credit card cash withdrawal interest

Reading through Halifax Clarity T&Cs it seems to me that there is no way avoiding paying interest on interest for cash withdrawals even if paying balance in full by DD -or am I wrong?
"We start charging interest from the date they are added to the account. We add this interest to your account on the statement date each month. We then charge the interest on the whole balance* until you make a payment. We then charge interest on your remaining balance until your next statement date and this interest will be added to your account on the statement date. This means you may be charged interest on interest".
It seems that if I withdraw say £1000 in cash and repay it back by money transfer in 3 days time I shall be charged 3 days interest, that will be added to the statement. Then I shall continue to accrue interest on that added interest from the statement date till DD kicks in - but that will repay statement balance and not interest on interest accrued since the statement date etc..... When does it end?
*there is an exception for purchases
«1

Comments

  • Clear two statements in full and no more interest is charged.
  • zagfles
    zagfles Posts: 20,220
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Forumite
    Depending on APR, interest on £1000 for 3 days will be about £1-2. Interest on the £1-2 will be about 1-4p. Interest on the 1-4p will be too tiny a fraction of a penny to charge.

    The real issue with paying by DD is that if you have an outstanding statement balance you CANNOT pay off a cash advance until you've cleared your statment in full. All payments always go towards statemented balances first, before unstatemented items.

    So you might think you're paying the cash advance off, when all you're doing is paying off part of the previous statement balance early.
  • divoch
    divoch Posts: 23 Forumite
    If you are right about payments going against the statement balance first, and it appears you are, then the best time to draw £1000 would be a day before the statement date and then pay in £1000 "manually" immediately on the day the statement is generated. DD payment will be adjusted accordingly.
  • HappyMJ
    HappyMJ Posts: 21,115
    Combo Breaker First Post
    Forumite
    divoch wrote: »
    If you are right about payments going against the statement balance first, and it appears you are, then the best time to draw £1000 would be a day before the statement date and then pay in £1000 "manually" immediately on the day the statement is generated. DD payment will be adjusted accordingly.

    Not really sure what the point of all this is. Cash advances on a credit card are only meant for dire emergencies only where a card is not accepted and you need to pay cash for emergency goods or services.

    If you are planning to withdraw cash to pay for something then repay it several days later then it doesn't make sense that you would do it that way.

    I only ever took a cash advance once....on Christmas Eve. Didn't realize trains stop running early and had to get home via taxi so needed cash and my current account was empty. I repaid the CC a few days after the holiday and was charged about £1 in interest. If you pay that statement balance in full you will not be charged any more interest.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • zagfles
    zagfles Posts: 20,220
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Forumite
    HappyMJ wrote: »
    Not really sure what the point of all this is. Cash advances on a credit card are only meant for dire emergencies only where a card is not accepted and you need to pay cash for emergency goods or services.

    If you are planning to withdraw cash to pay for something then repay it several days later then it doesn't make sense that you would do it that way.

    I only ever took a cash advance once....on Christmas Eve. Didn't realize trains stop running early and had to get home via taxi so needed cash and my current account was empty. I repaid the CC a few days after the holiday and was charged about £1 in interest. If you pay that statement balance in full you will not be charged any more interest.
    This is the Clarity. For foreign withdrawals it's one of the cheapest ways of getting cash, the OP would likely be paying 0.1-0.2%. Most other ways of getting foreign cash charge 2-5%.

    Even for UK withdrawals it's probably cheaper than most banks' overdrafts. Most banks seem to charge 50p or £1 a day for planned overdrafts, and much more for unplanned. The Clarity would charge less than 50p a day for £1000 on the 18.9% APR.
  • zagfles
    zagfles Posts: 20,220
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Forumite
    divoch wrote: »
    If you are right about payments going against the statement balance first, and it appears you are, then the best time to draw £1000 would be a day before the statement date and then pay in £1000 "manually" immediately on the day the statement is generated. DD payment will be adjusted accordingly.
    If you withdraw in the period after the DD date and before the statement date, then you can just pay it off straight away as there's no outstanding statement balance. Or if you have a zero previous statement balance.

    You just need to watch out if you have a statement balance and you're in the period between the statement date and DD date. To pay off the cash advance you need to pay the entire statement balance early plus the cash advance. And then hope the DD gets adjusted!

    I don't use a DD for the Clarity as it complicates things.
  • divoch
    divoch Posts: 23 Forumite
    HappyMJ wrote: »
    Not really sure what the point of all this is. Cash advances on a credit card are only meant for dire emergencies only where a card is not accepted and you need to pay cash for emergency goods or services.....

    It does make sense with Halifax Clarity when you are abroad, particularly outside EU, and do not have and so cannot use no fee debit card. Apart from Norwich&Peterborough debit card I do not know of any. Halifax Clarity, although it is credit card, is in this respect better bet than almost all debit and other credit cards.
  • divoch
    divoch Posts: 23 Forumite
    zagfles wrote: »
    If you withdraw in the period after the DD date and before the statement date, then you can just pay it off straight away as there's no outstanding statement balance. Or if you have a zero previous statement balance.

    You just need to watch out if you have a statement balance and you're in the period between the statement date and DD date. To pay off the cash advance you need to pay the entire statement balance early plus the cash advance. And then hope the DD gets adjusted!

    I don't use a DD for the Clarity as it complicates things.

    I agree with the first paragraph. However, if I draw cash before the statement date and pay it off after the statement date, as I suggested, it should also work as the payment according the T&Cs is applied first against cash advance. In other words I can draw cash any time between DD and statement date and pay it off but not between statement date and DD....
  • zagfles
    zagfles Posts: 20,220
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Forumite
    divoch wrote: »
    I agree with the first paragraph. However, if I draw cash before the statement date and pay it off after the statement date, as I suggested, it should also work as the payment according the T&Cs is applied first against cash advance. In other words I can draw cash any time between DD and statement date and pay it off but not between statement date and DD....
    Yes, I think we're saying the same thing - but you don't need to wait till after the statement date to pay it. You could make a withdrawal 3 days before statement date and pay it off 1 day before, assuming it's hit the account, rather than wait till after the statement date. Unstatemented cash advances are paid before unstatemented purchases.
  • zagfles
    zagfles Posts: 20,220
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Forumite
    divoch wrote: »
    It does make sense with Halifax Clarity when you are abroad, particularly outside EU, and do not have and so cannot use no fee debit card. Apart from Norwich&Peterborough debit card I do not know of any. Halifax Clarity, although it is credit card, is in this respect better bet than almost all debit and other credit cards.
    Metrobank (in Europe) & Nationwide Flex Plus (there's a fee but well worth it if you need the travel insurance and breakdown cover).

    But if you use it properly the Clarity is only very slightly more expensive.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 341.9K Banking & Borrowing
  • 249.7K Reduce Debt & Boost Income
  • 449.2K Spending & Discounts
  • 234K Work, Benefits & Business
  • 606.2K Mortgages, Homes & Bills
  • 172.5K Life & Family
  • 246.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards