4

I am planning to use Halifax clarity credit card abroad when I travel to Europe. The credit card offers good rates while using abroad with no transaction charge or non sterling transaction charge (only interest charges apply). If I use my debit card abroad there are host of charges which come into the picture.

My question is can I make payments into my credit card from my debit card bank account without even using it and then use that money for credit card transactions? This means if my credit card balance is nil (not used even once for any transaction) and I pay suppose £500 from by bank account into credit card - can I use the paid amount through my credit card transactions in the future?

My assumption here is that I won't pay interest charges unless I start using my actual credit card limit. Am I right in understanding this or am I missing something?

2

I'm in the US, and I can't speak for all credit cards, but I have done this in the past. I've paid extra on my credit card, and had a positive balance on my credit card account. The purchases made after paying extra were applied to the balance, and if there was money left over on the statement closing date, I didn't owe anything that month.

Of course, I didn't incur any interest charges, but I never pay interest anyway, as I always pay my statement in full each month and never take a cash advance on my credit card.

You could call your credit card company and ask them what will happen, or if you are feeling adventurous, you could just send them some extra money and see what happens. Most likely, they will just apply it to your account and give you a positive balance.

1

You don't pay any interest until a few weeks after you receive your statement, when the payment is due. Simply set up a direct debit with Halifax for the statement balance and they will take the correct amount (whatever you spent that month) from your bank account on the payment due date. Problem solved!

-2

Unfortunately not. Even if the credit card balance is positive (i.e. customer has overpaid the credit card account), you cannot withdraw cash (for free) - as any cash withdrawal is subject to 12.9% interest - even if repaid in full at the end of the month!

The clarity credit card is one of the best cards for overseas spending, as its load free (no fees for purchases abroad) and it gives near perfect exchange rates. If your balance is positive, you start at £0, then fund that credit card account from your bank account £500. You can then spend on your credit card, and when your next bill is due at the end of the month - they will use that extra £500 sitting in your account first, and ask for the remainder from you.

i.e.

scenario1:

  • £500 extra put into clarity account.
  • spend £480 on holiday on clarity card.
  • Halifax will owe you £20 at the end of the month.

scenario 2:

  • £500 extra put into clarity account.
  • spend £520 on holiday on clarity card.
  • Halifax will send you a bill for £20 at the end of the month.

It is better in my opinion, to set up a direct debit to always clear out the full amount on your credit card. That way, you have cash in your bank account for emergencies (getting £500 back from a credit card will take a few days to process as opposed to having the ability to withdraw cash from the cashpoint 24/7). And once the direct debit is paid automatically at the end of the month, there are no fees - voila your credit card is almost like a debit card, spend on it when you like, it gets paid automatically, no hassle, no worries. This approach does take a careful mindset though, as you need to know your credit limits and also you need to ensure your bank account has enough to pay off the direct debit at the end of the month. Otherwise those darn fees will get you (and hurt your credit rating).

For cash spending, you will want to either take cash with you (check online here for best rates & get the money well in advance to avoid fees). Also in some countries the exchange rate is better there, than in the UK, google will help you here.

If you dont like the idea of carrying large sums of cash with you can use a prepaid card like CaxtonFX, which is one of the better ones out there. The other well known ones are FairFX and Travelex Cash Passport.

  • thanks for your answer. What about purchase transactions - do they fall in same category as cash? – vicks1 Jul 4 '14 at 16:47
  • 1
    Op is not asking to withdraw cash from the Credit Card, only to overfund it. – JoeTaxpayer Jul 4 '14 at 16:48
  • @JoeTaxpayer edited answer, hope it helps – Husman Jul 4 '14 at 16:57
  • @vicks1 no a credit card transaction is not the same as a cash withdrawal (as a small fee is paid by the shop/venue you use your credit card at - hence the customer can use it fee free). But check my updated answer above, it should answer your original question now. – Husman Jul 4 '14 at 16:58

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.