Halifax Clarity - pay before I spend???

chattychappy

skybluearmyontour wrote: »

Seems like I am punishing myself by paying DD

Yes, you are. In the case of cash withdrawals, it is worth paying them off manually as soon as convenient. In effect, DD "forces" a delay during which time you are paying interest.

For this reason (and others), I don't use DDs. If you keep your DD, be sure to understand how they interact with manual payments.

But as you can see from your statement, Clarity cash interest is hardly punitive. Hence I say "as soon as convenient" - no need to panic.

vacheron

I posted this recently in another thread:

I spent 12 days in Greece last month and used my Clarity card for payments and for withdrawing about 400-500 euros from cash machines .

I paid off the balance about 10 days in to the holiday and the second when I came home and all outstanding payments had settled down.

The total interest came to 42 pence. It would have been less had I paid the balance off every couple of days or so, but even I can live with 42p.

https://www.dropbox.com/s/db64a8amb3z4mfo/Capture.PNG?dl=0

It is useful to have the Direct Debit in place to ensure that any "leftover" balance is cleared automatically, or to take care of the full balanced if you're sure you haven't been using cash withdrawals.

KEM

I have a Halifax Clarity card that I use when abroad on holiday and am happy to pay the small amount of interest charged on cash withdrawals as the withdrawal itself doesn't cost me anything (as opposed to using a debit or other credit card).

Can someone clarify what happens in the following situation:

1/8/17 Cash withdrawn (in currency) £200
4/8/17 Other purchases £400
Statement dated 6/8/17 and DD for £600 + 60p interest to be taken on 31/8/17
10/8/17 Cash withdrawn (in currency) £150

On 13/8/17 I made a one-off payment for £360 (being the cash drawn plus a bit extra). Halifax say that they apply payments to the most expensive items first so will I avoid any further interest being charged after 13/8/17 or not?

anto164

If you check your statement, it will tell you to what they will apply the payment to first. Mine is something like cash, then purchases.

So you shouldn't receive any interest charge, unless you don't pay your full statement balance.

KEM

Thanks anto164 for replying.

I know they say that payments are allocated to the most expensive borrowing which is obviously the cash withdrawals. I'm confused because the cash has been withdrawn before and after the statement date. I'm not sure whether the £360 I've paid will be deducted from the £600.60 DD and so the second cash withdrawal will still be outstanding - if that makes sense.

KEM

Actually based on this that I've found posted on another thread it looks like I'll need to pay off the whole of the statement balance plus the cash withdrawn after the statement date to prevent further interest accruing

We will reduce the amount you owe in the following order:

• any overdue amounts from previous statements; then
• the remaining balance on your statement; then
• any recent transactions not yet shown on your statement.

anto164

Are you sure? I've just checked the 'allocation of payments' section of my clarity CCD statement, and it says the below;


We use your payments to pay off balances charged at the highest interest rate first and so on down to balances with the lowest interest rates. This means the more expensive balances are always paid off first.

If there is more than one type of balance at the same interest rate, they are paid off in the following order: cash transactions, purchases, balances transfers and money transfers (if available) and then default charges (plus any interest or charges incurred as a result of those balances). For each type of balance, your payments will pay off the oldest balance (and related fees, charges or insurance)first.

I read that as pay off the cash transaction first and asap, as that accrues interest daily, then pay the rest at statement date.

bigadaj

Yes, but statemented items will be paid before not yet statemented items, so paying additional money to a cash advance after a statement date will actually clear purchases from the last statement rather than the cash withdrawal as that hasn't been on a statement.

KEM

Thanks for taking the time to reply

anto164 - this was my interpretation but I had a nagging doubt as to whether it was correct, hence my question.

bigadaj - I think you are correct in that once an item is on a statement it gets paid off before items not on the statement even if the newer transactions are more expensive.

To make sure that I don't incur more interest than necessary I have now paid off the full statement balance plus enough to cover the more recent cash withdrawal.

chattychappy

bigadaj wrote: »

Yes, but statemented items will be paid before not yet statemented items, so paying additional money to a cash advance after a statement date will actually clear purchases from the last statement rather than the cash withdrawal as that hasn't been on a statement.

It's in the T+Cs at B7.4

https://www.halifax.co.uk/creditcards/help-guidance/terms-and-conditions/clarity-card/

Actually B7.4 is drafted poorly, IMHO. It seems contradictory. It states:

We use your payments to pay off balances charged at the highest interest rate first and so on down to balances with the lowest interest rates. This means the more expensive balances are always paid off first.

immediately after the bit where it says statemented balances are paid first (which means that the most expensive balances are NOT always paid off first.) Worse: the summary box repeats the claim that "more expensive balances are always paid off first" without the bit about statemented balances being paid first. A rather misleading summary! Santander's Zero includes this qualification in its summary box.