Credit card paid in full but still charged interest. Why?

janehp

Hi
Can anyone explain why I have been charged interest by Halifax after clearing my balance by the due date. I have had a long conversation with Halifax customer services and am none the wiser.


I took out a Halifax Clarity card after reading the article on best credit cards to use abroad. Over a 5 day period in October I used the card for cash withdrawals and restaurant bills. I knew I would pay interest on the cash from the date of withdrawal and had set up a direct debit to pay the balance in full by the due date.


My statement dated 9th Nov. showed interest of £1.34, the full balance owed (£904) was taken from my account on the 4th Dec.


The credit card has not been used since the 24th October. This week I received a statement from Halifax dated 7th Dec with a balance of £1.72 to pay. The amount was listed as interest due.


My understanding of paying the balance in full is that there is nothing else to pay, there is nothing in the information provided with the statement saying that further interest will be charged even after the balance is paid in full. While this is a very small amount of money I still feel I have been robbed how many 100s or 1000 of people pay a small amount and make the banks significant amounts?


Can anyone explain how this works?

DUTR

So it seems the interest is for the cash withdrawal.

fred246

Probably it was the interest accrued on cash withdrawals from your statement date 9/11/14 until it was paid on 4/12/14. You may have paid less interest if you had manually paid the bill immediately with internet banking. Best never use credit card for cash withdrawals.

janehp

my assumption was that the interest was from statement date to payment date, but how do you ever catch up if that's the case as my statement arrived 5 days after the date. Am I to assume my next bill will be for 2p which is what I calculate would be 28 days interest on £1.72. if I don't pay it off until the due date.


Where the statement says 'balance' it should also say ' but you need to guess how much interest has accrued from date of this statement to the date you plan to pay and overpay by that amount'!!!


I've never paid interest on credit cards in 40 years. I only applied for this card because the exchange rate and no fees for withdrawing cash abroad made it a good option even taking into consideration the interest I had expected to pay.

Nebulous2

If you pay your bill in full for two consecutive months there is nothing else to pay.

After running up a balance you get charged interest on it, then the following month there is a small amount of residual interest, and then it stops.

Unless of course you have made any cash withdrawals in the interim period.

fred246

I have never paid a penny either. I think they charge interest on cash withdrawals from the date it is withdrawn until the date it is paid off. I don't think they'd charge interest on the interest ie 2p, but I may be wrong.

rehanmalik3030

janehp wrote: »

Hi
Can anyone explain why I have been charged interest by Halifax after clearing my balance by the due date. I have had a long conversation with Halifax customer services and am none the wiser.


I took out a Halifax Clarity card after reading the article on best credit cards to use abroad. Over a 5 day period in October I used the card for cash withdrawals and restaurant bills. I knew I would pay interest on the cash from the date of withdrawal and had set up a direct debit to pay the balance in full by the due date.


My statement dated 9th Nov. showed interest of £1.34, the full balance owed (£904) was taken from my account on the 4th Dec.


The credit card has not been used since the 24th October. This week I received a statement from Halifax dated 7th Dec with a balance of £1.72 to pay. The amount was listed as interest due.


My understanding of paying the balance in full is that there is nothing else to pay, there is nothing in the information provided with the statement saying that further interest will be charged even after the balance is paid in full. While this is a very small amount of money I still feel I have been robbed how many 100s or 1000 of people pay a small amount and make the banks significant amounts?


Can anyone explain how this works?

Let me try to explain this to you.

When you make a cash withdrawal the interest starts to be accrued on a daily basis. When you get your statement it is still being added on a daily basis, when you pay your statement in full you still owe those days of interest that have been added between the day the statement was printed and when you made full payment.

therefore in order to pay off the interest on cash withdrawal you need to pay the full outstanding balance on 2 statement cycles.

If you are really smart after a cash withdrawal when you have the money in order to avoid daily cash interest being charged you call up the credit card company and ask for a settlement figure on the day to settle your account incl. cash interest and pay it there and then over the phone with your debit card and make sure the agent writes on your account the account is settled.

fred246

Ah yes I remember now. I asked my german colleague who gets paid in pounds how he gets his money out in Germany. He said he had a Halifax Clarity Card. He withdraws his euros and then immediately gets on Internet Banking and pays it off. There is no cash fee or no non-sterling fee.

TartanSaver

Use faster payments (not debit card payment) to reduce the processing time. You DON'T need to pay the whole balance every time you take cash out abroad. Just paying enough to cover the cash should be ok - payments always have to cover the highest interest items first. As long as you can access your online banking, you should be able to do this wherever you are in the world, without waiting for the statement.

jennifernil

You need to be careful with this. If you have used the card for purchases previously, and a statement has been generated but not yet paid in full, any payment you make will first go towards paying that statement.

So you may not save the interest on the cash withdrawal.

Really, for the small amount of extra interest charged, it is just easier to leave the DD to take the payment.