Avoiding interest when using the Halifax Clarity Credit Card

Rich0200 · 18 June 2018 at 3:14PM

Hi all,

So on the basis of MSE advice I have applied and been accepted for the Halifax Clarity card, which I intend to use to support my foreign travel. My plan is to access my online banking and immediately pay off any purchase spending so to avoid the daily interest rate (18%). However, I was thinking that the alternative would be to overpay into the card before I go (say for example £500) and go into negative balance, that way avoiding the daily interest fee. If I have money left, it's then a straight cash withdrawal back in the UK, but if I need more I can 'overpay' some more into the card when I'm away. I understand banks will refund any negative balance but probably not for a couple of months, by which time I'll be home.

Is this a good idea? Will it work?

Thanks

[Deleted User] · 18 June 2018 at 3:17PM

Don't overpay, It's not worth the risk of the account being blocked, however small.

Just pay it as you go, or take the hit on the couple of pence interest and pay when you get back.

Carrot007 · 18 June 2018 at 3:24PM

Deleted_User wrote: »

Don't overpay, It's not worth the risk of the account being blocked, however small.

Just pay it as you go, or take the hit on the couple of pence interest and pay when you get back.

This!

It's against the terms and conditions and you will at best get the account closed. And at worst who knows.

clt666 · 18 June 2018 at 3:25PM

I have done exactly the same thing and since we are paying our hotel bills, petrol, entertainment and meals as we go the $ amounts will be substantial and a mix of card purchases and cash withdrawals on the card. There should be no charges for purchases if paid in full by statement date, but there will be interest on the cash withdrawals. According to MSE this interest can be minimized if the cash withdrawals are paid off by bank transfer in full as soon as they clear on my statement (e.g. next day). But how does the Halifax know that the bank transfer I make is to be applied against my cash withdrawal rather than an earlier credit purchase?

cajef · 18 June 2018 at 3:25PM

Suggest you read the Terms & conditions, namely this B.7.3 Payment Amount:-

You must not pay us more than you owe when you make payments to your account, or transfer funds from another credit or store card if this creates a credit balance on your account. If there is a credit balance on your account at any time, we may apply it to any recent transactions not yet shown on your account, or to transactions made after the date your account goes into credit. We may also return any credit balance to the account from which the money has been sent or pay the funds into a deposit account you hold with us. We do not pay interest on any credit balances or take them into account for the purpose of any reward schemes.

[Deleted User] · 18 June 2018 at 3:30PM

clt666 wrote: »

But how does the Halifax know that the bank transfer I make is to be applied against my cash withdrawal rather than an earlier credit purchase?

They'll apply it as per the allocation of payments hierarchy, so you need to understand that and whether your earlier transactions have statemented.

eskbanker · 18 June 2018 at 3:42PM

Carrot007 wrote: »

It's against the terms and conditions and you will at best get the account closed. And at worst who knows.

Yes, as above it's against the Ts & Cs, but based on other posters' (claimed) experiences as relayed on similar threads on here, at best you'll get away with it and at worst you'll get the account closed, and somewhere in between, the offending credit will be returned.

But why take the chance when travelling out of the country?

etienneg · 18 June 2018 at 4:15PM

A better approach would be to obtain a second travel credit card. Then use one for purchases (that can be paid in full by direct debit following the statement) and the other for cash withdrawals. It's then easy to see online when each cash withdrawal is posted (not pending!) and exactly the converted amount can be paid, without any complication about whether purchases or cash advance is being paid. The secondary advantage is that, should either card be blocked, you have a back-up.

Rich0200 · 18 June 2018 at 9:25PM

Thanks all. I'll just pay things off as I go. Your advice is much appreciated.

clt666 · 19 June 2018 at 6:39PM

Good point about checking T&C here they are - cash withdrawals get paid off before purchases

B7.4 How we apply your payments

We use your payments to clear any overdue amounts before we apply them to your latest minimum payment.

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.
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, balance transfers and money transfers, 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.

redux · 19 June 2018 at 6:59PM

clt666 wrote: »

Good point about checking T&C here they are - cash withdrawals get paid off before purchases

B7.4 How we apply your payments

We use your payments to clear any overdue amounts before we apply them to your latest minimum payment.

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.
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, balance transfers and money transfers, 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.

Whilst what you say is correct, that also confirms comments in some posts above that payment goes to items that have already appeared on a statement before the most recent.

Thus someone who wants to completely minimise interest after a cash withdrawal needs to pay an amount equal to the last statement balance plus the cash advance, not just the cash advance itself.

I don't know why there is so much debate about this. It's reasonably easy to get by with very little or no cash at all, pay almost everything by card.

Avoiding interest when using the Halifax Clarity Credit Card

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