Halifax Clarity Card 'interest'

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  • [Deleted User]
    [Deleted User] Posts: 35,242
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    The payment was allocated properly. It was put to the highest statemented balance.

    Remember to wait until the transaction has posted on your statement next time.
  • OceanSound
    OceanSound Posts: 1,482
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    Vortigern wrote: »
    Yes, Payments are allocated first to the statemented balance.

    So, to avoid interest you have to pay off the whole of the previous statement balance, plus the amount of the cash withdrawal.

    Also, don't attempt to pay off the cash before the transaction appears online, otherwise your payment could go to recent purchases rather than the cash withdrawal that Halifax haven't seen yet.

    Make another payment of £146.68 now, to avoid further interest.

    I had a statement balance of £10 for March. Even if that was paid off first, the balance from my payments £146.50 (£156.50 - £10.00) should be allocated to cash transaction, no?
  • chattychappy
    chattychappy Posts: 7,302 Forumite
    edited 17 May 2018 at 9:03AM
    OceanSound wrote: »
    I had a statement balance of £10 for March. Even if that was paid off first, the balance from my payments £146.50 (£156.50 - £10.00) should be allocated to cash transaction, no?

    But what was your unstatemented balance at the moment you sent payment? Were there unstatemented purchases?

    Really a transaction goes through 3 stages (my choice of words):
    1) Authorised/pending. Reduces your available balance immediately. You won't normally see them online, though you might do if you choose to view pending transactions. Sometimes pending transactions never go through (eg in the case of hotel deposits) and eventually disappear.
    2) Posted. Might take a day or so in the case of ATM transactions. This is when you first see the transaction on the account.
    3) Statemented.

    I'm wondering if those April purchases were posted on the account, albeit unstatemented when you sent the payment. Because the ATM withdrawals were still pending and not yet posted, your payment hit the purchases first. (You worked out the amount from the available balance which would indeed have reduced because of the pending ATM activity.)

    I've used Clarity for a few years and haven't had the problem you've had. I might sometimes pay off an ATM withdrawal the moment I've made it (without waiting for it to appear on the account), but not when there are purchases on the account.

    Two ways to avoid the problem:
    1) wait for the ATM transaction to post (not merely appear as pending or reducing your available balance); or
    2) after an ATM withdrawal, send payment to cover all outstanding transactions, including purchases (ie the difference between your credit limit and your available balance)*.

    *some might argue that technically you are putting the account into credit (I disagree) and of course the actual amount posted can vary slightly. But bear in mind that even if more is eventually posted, interest on this would be tiny. Eg if £2 more is billed, interest would be less than 3p in a month.

    I always pay off the entire balance (inc purchases) asap after an ATM transaction whether or not it has posted. But I don't panic if I can't do this for a few days.
  • Vortigern
    Vortigern Posts: 3,242
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    OceanSound wrote: »
    I had a statement balance of £10 for March. Even if that was paid off first, the balance from my payments £146.50 (£156.50 - £10.00) should be allocated to cash transaction, no?
    Your payment goes first to the £10 from the March statement, then to current month transactions that are visible online.

    If there were both purchase and cash transaction visible online, then the hierarchy of higher interest first would be applied. Your cash transaction was not visible online at the time you made the payment.

    Lesson learned, didn't cost much. You'll know next time.
  • OceanSound
    OceanSound Posts: 1,482
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    Vortigern wrote: »
    .....Lesson learned, didn't cost much. You'll know next time.

    I'd rather have learnt the lesson beforehand though!. Did read a lot of the posts on the clarity card on here, like this one:
    Pay online when the cash withdrawal entry hits your account.
    I took 'hits your account' to mean when it appears on pending transactions.
    So checked account online, paid it straightaway. One time (with another credit card which had a higher % interest) I forgot and got stung with much higher interest. So, figured. OK, lesson learnt, from now I pay the cash pull amount straightway, and then this happens.
    If there were both purchase and cash transaction visible online, then the hierarchy of higher interest first would be applied.
    Please see screenprint attached and explanation in post #10
    Purchases and cash transactions both have the same interest rate:
    18.95% for both cash transactions and purchases
  • OceanSound
    OceanSound Posts: 1,482
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    ....You won't normally see them online, though you might do if you choose to view pending transactions...
    I always view pending transactions especially after a cash pull and take screenprint. This time was no exception. See below:

    halifax-pending-trans-200418-redacted.png
    Two ways to avoid the problem:
    1) wait for the ATM transaction to post (not merely appear as pending or reducing your available balance); or
    2) after an ATM withdrawal, send payment to cover all outstanding transactions, including purchases (ie the difference between your credit limit and your available balance)*.
    I think I would definitely have avoided the interest if I had done (2). i.e. paid off ATM withdrawal amount + send payment to cover all purchases. Then after the cash transaction is posted, there would just be the difference between ATM pull posted amount and pending transaction amount ( £156.50 - £154.14 = £2.36) to pay after a few days. When I say 'pay' I mean for this specific instance. However, I imagine it could end up as a credit if the exchange rate goes up (pound becomes stronger).

