What costs are payable using the Halifax Clarity?

fund_manager

Hi everyone

Its unclear in the article whether you will always have to pay interest charges on foreign cash withdrawals and spend. If you pay off in full each month, are you still charged for the period from the withdrawal/spend to the time when you pay it off?

Is the Norwich and Peterborough card any different?

Thanks!

bagand96

It works like most other credit cards.

Purchases: you get an interest free period each month so if you pay in full there will be no interest.

Cash withdrawals: you pay interest from the day you withdraw. There is no interest free period. It depends on your interest rate but even at 16.9% over a month the interest on £100 would be around £1.30. Even including this it still works out a better exchange rate than you'd get on the high street. You can minimise the interest further though by paying off the card asap after withdrawing and reducing the interest to pennies.

eDicky

fund_manager wrote: »

Is the Norwich and Peterborough card any different?

Yes, this is a debit card, not a credit card, so there is no question of paying interest (unless of course you take the account into overdraft).

It's true that the wording of MSE articles is often jumbled and unclear, unlike Bagand's brief and perfect explanation above.

fund_manager

Thanks guys. So really for foreign cash withdrawals you want to use a debit card, not a credit card, because interest is ALWAYS charged on foreign cash withdrawals using a credit card.

For foreign transactions, the situation is simpler - from an economic point of view, there is no charges and no interest using either a credit or a debit, except that with a credit card to ensure no interest you have to repay in full.

YorkshireBoy

fund_manager wrote: »

...interest is ALWAYS charged on foreign cash withdrawals using a credit card.

Not "always", but usually. There are some cards that don't charge interest on cash withdrawals (both in the UK and abroad), but do charge a cash advance fee. This fee is typically 2%, so Clarity would still be cheaper for your 2 week (or even a month!) holiday.

zagfles

fund_manager wrote: »

Thanks guys. So really for foreign cash withdrawals you want to use a debit card, not a credit card, because interest is ALWAYS charged on foreign cash withdrawals using a credit card.

Only if you use one of the few fee free debit cards eg N&P or Metrobank in Europe.

The Clarity credit card is easily better than a normal debit card which charges around 3% exchange rate markup, and some charge an additional fee for foreign cash withdrawals as well.

In fact the Clarity, being Mastercard, could be cheaper than using even a fee free VISA card eg N&P, because Mastercard rates on average are better than VISA rates. Just pay the Clarity off as soon as you get back off holiday to minimise interest. Or while you're there if it's a long holiday eg over 3 weeks.

Gloomendoom

We usually pay off the Clarity within an hour of making a cash withdrawal. Interest charges are pennies even after several weeks away.

The only problem with Mastercard is that you have to make an educated guess at the exchange rate used.

Doshwaster

Gloomendoom wrote: »

We usually pay off the Clarity within an hour of making a cash withdrawal. Interest charges are pennies even after several weeks away.

The only problem with Mastercard is that you have to make an educated guess at the exchange rate used.

That's why I wait a week to give the payments time to hit the card. I have better things to do on holiday rather than worrying about paying off the credit card as quickly as possible just to save a few pence.

zagfles

Gloomendoom wrote: »

We usually pay off the Clarity within an hour of making a cash withdrawal. Interest charges are pennies even after several weeks away.

The only problem with Mastercard is that you have to make an educated guess at the exchange rate used.

That's all very well if you only use it for cash. If you use it for purchases as well, and you have an outstanding purchase balance, you need to make sure the ATM withdrawal has hit the account, also that you have no outstanding purchase balance that is statemented, because payments will always go towards statemented balances first.

So if your statement date is while you're away, any cash withdrawals you make after the statement date cannot be paid off until the statemented balance is paid off in full. This applies even if you have a DD to pay the statement off in full.

mbailey

zagfles wrote: »

That's all very well if you only use it for cash. If you use it for purchases as well, and you have an outstanding purchase balance, you need to make sure the ATM withdrawal has hit the account, also that you have no outstanding purchase balance that is statemented, because payments will always go towards statemented balances first.

So if your statement date is while you're away, any cash withdrawals you make after the statement date cannot be paid off until the statemented balance is paid off in full. This applies even if you have a DD to pay the statement off in full.

Having a current balance and adding new cash withdrawals is tricky.

Could almost do with having 2 cards to keep them separate.

For the standard purchases I always make most of the max interest free period, but now I have cash withdrawals on the card, I need to pay off the balance for the standard purchases earlier than previously planned in order to pay off the new cash withdrawals when they appear on the online statement.

Gloomendoom

mbailey wrote: »

Could almost do with having 2 cards to keep them separate.

We have been using a Clarity abroad a lot recently and have come to the same same conclusion. Ideally we need one for cash and one for purchases.