Halifax Clarity: Why take 2 months to take interest payment on a foreign withdrawal?

CliveOfIndia

NoodleDoodleMan said:

Using a credit card to withdraw cash at an ATM is not the best of choices.

I tend to agree with you these days, but in the past it was not so clear-cut.

It used to be the case that pretty much every debit card charged a fairly hefty fee for cash withdrawals abroad.  And at the time, the Halifax Clarity card was about the only one that didn't charge an FX fee on non-Sterling purchases, and it also didn't charge a fee for cash withdrawals.  So even if you ended up paying a little bit of interest on the cash withdrawal, it still worked out cheaper than using your debit card.

As you rightly point out, if you have access to a secure internet connection whilst abroad, you could mitigate the amount of interest charged by repaying the cash withdrawal as soon as it hits your account (which is not necessarily instantaneous).  But even if you waited until you got home and paid the full balance as usual, the interest is not a huge amount - unless you are withdrawing thousands of pounds-worth of currency.

It's a little different these days.  Clarity is no longer the only one that offers free FX conversions, and there are quite a few debit cards these days that don't charge a fee for cash withdrawals abroad.  And, as pointed out by NoodleDoodle, the Barclaycard Reward gives you the best of both worlds.

As a slight aside, it's always worth remembering that the owner of the ATM might impose their own fee - this is not something your card issuer has any control over.

pochisoldi

Interest on Cash advances is payable from the date of withdrawal until the date that the cash advance is repaid.
So a withdrawal in Month 1, will show interest on the next statement (Month 2).

The simple answer that requires nothing more than having a statement in front of you is to make a repayment of all cash advances+interest shown on the statement as soon as you receive your statement. This will stop the clock on the interest, and then leave you to repay the remaining purchases on the due date. (If you have a full balance direct debit - it may be still taken in full unless it would put the account into credit). 

Based on my own experience and practice:

The alternative version, which requires access to the Halifax app/online banking is to:
- watch for the cash advance clearing (i.e. showing as an actual transaction not a pending one)
- If you haven't cleared last month's statement balance, repay the statement balance+cash advance
- If you have cleared last month's balance, then just repay the cash advance.

This makes use of the way that repayments are allocated on the card:
1. Last month's statement balance
2. Any cleared cash advances (because they carry a higher interest rate than purchases)
3. Any cleared purchases
4. Any uncleared items

You don't repay anything until the cash advance clears, as that would clear interest free items first
You have to pay off last month's balance first, so you can then start paying off the cash advance

Note that any direct debit would still be taken (and possibly would only be reduced if it would leave the account in credit) - that's why I have a fixed amount direct debit for £10 (to cover a ~£8 monthly subscription) which only pulls the lower of the statement balance or £10.

Example:

Statement issued on 2nd July for £100, payment due 29th
16th July: Purchase £200 - shows on account on the 17th
18th July: Cash withdrawal £50 - shows on the account on the 19th
19th-22th July: Purchases amounting to £500
23rd July: Cash withdrawal £50 - shows on the account on the 24th

To minimise interest payable, you would first repay £150 on the 19th, and then £50 on the 24th.
This would then leave £700 of purchases on the card (@ 0%) which then get cleared by the due date on the statement (or if I'm abroad and pulling out cash at an ATM after the statement goes out, whenever I need to payoff a cash advance)

This would leave you paying a few pennies in interest (which will show on the next statement, and once that statement is cleared, nothing else to pay)

PochiSoldi

zagfles

pochisoldi said:

Interest on Cash advances is payable from the date of withdrawal until the date that the cash advance is repaid.
So a withdrawal in Month 1, will show interest on the next statement (Month 2).

The simple answer that requires nothing more than having a statement in front of you is to make a repayment of all cash advances+interest shown on the statement as soon as you receive your statement. This will stop the clock on the interest, and then leave you to repay the remaining purchases on the due date. (If you have a full balance direct debit - it may be still taken in full unless it would put the account into credit). 

Based on my own experience and practice:

The alternative version, which requires access to the Halifax app/online banking is to:
- watch for the cash advance clearing (i.e. showing as an actual transaction not a pending one)
- If you haven't cleared last month's statement balance, repay the statement balance+cash advance
- If you have cleared last month's balance, then just repay the cash advance.

This makes use of the way that repayments are allocated on the card:
1. Last month's statement balance
2. Any cleared cash advances (because they carry a higher interest rate than purchases)
3. Any cleared purchases
4. Any uncleared items

You don't repay anything until the cash advance clears, as that would clear interest free items first
You have to pay off last month's balance first, so you can then start paying off the cash advance

Note that any direct debit would still be taken (and possibly would only be reduced if it would leave the account in credit) - that's why I have a fixed amount direct debit for £10 (to cover a ~£8 monthly subscription) which only pulls the lower of the statement balance or £10.

Example:

Statement issued on 2nd July for £100, payment due 29th
16th July: Purchase £200 - shows on account on the 17th
18th July: Cash withdrawal £50 - shows on the account on the 19th
19th-22th July: Purchases amounting to £500
23rd July: Cash withdrawal £50 - shows on the account on the 24th

To minimise interest payable, you would first repay £250 on the 19th, and then £50 on the 24th.
This would then leave £700 of purchases on the card (@ 0%) which then get cleared by the due date on the statement (or if I'm abroad and pulling out cash at an ATM after the statement goes out, whenever I need to payoff a cash advance)

This would leave you paying a few pennies in interest (which will show on the next statement, and once that statement is cleared, nothing else to pay)

PochiSoldi

Bolded bit should be £150, typo? 

pochisoldi

zagfles said:

pochisoldi said:

Interest on Cash advances is payable from the date of withdrawal until the date that the cash advance is repaid.
So a withdrawal in Month 1, will show interest on the next statement (Month 2).

The simple answer that requires nothing more than having a statement in front of you is to make a repayment of all cash advances+interest shown on the statement as soon as you receive your statement. This will stop the clock on the interest, and then leave you to repay the remaining purchases on the due date. (If you have a full balance direct debit - it may be still taken in full unless it would put the account into credit). 

Based on my own experience and practice:

The alternative version, which requires access to the Halifax app/online banking is to:
- watch for the cash advance clearing (i.e. showing as an actual transaction not a pending one)
- If you haven't cleared last month's statement balance, repay the statement balance+cash advance
- If you have cleared last month's balance, then just repay the cash advance.

This makes use of the way that repayments are allocated on the card:
1. Last month's statement balance
2. Any cleared cash advances (because they carry a higher interest rate than purchases)
3. Any cleared purchases
4. Any uncleared items

You don't repay anything until the cash advance clears, as that would clear interest free items first
You have to pay off last month's balance first, so you can then start paying off the cash advance

Note that any direct debit would still be taken (and possibly would only be reduced if it would leave the account in credit) - that's why I have a fixed amount direct debit for £10 (to cover a ~£8 monthly subscription) which only pulls the lower of the statement balance or £10.

Example:

Statement issued on 2nd July for £100, payment due 29th
16th July: Purchase £200 - shows on account on the 17th
18th July: Cash withdrawal £50 - shows on the account on the 19th
19th-22th July: Purchases amounting to £500
23rd July: Cash withdrawal £50 - shows on the account on the 24th

To minimise interest payable, you would first repay £250 on the 19th, and then £50 on the 24th.
This would then leave £700 of purchases on the card (@ 0%) which then get cleared by the due date on the statement (or if I'm abroad and pulling out cash at an ATM after the statement goes out, whenever I need to payoff a cash advance)

This would leave you paying a few pennies in interest (which will show on the next statement, and once that statement is cleared, nothing else to pay)

PochiSoldi

Bolded bit should be £150, typo? 

Well spotted, - post edited accordingly

BlueonBlue

Different credit cards have different order of payments .
In the "past" the claritys order of payments benefitted the customer

At one time the Clarity card was a unbeatable travel card but it has had changes to its terms and conds around 2017-2018.
It isnt as good a travel card as it used to be ..you can do better.

