Just been stung by Halifax

Networkguy

I have a Halifax Clarity credit card just for travel use as I do travel into the EU quite a lot.

I have a direct debit set up to clear the balance every single month in full and of course have not seen any interest charges or fees through using the card.

Back in May whist in Paris I chose to withdraw cash from an ATM. I understood that there would be no ATM charges but that i would be charged interest at 17% (or whatever the normal rate is) UNTIL IT WAS PAID OFF IN FULL.

So on my statement that month, I saw an interest charge of £1.56 which still worked out better value than if I had bought my travel currency here in the UK. The direct debit went out of my account and all was good. So I thought

The following month there was a charge for £1.36 again marked as interest. I assumed that perhaps because of billing cycles, this was just a carry over from the previous month however that the end of that month, the balance was paid off in full again.

This month, I see another interest charge. This time only for a few pence but a charge all the same so I called Halifax up.

The first charge was right. The second charge was interest on that interest and the third was interest on that interest.

They tried to claim that unless I got the balance on my card to ZERO this interest on interest would continue to happen even if I continued to pay off my balance by DD every month because it was interest on a cash withdrawal and not a purchase.

So they have now waived "some of the costs" and I am assured I will not see another interest charge next month however this as caught me out and it means that using the card to withdraw cash abroad via ATM is not good value as implied by both the Halifax website AND the MSE travel money section

Beware

NiftyDigits

The problem her is that you have not understood what you have been told.

You are generally told that there is no need to wait until your statement is produced before clearing your cash withdrawals.
Otherwise, theoretically you can end up borrowing the cash for up to two months.
Simple example: Your cut off date is on the 15th of each month and your statement is payable on the 8th of the next month.
You withdraw cash on the 16th of July. That means that withdraw does not become payable until September the 8th, as you have missed the cut-off for the August the 8th payment.
So all of this time from the 16th of July to the 8th September, you will be paying interest of that withdrawal.

So clear your balances more promptly. No one has stung you. You just have not understood the advice that you have been given. In addition it does not help that you would not understand this for yourself.

If you want a more suitable card for the EU, get a Metro Bank debit card.

Networkguy

So I would have agreed with you if I had not been charged for a 3rd billing cycle (and a 4th if I had not spotted this)

I accept the charge for the billing cycle I am in

I even accept the charge for the following billing cycle for the reasons you give and with hindsight should have seen that one coming

However to then have a charge for every subsequent billing cycle does not compute and it is here where I feel things are not right

BTW

The Metro Bank option simply doesn't work for me as I would need to maintain and manage another current account at a branch a number of counties away from me that requires me to actually visit the branch in the first place.

Seems to me that Metro bank is only a real option if you live in the South East

NiftyDigits

Networkguy wrote: »

So I would have agreed with you if I had not been charged for a 3rd billing cycle (and a 4th if I had not spotted this)

I accept the charge for the billing cycle I am in

I even accept the charge for the following billing cycle for the reasons you give and with hindsight should have seen that one coming

However to then have a charge for every subsequent billing cycle does not compute and it is here where I feel things are not right

BTW

The Metro Bank option simply doesn't work for me as I would need to maintain and manage another current account at a branch a number of counties away from me that requires me to actually visit the branch in the first place.

Seems to me that Metro Bank is only a real option if you live in the South East

This is not the case. You need to visit the branch once to obtain the card and then never again. All else can be done online. Nothing much to do anyway. Just spend how and wherever and then refill online.

As to the continued interest, the second payment was not 'Interest on the Interest'. How can £1.36 be an interest payment on £1.56?

Perhaps there were withdrawals before and after your statement cutoff dates.

MarkBargain

As soon as I get home, I log onto my Halifax account to check the full balance then pay it off in full using ebanking to make sure that the only interest I occur is while I am away. Sometimes I even set up payments in advance so that it is paid off in part while I am abroad. I hate paying interest!

PeteDoff

GET A METRO BANK DEBIT CARD!!!!!!! (For Europe)


I also use a Kalixa pre-paid card which I load for free spend with no charges and get an unbeatable pre-paid rate (by far). which I used today and was soooo impressed to get a text message whilst still at the checkout (outside UK) to to tell me what I had just spent and my remaining balance. All of which cost me ----NOTHING.

yelnos

I'm planning to go to the EU with my Clarity Card showing +£300 in credit and then taking a chunk of Euro money out as soon as I arrive in the EU. I'm assuming this would mean I pay zero interest and can then start using the card for purchases as required.

Am I correct??

visidigi

yes, except preloading the card with credit is against the T&C of the card.

Roger1

I disagree with the word 'stung' in the thread title.

The supposed interest on interest situation is explained in the T+Cs you agreed to when you applied for the card. There's nothing to stop you making intermediate payments to reduce the balance if you wish.

The interest on interest can sometimes be amusing. I once had a monthly bill for 1p and, yes, the whole amount was collected in due course by direct debit.

And even if you were 'stung', how would £1.56 + £1.36 compare with another card likely to have charged more?

ic

I'd agree that to claim you have been "stung" is wrong - this is just how credit cards work. I guess generally people fit two categories, either don't withdraw cash, just make purchases and then pay off in full, or use the card but have a rolling balance, so are charged interest each month. Neither will see the nuances around how the interest works - only those that use the card like you and then pay off in full.

The extra interest that follows each month is the interest on the none-purchase balance on your account between the statement date and payment date. So if you owe interest on the statement or have made cash withdrawals, the interest will be charged on this amount. Only purchases are interest free if paid in full. If you didn't pay in full, the full interest is actually charged for all purchases - even if you only paid 1p less than the full balance! The bigger the balance, the more obvious it is.

Payments always work to clear down the most expensive interest-earning parts of the balance. Therefore, if you can log in once home from a holiday, and pay off the amount you withdrew, + a little extra, you should immediately clear the cash withdrawal balance, plus whatever interest it has already accrued.