never had a credit card before, but need one for traveling/backpacking? need help!

YorkshireBoy

Where did your post go? I was just about to reply to it...because the T&Cs you quoted were exactly the same as I quoted.

I'm not disputing that's what happening with your account I'm saying the T&Cs suggest it doesn't work like that.

knightstyle

Sorry that is not what it says. I use it to make purchases and cash withdrawals, then I make a payment for a couple of £ more than the cash withdrawal. This ensures that the cash is repaid straight away and the £ or two over comes off the purchases.
Over the last year I have used my Halifax card to purchase several thousands of £s worth of goods and withdrawn 2000€ hardly paid any interest by doing what I said in my post, same was true for my Santander Zero card but I have a feeling they changed things a few years ago so I just keep it for emergencies now.

Edit, after posting I read it and put this instead.

YorkshireBoy

Here's the equivalent condition from MBNA...

4 Payment allocation



4.1 We will allocate your payment towards paying off amounts that are charged at higher interest rates before those that are charged at lower interest rates (including amounts added to your account after your statement date up to the date your payment is credited to your account).

...which does back up what you say your experience is with MBNA.

YorkshireBoy

knightstyle wrote: »

Sorry that is not what it says.

Could you explain where I'm misunderstanding it then, because I'm generally OK with T&Cs?

However, just a thought...if you only ever use the card for overseas transactions, and/or always start your holiday with a zero balance on the account, then your cash transactions will indeed be paid off first because the first emboldened bit in my quote above won't apply to you. All your purchases and cash transactions will not yet have appeared on your statement, so will be paid off in a favourable order (as per the second emboldened bit).

Maybe that's where the confusion lies?

zagfles

Halifax T&Cs definitely say they pay statemented items before non-statemented.

I thought all CCs worked that way - otherwise what would happen if you had £1000 of purchases on your last statement, got a £50 cash advance 20 days after your statement date, and then 5 days later (before the due date) paid £1000?

If £50 of that £1000 payment goes towards your cash advance, then you haven't paid your statement off in full, you've only paid £950 of the £1000, so you'll be charged interest on the £1000 of purchases between the statement date and the payment date, instead of just being charged interest on £50!!

knightstyle

Yes zagfles that is what happens in my experience and if YB reads my first post I said to set up DD to pay in full each month so all purchases are at 0% and any payments you make in addition to the DD one will go to pay of the cash withdrawals. Simple!
Just checked and a few months ago in France I withdrew a total of 650€ cash and paid for each withdrawal the next day, Total cost £1.73, this is so much cheaper than bank transfers etc.

YorkshireBoy

knightstyle wrote: »

Yes zagfles that is what happens in my experience and if YB reads my first post I said to set up DD to pay in full each month so all purchases are at 0% and any payments you make in addition to the DD one will go to pay of the cash withdrawals. Simple!

Even if you're carrying a balance from a previous statement (as I asked earlier)?

Just checked and a few months ago in France I withdrew a total of 650€ cash and paid for each withdrawal the next day, Total cost £1.73

That's strange, if it's cash interest?

I use Santander Zero overseas (27.9% APR on cash), and I've used it 3 times so far this year for both purchases and cash advances, with the cash advances always being on the last or next to last day abroad.

Immediately on my return to the UK I pay off the entire balance some 2-3 days later and I've never incurred any interest at all (remember...the posting date may be, and usually is in my experience, 2-3 days after the transaction date). I do, however, always start my holiday with a zero balance on my account...which is why I'm asking the question.

zagfles

knightstyle wrote: »

Yes zagfles that is what happens in my experience and if YB reads my first post I said to set up DD to pay in full each month so all purchases are at 0% and any payments you make in addition to the DD one will go to pay of the cash withdrawals. Simple!

No. It's not as simple as you think. DD's aren't applied any differently to any other payment.

Just checked and a few months ago in France I withdrew a total of 650€ cash and paid for each withdrawal the next day, Total cost £1.73, this is so much cheaper than bank transfers etc.

Yes, but you're paying far more than a day's interest! A day's interest on £550 would be about 18p if you're on the 12.9% APR, it should be under 40p even if you're on the highest APR.

You're paying more, because as above, the payments go towards the statemented items before the non-statemented. So if you have a balance of say £1000 waiting to be paid by DD, but before the DD goes out, you make a cash withdrawal and pay it off, the payment you make will go towards the statement balance, not the cash advance. You then end up paying interest on the cash advance from the date you made it until your DD goes out.

If you're on the 12.9% APR, you've paid around 9-10 days interest on average.

knightstyle

Well the withdrawals were in 3 withdrawals as where I was I didn't want too much cash on me,and one payment was a few days late. So that would explain it.
It is still much cheaper than other methods of getting cash in France. I have a french bank account and pay £10 to get money into it from UK by € cheque.

zagfles

knightstyle wrote: »

Well the withdrawals were in 3 withdrawals as where I was I didn't want too much cash on me,and one payment was a few days late. So that would explain it.

No it wouldn't. The 9-10 days I mentioned above was the average, not the total. Interest on £600 for 10 days is the same as interest on 3 £200 withdrawals each of which you wait 10 days before paying off.

It is still much cheaper than other methods of getting cash in France. I have a french bank account and pay £10 to get money into it from UK by € cheque.

Indeed it is - I use the Clarity but don't usually bother to pay it as I go - I just pay it off when I get back off holiday.

It's pointless paying off cash advances straight away if you've got an outstanding balance on your previous statement. To stop interest accruing on cash advances made since the last statement, the entire balance of the last statement needs to be paid off first.

The Clarity is the only card I don't use DD for, since it's often better to pay the previous statement early so that I can pay off cash advances made since.