Halifax Credit Card Order of Payments

dreams4531

I have just had an interesting conversation on the order of payments for Halifax Credit Cards.

I currently benefit from an interest free balance transfer that ends next year.

I made one purchase prior to the generation of the statement in June.

In July I made two payments (one direct debit, the other manual) , the combined total being for the purchase made in June and paid before the due date.

I had been informed that any payments made to the Credit Card would go towards those attracting the higher interest rate , in this case purchases and this is confirmed in the terms and conditions.

Imagine my surprise when I found an interest charge had been applied for purchases made in June. Though Halifax Credit Card services confirm that both payments have gone towards the purchase made in June they insist that in order for me to benefit from the 45-day interest free period for purchases I would have to pay off both the balance transfer at 0% and purchases.

My understanding from the terms and conditions is that any payments go towards those attracting the higher interest rate.

Has any one else experienced problems similar to mine.

[Deleted User]

This is true of all cards. Payments do go to the higher rate transactions. But to avoid paying interest , you need to clear your whole balance. Even if some of it is at 0%.

Tixy

The payments did go towards the purchases made in June.
But you still pay interest on those purchases from the date of purchase to the date of payment.

Your terms will state that you only get the 45days free credit if your statement is paid in full - your didn't so you are charged interest..

scottishblondie

Because you are technically carrying a balance you are attracting interest monthly, even tho it is at 0%. So when you purchased something it started to accrue interest at the standard rate from the day of purchase because carrying a balance month to month means you no longer get the interest free days.

The payments you made have gone towards the purchases, but I think you are going to be paying small amounts of interest as a result of the purchase for as long as you have a balance. Hopefully someone else will be able to say for sure.

dreams4531

Thank you to all for replying most promptly.

The information was very useful.

Thank you again.

thenudeone

Deleted_User wrote: »

This is true of all cards. Payments do go to the higher rate transactions. But to avoid paying interest , you need to clear your whole balance. Even if some of it is at 0%.

NO YOU DON'T!!!!!

You only need to pay the value of the purchases (plus accrued interest). Then the interest will stop accruing, and the rest of the balance will continue at 0%.

[Deleted User]

Correct. But I meant in any give month, only clearing your interest bearing transactions by the payment date does not prevent interest being charged.

dreams4531

I have reviewed my terms and conditions but nowhere does it say that I will forfeit my interest free period for new purchases whether or not I am carrying over a previous balance which in this case is interest free until next year.

I have provided an extract from the T and C :

3.5 We will not charge interest on purchases shown on your current statement, if you pay the total balance shown on that statement by the payment date (and have also paid the total balance on the previous statement by the payment date). On all transactions where we do charge interest, we charge it from the date we first charge the amount to your account.
3.6 If you do not pay the total balance shown on your statement, at the date of the next statement we will add the interest we have charged on the unpaid amount to the balance we charge interest on.

Surely by paying off the entire amount that would ordinarily bear interest (in this case purchases) if not entirely paid off by the due date, there should be no interest and since both my payments went towards the purchases per the positive payment heirachy , there should have been no interest.

Very confused.

CLAPTON

dreams4531 wrote: »

I have reviewed my terms and conditions but nowhere does it say that I will forfeit my interest free period for new purchases whether or not I am carrying over a previous balance which in this case is interest free until next year.

I have provided an extract from the T and C :

3.5 We will not charge interest on purchases shown on your current statement, if you pay the total balance shown on that statement by the payment date (and have also paid the total balance on the previous statement by the payment date). On all transactions where we do charge interest, we charge it from the date we first charge the amount to your account.
3.6 If you do not pay the total balance shown on your statement, at the date of the next statement we will add the interest we have charged on the unpaid amount to the balance we charge interest on.

Surely by paying off the entire amount that would ordinarily bear interest (in this case purchases) if not entirely paid off by the due date, there should be no interest and since both my payments went towards the purchases per the positive payment heirachy , there should have been no interest.

Very confused.

it seems very clear... it says you pay interest unless you 'pay the total balance'
you didn't pay the 'total' balance only the purchase balance


as always use two CC and keep the purchases separate from the 0% BT

mr_mitch

I really do not understand the thinking behind this?

can anyone explain it in simple terms?

it doesnt seem right that they start charging interest on balance transfers that you got at 0%, just because you made a purchase on the card....

scottishblondie

mr_mitch wrote: »

I really do not understand the thinking behind this?

can anyone explain it in simple terms?

it doesnt seem right that they start charging interest on balance transfers that you got at 0%, just because you made a purchase on the card....

They aren't charging interest on the BT, they're charging it on the purchase.

You only receive interest free days on your CC when you clear each statement in full. With a BT you are typically paying it off over a number off months, so you are carrying a balance during that time. That balance is accruing interest at it's own rate - in this case 0% - so there is no interest charge added.

However, purchases are charged interest at the standard rate. This means that they are accruing interest from the day of purchase unless you clear the full statement balance i.e. the BT plus the purchase amount. So paying off only the purchase amount will not prevent interest being charged on it.

E.g. if I make a purchase of £10 and then pay that £10 off before the due date, in the intervening time it will already have attracted (for example) 10p in interest. That 10p will also attract interest, and so on. You need to pay off enough to cover the purchase and the interest to get rid of it and any further interest charges.

I hope that makes it clearer.