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Kurt Sansone
Flaunting a credit card is possibly one of those status symbols reflecting financial independence but few people realize that withdrawing money from an ATM can incur a charge that is not insignificant, especially if withdrawing from automated machines that belong to other banks.
An analysis carried out by MaltaToday based on a comparative study of charges and fees levied by Maltese banks, compiled by the Malta Financial Services Authority, shows that for Lm30 withdrawal from an ATM, Lombard Bank credit card holders would be paying the dearest fee for withdrawing cash from their bank’s own machine.
A Lombard Bank customer would incur a charge of 30c for withdrawing Lm30 from a Lombard ATM.
HSBC credit card holders would not be far behind. Withdrawing Lm30 from an HSBC ATM using a credit card issued by the same bank would incur a charge of 25c, while Bank of Valletta customers have the better deal incurring a charge of 12c.
On the other hand, charges for withdrawing Lm30 from another bank’s ATM would simply spiral up. HSBC credit card holders have a raw deal since withdrawing Lm30 cash from an ATM belonging to another bank in Malta would incur a minimum charge Lm2.
BOV credit card holders would be incurring a charge of Lm1.20 if they withdraw the same amount from another bank’s ATM. Lombard Bank customers get the better deal, incurring a charge of Lm1.10.
While charges levied by BOV and Lombard remain the same as those for withdrawing from other bank ATMs when a customer withdraws cash from a different bank over the counter, HSBC credit card holders incur a fee of Lm2.35.
The fees quoted do not reflect any interest that may be charged on the withdrawal of cash. HSBC credit card holders get the best deal on their annual interest rate, set at 8.25 per cent.
BOV customers pay nine per cent interest and Lombard clients have to contend with the highest interest rate of all, set at 9.5 per cent.
The banks also have a different set of charges for credit card use abroad.
HSBC customers get the more expensive deal when withdrawing cash abroad. Based on the MaltaToday analysis of Lm30 withdrawal, utilising an HSBC credit card at an ATM abroad carries a minimum charge of Lm2.
A similar cash withdrawal by a BOV customer would carry a charge of Lm1.20 while a Lombard client comes out the cheapest with a withdrawal charge of Lm1.10.
A cash advance over the counter in a foreign country would see BOV and Lombard clients paying the same charge as that for withdrawing from an ATM, while HSBC customers would have to fork out an exorbitant Lm2.35 in charges.
Using the credit card to affect Lm30 purchase from a shop in an EU country would incur a charge of 23c for HSBC customers and an optional 15c charge for BOV customers. Lombard clients have the best deal with no charge at all.
If travelling outside the EU, an HSBC credit card holder buying a gift worth Lm30 would incur a 30c charge on the purchase while a BOV client would be forking out an optional 38c. Once again, Lombard customers come out on the cheap with no charge at all.
In evaluating the cost of a credit card one does not have to rely solely on the credit period allowed, the annual fees or the widespread utilisation aspect, but also the Annual Percentage Rate(APR).
The APR is the cost of the credit given to the client expressed as an annual percentage for this credit. This is calculated by assuming that the credit limit granted on the card is spent on day, topped up by the initial or annual fees and the government levy and then assuming that the client will pay all this in twelve equal monthly instalments inclusive of the interest rate given by the bank.
This gives the customer a comprehensive calculation of what is the expected expense on a credit card. HSBC customers get the cheapest deal on their credit card with a typical APR of 12.16 per cent. BOV customers have to contend with a typical APR of 13 per cent while Lombard Bank clients pay the highest APR rate at 15.49 per cent.
The domestic banks offer their credit cards under the MasterCard and Visa umbrellas.
APS Bank does not issue credit cards.
The decision by the Malta Financial Services Authority to publish comparative tables of the fees levied by the commercial banks on debit and credit cards is unprecedented. The tables give consumers the opportunity to compare charges and conditions.
The leaflet includes detailed explanations of what debit and credit cards are and the meaning of the Annual Percentage Rate (APR) calculation, interest levied and the various fees and charges associated with the use of these cards. MFSA comparative study of credit and debit cards
All four domestic banks - HSBC, BOV, Lombard and APS - offer debit cards to their customers (not included in the MaltaToday analysis). According to the MFSA table clients of HSBC and APS come out with the best deal as their debit cards, branded Quickcash and Premier respectively, are available for free. These cards also do not incur initial, annual or transaction fees.
These debit cards may be used only in Malta and Gozo but both banks will replace lost cards and issue supplementary cards for free.
Although Bank of Valletta through their Quickcash card matches the other banks in providing free debit cards the bank charges a fee for replacement services and to provide a copy of a transaction voucher. Lombard bank offers its Cashpoint-branded ATM card at a minimal fee of Lm1, which rate also applies for supplementary cards. Like the other banks this card may only be used in Malta.
BOV and APS also provide customers with an international debit card in conjunction with Visa, which may be used outside Malta.
The APS International Debit Card-Visa has a minimal fee for ATM withdrawals or for cash advances per transaction when used overseas. BOV offers a similar service through its Cashlink International Visa Card.
The comparative study can be accessed online at: http://www.mfsa.com.mt/consumer/new_page_2.htm
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