    About (1): I don't know if waiting for transaction to post would have solved it on this occasion. See:
    halifax_-_clarity_statement_-_transa_-_May_2018-redact.png
    I had £10 balance from previous month. A £20 transaction on 18 April, then two purchases for £85 and £30 on the same date as the cash pull. They were all posted (entered) on the same date 23 April 2018. Surely, my payments of £154.14 and £2.36 should have gone towards:

    1) Overdue balance from previous month (£10.00)
    2) other transactions posted in the order:
    a) cash transactions
    b) purchases
    c) balance transfers and money transfers
    d) default charges (plus any interest or charges incurred as a result of those balances).

    It's not really clear if the payment allocation happens immediately upon payment or when the statement is produced. If immediately, £10 of my £154.14 payment would have gone towards clearing last months balance, then the remainder of £144.14 should have gone towards clearing my cash transaction. This hasn't happened, only £9.82 from my payments of £156.50 has been allocated towards the cash transaction (see: screenprint on post#10)
  • OceanSound
    OceanSound Posts: 1,482
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    edited 17 May 2018 at 4:16PM
    Guys,

    You've gone awfully quiet after my last post (You're usually a very vocal lot).

    Apparently, in the old days Credit card companies used to apply repayments to the cheapest debt first. e.g. the debt with the lowest interest rate.

    But that changed in January 2011. See: http://www.theukcardsassociation.org.uk/wm_documents/Good%20news%20for%20credit%20card.pdf

    The same changes happened across the pond (in USA) as well:
    https://www.creditcards.com/credit-card-news/law-bans-credit-card-payment-allocation-trickery-1282.php
    A federal credit card reform law enacted in May 2009 requires that credit card companies must apply your entire payment, minus the required minimum payment amount, to the highest interest rate balance on your card. That requirement takes effect Feb. 22, 2010.
    Yet, as you can see above in post#10 my repayments have been allocated to the purchases (that doesn't attract any interest). Suffice to say Something is rotten in Denmark.
  • eskbanker
    eskbanker Posts: 30,398
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    If you carried a balance forward from your previous statement then you'd presumably have an interest charge applied to the current statement, but I don't see this on your extracts. Is it possible that some of the £1.68 relates to trailing interest, even though it seems to be attributed to cash?
  • Dobbibill
    Dobbibill Posts: 4,133
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    Hi OceanSound,

    I've tried to put the theory below in a simple term but sometimes writing it down is alot harder than explaining it in a conversation.

    The payment made would be to cover £10 outstanding (this will have been incurring interest as you didn't pay it off in full - this won't be seen yet as it's posted to the following statement). The £20 transaction which had statemented and the remainder would go off the interest accuring in the background to prevent it acurring any longer. (again you won't see this until your following statement but the interest on the £10 & £20 transactions will only be a few days rather than a full statement month).

    The remaining payment should come off the cash transaction. That wasn't enough after taking the above into consideration to completely stop all interest - thus the calculation on interest above would be calculated daily/billed monthly.

    Hope this makes sense.
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  • You've actually posted exactly why the interest has been added - neither the cash transaction nor the purchases had fully posted to the account when you made the manual payment, so it didn't have any debit balance to allocate to.

    The payment went on immediately on the 20th April, but the cash and purchase transactions didn't fully post until 23rd April. This is the point at which you should make the payment to clear the interest-accruing cash balance (plus you'd know exactly how much it was too).

    I'd never try and pay off a pending transaction, even if I personally know it's going through, because the bank(s) don't, and that's why they can't allocate payments to it. Essentially you put your card into credit by £124.14, so when the cash and purchase transactions end up debiting, they likely just debit in processing order (which could well be different from the order in which you actually made them). You'd also probably have a very hard time convincing Halifax to change their systems to debit payments in "highest interest first" order too, since deliberately leaving a credit balance on the account is almost certainly a breach of the T&Cs.
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