Question about interest charged on foreign withdrawals

xtremepix

Hey,

I'm about to leave for New Zealand, and have just got myself a Halifax Clarity credit card for spending abroad.

My question is about the interest charged on ATM withdrawals. My interest rate is 21.9% on withdrawals, which I have to pay no matter if I pay the balance in full.

What I need to know is- if I were to withdraw £100 (or the NZ equivilent), that month would the interest be £21.90? or is it over the course of the year, making it £2.19? I plan on paying my balance in full every month, so the interest would only last the one month.

If its going to cost a lot, I'll look in to getting a prepaid card for cash withdrawals!

Thanks,
James

bengalknights

It would be over the year so more like £1.82 for first month then grow onwards if based on APR

agrinnall

To minimise interest you should consider using online banking to make a payment to your Clarity card equivelent to the withdrawal amount soon after you've done the transaction.

opinions4u

It costs very little.

But if you focus on using your card for purchases rather than withdrawals you can reduce your interest exposure.

Better still, if socialising pay the bill on your card and collect the cash from friends. Then you won't pay any interest if you settle the next statement in full.

Similar if staying with friends. Pay for their weekly shop and collect the cash off them.

chattychappy

agrinnall wrote: »

To minimise interest you should consider using online banking to make a payment to your Clarity card equivelent to the withdrawal amount soon after you've done the transaction.

It may be necessary to wait until a statement has been generated that shows the transaction. Not sure how Clarity works, but that's true of some other cards. It also may be necessary to clear the entire balance at that point, including any purchases that have been made.

YorkshireBoy

chattychappy wrote: »

It may be necessary to wait until a statement has been generated that shows the transaction. Not sure how Clarity works, but that's true of some other cards.

From the Clarity T&Cs...

2.2 We use any payments you make to pay off transactions that appear on your statements starting with those on which we charge interest at the highest rate...

http://www.halifax.co.uk/creditcards/low-rate-no-fee/clarity-card/terms/

agrinnall

chattychappy wrote: »

It may be necessary to wait until a statement has been generated that shows the transaction. Not sure how Clarity works, but that's true of some other cards. It also may be necessary to clear the entire balance at that point, including any purchases that have been made.

Yes, that's why I made my post a bit circumspect. But given that the OP is planning to pay the card off every month I don't think there should be too much of a problem making payments early (unless Clarity consider that to be going into credit, and that turns out to be against the T&Cs).

AdamJK_2

The cost of withdrawing the cash (as interest) is next to nothing as don't forget you're accessing the best exchange rates by using the card too.

As said above though you can always pay the cash withdrawal off immediately (the same day) to minimise your interest exposure if you wish. The T&C expressly prohibit putting the card into positive balance so you can't for instance 'load' the card with £100's prior to departing for hols, but you can pay back immediately on use.

I personally use the mobile banking app (I'm with Lloyds) to transfer the money rather than use public computers as you need to be careful accessing your online banking from any old computer. I've known some people call through to their telephone banking to make the transfer as well - the irony being that the call has cost them more than the interest would for the full month!