Credit card for overseas travel - confusion re. fees

shadrach

Hello,
I'm looking at applying for a credit card which I mostly plan to use while travelling. I'm considering the Halifax Clarity and MBNA Everyday Plus, as they seem to be the best options. However, I'm confused about one aspect of the terms. On Which, under cons for both it states:

"It has no 0% period for purchases or balance transfers."

What does this mean in practice? Does it mean that if I use the card to withdraw money or make purchases I'm charged interest right away?

Probably a daft question, but I don't have much experience with credit cards!

I should add that I don't expect to use the card much at all - I just want to have it for emergencies and those circumstances where I can't use a debit card (I spent a lot of time travelling in China last year, for instance, and found in many places I couldn't use a debit card where a credit card would have been accepted). So I'd ideally like a card that won't charge much on overseas purchases/withdrawals in the event that I do use it, and which won't see me paying monthly fees. I won't need to borrow on it.

bigadaj

Sounds like they mean you won't get 0% offers on these, though in not sure if that's true.

If you purchase things then you will get the normal 'up to 56 days' of interest waived if you lay the full balance on your statement by the due date.

You would be charged interest on cash withdrawals from the date they are recorded, but it's still probably the cheapest way of getting cash if you can pay it off within a few weeks.

eDicky

shadrach wrote: »

I don't expect to use the card much at all - I just want to have it for emergencies and those circumstances where I can't use a debit card

Do you have a debit card that is preferable to the Clarity and Everyday Plus for overseas use? Why would you not be using those most of the time, with the debit card as backup?

shadrach

I'm just not in the habit of using credit cards and have always defaulted to debit cards. Perhaps always been slightly wary of credit cards and have never trusted myself to read all the small print and not accidentally find myself paying monthly charges unnecessarily. I only own the one credit card - it's a company card and you could count on one hand the number of times I've used it. For all intents and purposes I've never owned a credit card.

Which is why I don't quite understand how the interest rates work. i.e. The average rate on card purchases on the MBNA Everyday Plus card is 7.4%. It has no 0% period for purchases. Does that mean I pay 7.4% on any and all purchases I make, or is this only if I forget to settle the balance on the card at the end of the month?

eDicky

shadrach wrote: »

Which is why I don't quite understand how the interest rates work. i.e. The average rate on card purchases on the MBNA Everyday Plus card is 7.4%. It has no 0% period for purchases. Does that mean I pay 7.4% on any and all purchases I make, or is this only if I forget to settle the balance on the card at the end of the month?

Ok, you say you don't need to borrow on these cards, so you can disregard the "0% period for purchases and balance transfers" that they don't have. Instead, they are ideal for travel because they charge no fees for overseas use and give you the straight MasterCard and Amex exchange rates with no loading. I doubt that your debit card gives anything like such good value.

Don't worry, you will pay no interest on purchases as long as the balance is paid by the due date, and the daily interest that accrues from cash withdrawals is relatively minimal. You can pay it off by online banking any time you have a secure connection, and set up a direct debit to automatically pay anything outstanding in good time before the due date, so you are safe.

pjala

This relates to the Halifax Clarity card :-
You pay on credit for everything, and you draw cash on credit as well if you draw cash from a cash machine abroad (just make sure you draw as local currency, not sterling equivalent).
When you pay for stuff abroad in a shop using the card, at the end of the month the payment appears on your statement, in the spot rate on the day you bought it. (The spot rate is the absolutely best rate you could ever get). When you get your statement, you have a month to then pay the statement off. This in effect gives you nearly two months interest free credit on your purchase.
Alternatively you may take out cash abroad. When you take out cash using your card, again take it out as local currency not sterling equivalent, then you again take it out at the spot rate at that time. But this time you pay interest on the cash taken from that day. The interest is at 12.9% per annum, and this works out at just over 1% per month. So if you take out 200 Euros, that would be about £160. If you waited until you had to pay off through your statement, this cash amount would incur an interest of about £3.20 absolute maximum. Of course if you pay off your cash earlier, it would be 3.20 divided by 60 (ish) per day. So if you pay off your £160 as soon as you get back from your 2 week hol. it would cost you about 70p in interest. This is far better than the normal cost of withdrawing money from other cards.
Finally, if you spend £300 or over on clarity, you get a "reward" of £5 per month - this for me compensates for any interest paid on the card. Winner!

Biggles

pjala wrote: »

Finally, if you spend £300 or over on clarity, you get a "reward" of £5 per month - this for me compensates for any interest paid on the card.

IF you have a qualifying Halifax current account.

shadrach

Thanks all, that helps explain things.

I did an eligibility check on the MBNA website for the Everyday Plus card and was rejected. Hopefully I will have more luck with the Halifax Clarity card.

I know this probably merits a separate thread, but what would be the obvious reasons for being rejected? Not having much of a credit rating by virtue of not having used a personal credit card in the past and not having borrowed (excluding student loan)?

My income is reasonable, 24k, and I have savings. The only other aspect that I was wary about when applying was my residential status. My parents own but don't actually live at the property and I pay a rent so I wasn't sure whether to put tenant or resident with parents - I put the latter. And then there's my age - are applicants in their mid-20s just rejected for many cards as a matter of course?

System

Assuming this is your first credit card, then you should apply for one issued by your own bank (where your income goes into) or someone like Aqua as they are happy with people with limited credit history.

Savings aren't really of any relevance when applying for credit cards.

CLAPTON

shadrach wrote: »

Thanks all, that helps explain things.

I did an eligibility check on the MBNA website for the Everyday Plus card and was rejected. Hopefully I will have more luck with the Halifax Clarity card.

I know this probably merits a separate thread, but what would be the obvious reasons for being rejected? Not having much of a credit rating by virtue of not having used a personal credit card in the past and not having borrowed (excluding student loan)?

My income is reasonable, 24k, and I have savings. The only other aspect that I was wary about when applying was my residential status. My parents own but don't actually live at the property and I pay a rent so I wasn't sure whether to put tenant or resident with parents - I put the latter. And then there's my age - are applicants in their mid-20s just rejected for many cards as a matter of course?

get any credit card you can that doesn't charge a fee
use it regularly for things you buy anyway (supermarket, petrol or whatever) and pay in full every month (preferrably set up a direcct debit so you never forget)

this will show on your credit reports as a good payers and will help build you a good credit history

this will be useful when you want a good credit card like Clarity or a cash back card which usually require a proven good credit history
and of course will be very helpful when you want a mortgage

billycoi

Me toooo thanks alll