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Tesco Bank starts to treat pre-paid cards (but not Curve) as a cash advance – with a 4% fee

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Since the law changed in January to ban credit card acceptance fees, there has been a interesting miles earning niche available.

Some of the pre-loaded travel money cards, such as Revolut (we reviewed Revolut here, our special offer saves you the £5 fee), have been treated by some credit card companies as a purchase.  This means that you earn miles or points when you load up your Revolut, Monzo etc debit card.  There is no list of which credit cards treat Revolut etc as a cash advance and which treat it as a purchase – you need to try out the various cards you own.

Tesco Bank has now decided to take action.

From 1st June, Tesco credit cards will increase their cash advance fee from 3.0% to 3.99%.  More importantly, it will now treat payments to prepaid or virtual cards, such as Revolut, as a cash advance.

For clarity, this does not impact Curve.  If you have linked Curve to your Tesco credit card you may have received this letter.  This is because, for two days earlier this year, Curve transactions were incorrectly coded by Mastercard.  If you used Curve during those two days then Tesco thinks – incorrectly – you were loading a prepaid card.

Tesco also has other targets in its sight.  Wire or international money transfers, repayments of loans or mortgages, purchases of foreign currency except in Tesco stores, investments, share trading and spread betting payments will be treated as cash advances.  (I seriously doubt that any mortgage lender was actually accepting a Tesco credit card as payment, but who knows?!)

I get a feeling that, by the end of the year, it will no longer be possible to use any UK credit for a fee-free top-up of a prepaid debit card.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)