New credit card rules - be ware!

msangelface

MSE reported this week that the industry has taken the leap and decided that perhaps it's really more fair to use any payment against costlier debt - finally.

However, be ware of your terms and conditions. I took this to mean that as soon as I've incurred a costly item (e.g. cash advance), and I make a payment the next day (unfortunately I'm not allowed same day payment), I would accrue hardly any interest.

Not (always) the case.

My credit card (Halifax reward clarity) has cunningly added the words "transactions appearing on your statement". And once only in the letter it sent happily blowing its own trumpet about this fantastic new benefit it has brought its members. Only do one go to the terms and conditions (which, incidentally, they haven't sent me a new copy of and I had to go and find on the website) do they explain that any credit to the account pays off debt in the following order:

Cash advance

Cheques

Purchases

Balance transfers

Default sums

that appear on the statement. Only after the balance on the statement is cleared do they start paying off debts in the same order for items on Recent Transactions.

This means that if you take out cash, for example, right after your statement date, the earliest date you can pay off that is your next statement date, meaning that you accrue interest for roughly a whole month. Unless you want to pay off the entire balance on your previous statement, therefore withgoing the advantage of using credit card in the first place (if you are a typical MSE'er like me, who always pay off in full at the latest possible date).

Moral of the story - be very careful what your terms and conditions are.

Consumerist

For the reasons you state, and there are variations from card to card, it is still best policy to keep purchases and cash advances on separate cards unless you know your Ts&Cs well enough to get your timing right.