Several HSBC Malta customers were surprised to learn, when they opened a letter from the bank, that as from next month they will not be able to deposit extra cash on to their credit cards.

They will soon be receiving another letter from the bank clarifying that this measure is aimed at minimising credit card fraud losses and that accounts may be in credit for up to 90 days  without incurring a charge.

The letter informed credit card holders that the bank was making changes to the card conditions of use and that from August 21 such cards could no longer be in credit.

“If your credit card account is in credit, we have the right to, without prior notice, (i) reject further payment into your account and/or (ii) transfer the credit balance to another account in your name.

“In the case of (ii) you will be charged the Cash Advance Fee,” the letter read.

A bank spokesman explained this was done to reduce the number of clients keeping a credit card account in credit because “it increases the potential impact of a fraud loss if it were to be lost, stolen or otherwise compromised”.

But does this mean that clients going on holiday risk getting charged if they topped up their credit card to have access to their hard-earned cash?

The bank assured customers this was not the case and it would be making it clear to customers that accounts may be in credit for up to 90 days without incurring a charge.

This measure is aimed at minimising credit card fraud losses

“This recognises the situation where people may wish to top up their credit card ahead of holidays, travel or large expense items,” the bank said, adding that it regularly reviewed its terms and conditions to ensure they were up to date.

A Malta Financial Services Authority (MFSA) spokesman said that changes to terms and conditions did not require the authority’s approval but banks were required to communicate changes to card holders at least two months before the change came into effect.

“A credit card is a loan facility granted by a bank allowing a card holder to spend/withdraw up to the credit limit on the account,” he said.

Some card holders may temporarily deposit additional funds into the credit card account beyond the credit limit.

“Some banks prohibit a credit card holder from maintaining credit balances on credit card accounts because this increases the extent of fraud loss if a card becomes compromised,” he added.

The authority spokesman added that following feedback it received, the bank had decided to phase in the changes from October 1.

“The bank will be sending a letter to all credit card holders shortly detailing the revised terms and conditions.

“The MFSA has also been informed that the bank will send a further letter to those customers who have already received the letter about the changes to the terms and conditions, providing further clarification,” the spokesman said.