All banks eventually move the goal posts so they can catch you out on fees and charges although the clarity card was No1 for a very long time.
It even payed a fiver if you spent £300 at one time and interest on cash advances could be as low as 9.9%.

A example was I withdrew cash every week for two months away and it cost me about £1.50 as I payed the cash advances off asp.

Im not certain that the Clarity card allows you to stop the cash advance interest clock ticking anymore by paying cash advances from your current account ?
I dont believe it does .

Whatever you believe..... the endgame with the Clarity ultimately.....is its better to use a barclaycard travel card or another travel debit card as the Clarity just isnt as good as it was.

zagfles

BlueonBlue said:

Different credit cards have different order of payments .
In the "past" the claritys order of payments benefitted the customer

At one time the Clarity card was a unbeatable travel card but it has had changes to its terms and conds around 2017-2018.
It isnt as good a travel card as it used to be ..you can do better.

All banks eventually move the goal posts so they can catch you out on fees and charges although the clarity card was No1 for a very long time.
It even payed a fiver if you spent £300 at one time and interest on cash advances could be as low as 9.9%.

A example was I withdrew cash every week for two months away and it cost me about £1.50 as I payed the cash advances off asp.

Im not certain that the Clarity card allows you to stop the cash advance interest clock ticking anymore by paying cash advances from your current account ?
I dont believe it does .

Whatever you believe the endgame is with the Clarity its better to use a barclaycard travel card or another travel card as the Clarity just isnt as good as it was.

The Clarity's order of payments hasn't changed at all. The terms haven't changed at all, except IIRC something to do with how DDs are taken, and temporary cashback offers. But it never made any sense to have a DD on the Clarity if you used it for cash. It's described in detail in an earlier post. That's how it works, and it how it's always worked.  

What has changed is now there are newer cards which can be better like the BC rewards card which treats cash withdrawals like purchases, no interest if paid in full. But the Clarity itself is the same as it's always been. 

BlueonBlue

The Clarity at one time was unbeatable you could also preload it .
No one said the order of payments changed but the cash advance interest rates certainly increased from 9.9% the average was 12.9%

The Clarity cards terms changed around 2017 -2018

https://www.lemonfool.co.uk/viewtopic.php?f=24&t=12998

Bottom line is the clarity card isnt as good as it was .......its not a real bad card but you can do better.

In the OP,s case if they dont want to understand or cant understand the cards interest which is not uncommon with credit cards just try for the better  Barclaycard or one of the other better travel cards .
With Barclaycard you have a real person on the end of a ph if you ever need it .

eskbanker

BlueonBlue said:

The Clarity at one time was unbeatable you could also preload it .

Are you suggesting that the published Ts & Cs permitted that, or merely that some got away with breaching them?

zagfles

BlueonBlue said:

The Clarity at one time was unbeatable you could also preload it .
No one said the order of payments changed but the cash advance interest rates certainly increased from 9.9%

The Clarity cards terms changed around 2017 -2018

https://www.lemonfool.co.uk/viewtopic.php?f=24&t=12998

Bottom line is the clarity card isnt as good as it was .......its not a real bad card but you can do better.

In the OP,s case if they dont want to understand or cant understand the cards interest which is not uncommon just try for the better  Barclaycard or one of the other better travel cards .
With Barclaycard you have a real person on the end of a ph if you need it .

So why did you write "In the "past" the claritys order of payments benefitted the customer" then?

That linked thread is on about the DD policy. There was no point in having a DD on a Clarity used for cash, it just complicated things. I've had a Clarity for well over a decade and it's the only card I don't have a DD on. The change in the DD policy was totally irrelavent. 

Interest rates obviously fluctuate, and have gone up as have interest rates on everything compared to a few years ago. But the fundamentals of how the Clarity works haven't changed. Just that there better options now. 

zagfles

eskbanker said:

BlueonBlue said:

The Clarity at one time was unbeatable you could also preload it .

Are you suggesting that the published Ts & Cs permitted that, or merely that some got away with breaching them?

The T&Cs never permitted preloading.