off before the processed date would only reduce against oldest purchases, as no cash withdrawal exists until then?

I suspect the transaction date. If you know they are going to treat as cash advance, be easier to get around by using debit card.

Some banks have free debit cards, or if meet specific conditions can get for free (minimum deposits a month etc)

Handle9

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#2842147 2-Jan-2022 22:40

colinuu:
It's difficult to see how my Mylotto transactions are seen as being easily turned into cash (quite apart from me seeing them as charitable donations). Once a week on Friday, Mylotto transacts on my CC an amount as required to purchase tickets as per my subscription, topping up my account. They then immediately purchase the tickets for me leaving the account net zero. I have no opportunity to get my hands on that cash. But I now notice that when the transaction is processed 3 days later it is classified as cash withdrawal, not purchase as in the past.

Which leads to a question: When does the interest start getting charged. On the transaction date, or the processed date? I presume that trying to pay it off before the processed date would only reduce against oldest purchases, as no cash withdrawal exists until then?

Don’t use logic, just think of whatever makes Westpac the most profit.

colinuu

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#2842201 2-Jan-2022 22:53

rugrat:

If you know they are going to treat as cash advance, be easier to get around by using debit card.

Some banks have free debit cards, or if meet specific conditions can get for free (minimum deposits a month etc)

Good point, thanks for the suggestion.

KiwiSurfer

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#2842214 3-Jan-2022 00:20

I am surprised at the upset in this thread. I thought this sort of policy (i.e. treating certain transactions such as gambling, transfers to other financial accounts, etc as a cash advances) has been the case for a long time now. I'm the type of person that reads the T&Cs for financial products and I can think of several major NZ credit card issuers that have similar policies in place--so it's not just Westpac. Amex, ANZ, BNZ and Kiwibank are ones I personally know of (having read T&Cs for their credit card products over the last 15+ years since my first credit card from BNZ) that treat certain types of transactions as cash advances and I suspect all the others do.

I acknowledge Westpac has broadened the definition somewhat but it still seems quite reasonable to me. I would put money on other banks adopting this as well in time. It seems to be sensible policy to prevent abuse of the interest-free period. This is why the cash advance fee exists and also why interest is incurred on cash advances from day 1--to deter people from using one credit product to pay the balance of another credit product to pay off the balance interest-free. There is also the social benefit of making it unattractive using credit for gambling.

Transport/Phone cards are a bad example cited by a few in this thread. Transport agencies (e.g. AT, Canterbury Metro, et al) and phone companies (Vodafone, Spark, 2degrees, et al) does not allow you to convert your balance into cash. I remember reading somewhere that IRD allows entities to treat the GST on top-ups specially, so that entities can charge GST etc at the time you purchase the credit (as this is much simpler than charging GST for each individual purchase). To be eligible for that special tax treatment, entities would need to restrict the use of credit that GST has been applied to so that can only be for the relevant services (e.g. $20 of phone credit can only be applied to phone expenses). I can't see how that would come anywhere close to meeting Westpac's definition given there is no way to convert your balance into cash.

Snapper is an interesting case however if they are still allowing people to purchase other things with their cards. It could very weakly be argued that $200 could be loaded on a Snapper card and be used as a cash equivalent buying $200 worth of stuff in the very limited number of shops that accept Snapper... Although admittedly it presumably can't be used to pay your credit card bills nor buy gambling products so even there it's hard to see it meeting Westpac's definition. So even the strongest example I can find in this thread actually doesn't hold up if you think about it properly.

I am certain Westpac is simply locking down the ability to top up an account and later withdraw cash. This is where I am struggling to understand the upset. If you're topping up accounts that does not support cash withdrawals then you have nothing to worry about. E.g. personally I have AT HOP, Trade Me seller account, 2degrees/VF/Spark/Skinny prepaid accounts, etc all clearly not covered by this policy. The only account I can think of that is covered by this policy is my account with a poker site -- and I had already assumed Amex/Kiwibank (my card issuers) would charge a cash advance fee for that anyway as per standard credit card T&Cs for the last 15+ years.

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