Halifax Credit Card charging interest regardless of payment

tomdfrost

Hi all,
This is my first post here and am looking for advice.

We have a credit card set up with Halifax, we had it for a few months but only recently started using it. The plan was just to put spending on it and pay it off in full each month to earn a bit of cashback.

After the first month of spending we received a statement on 22 May asking for a payment of £248.17 by 20 June. We immediately set up a direct debit to pay off the balance in full each month.

On 2nd of June we received confirmation that the direct debit had been set up. To be on the safe side (in case the direct debit didn't take, since mistakes happen) we also did a manual transfer to the card of £240, so that we'd be able to see the direct debit going, without risking charges.

Today we have received our second statement. The direct debit did not go through, but my manual payment did, leaving an outstanding balance of £8.17. For that month we have been charged £6.31!

After speaking to halifax on the phone we've been told that the first two months of activity on the card are a 'grace period' where we get charged interest daily on every transaction, regardless of what is paid off. Apparently this is totally standard and applies to every credit card. I've used credit cards in the past and have never heard of this before.

Has anyone else experianced this? And what can be done about it?

Thanks,
Tom

CannyJock

You don't get charged interest daily on every transaction for the first 2 months. You do get charged interest daily on cash advances and balance transfers, but not normal purchases.

Your manual payment prevented the direct debit from going through (or you'd be £ 240 in credit with them), and you've been charged interest on the purchases that the £ 240 didn't clear. IIRC, you get charged interest on the full amount of the purchase even if you part-pay it. That'll be where the £ 6.31 came from.

If you phone them on Monday during normal working hours and explain the situation that you thought they'd take the balance by direct debit, you can ask them to credit you with the £ 6.31. There will also be residual interest on your next statement even with the direct debit taking the full balance shown.

tomdfrost

Thanks for your quick reply CannyJack.

In this case there were no balance transfers or cash advances, only normal purchases (mostly around £20 each). So it seems we've been charged interest on every purchase made in that month, since no individual transaction could accrue £6.31.

Do you think that if we'd let the direct debit take it all there would have been no interest charged? The lady we spoke to at Halifax told us we'd be charged interest on everything whether we paid it off or not. Somewhat defeating the point of a cashback card!

I'll speak to them on Monday and see if we can get the interest refunded, although the amount is small it's the principle of the matter. And to try and claim that this is completely standard has left a bad taste in my mouth.

Tom

CLAPTON

the way it works is like this

For purchases you get charged interest on the daily balance of your card;
however, if and only if you pay in FULL they will cancel the interest. However if you don't pay in full then it works as above.
So you got charged interest from the time you spent the 240 until you actually paid it off; plus the remaining 8.17 is still accruing interest.
So next month you will get charged a little interst.
Once interest has been charged you then need to pay in full for two consecutive months before interest stops.
Virtually all credit cards work this way.

Best to try to read the T&Cs.

YorkshireBoy

CannyJock wrote: »

Your manual payment prevented the direct debit from going through...

I don't think so CJ.

OP, you can't set up a DD 'after the event', ie the direct debit needs to be set up before the statement is produced...not after it.

The DD guarantee scheme rules state that the originator has to give you at least 10 days notice of both the amount and date. The mechanism for doing this is your statement...and you'd already had it by then.

tomdfrost

Thanks everyone. That definitely sounds like what's happened. Our mistake was expecting the direct debit to apply to the first statement. Would it be worth paying of this month's balance early (before the direct debit goes out) to minimise the amount of interest charged, in case we can't get it cancelled?

CLAPTON

In principle paying the balance early will reduce the next months interest although assuming the balance is only 8.17+ 6.31 the new interest should be quite modest.

YorkshireBoy

tomdfrost wrote: »

Would it be worth paying of this month's balance early (before the direct debit goes out) to minimise the amount of interest charged, in case we can't get it cancelled?

As CLAPTON says, interest is accruing daily on your account so the sooner you settle the account (to a slightly positive balance is best) the sooner you stop incurring interest.

chattychappy

For people that don't like DDs, you can usually set up a standing order. You must understand its limitations - it's a different animal. You have to fix the amount and date, and the CC won't be sympathetic if for some reason it doesn't happen. But provided you set it up for at least as much as your minimum payment is ever likely to be and not so much that it starts putting you in credit on the CC, you're protected against forgetting.

YorkshireBoy

chattychappy wrote: »

...provided you set it up for at least as much as your minimum payment is ever likely to be and not so much that it starts putting you in credit on the CC, you're protected against forgetting.

...but not against them changing the statement (and hence payment due) date...and you not noticing.

td_007

tomdfrost wrote: »

Hi all,
Has anyone else experianced this? And what can be done about it?

In this particular instance I would pay all outstanding amount - the interest is increasing (modestly) every day. Call up find out the amount on the day and pay by debit card and then request refund of interest explaining the situation. The CC might refund as a gesture of goodwill. Otherwise consider it as another experience to learn from.....