Which Halifax credit card would suit me better, 0% APR or €100 free?

Hey guys, I am thinking of applying for a Halifax credit card but I don't know which would suit me best. [broken link removed]

Normally, I'd select the option with the €100 free after first purchase because I use my card a lot but always pay it back in full each month so 0% APR for six months would be pointless.

But I am going on a month long trip around Asia shortly. I'll probably put at least €2,500 on the credit card in my time away. Now I could easily afford to clear the balance as soon as I get home but I think I'd prefer to chip away at it interest free for five months by paying back about €500 each month.

Do you think the 0% APR for 6 months option would suit me best, or would I be best off paying the credit balance of €2,500 as soon as I get back from my holidays and take the €100 free cash?

Thanks

Option 1 (free €100)
- €2,500 * 6 / 12 * 10.9% = - €136.25 interest
+ €100 free
Net: - €36.25

Option 2 (0% APR)
- €2,500 * 6 / 12 * 0% = €0 interest
Net: €0

Just one word of warning... You cannot view your Halifax CC statement online. You have to ring them to find out if transactions have gone through or wait for your statement. I changed back to my original CC provider because of this as I had to pay for the price of the call everytime and was often put on hold for ages.

VanHeusen said:

Option 1 (free €100)
- €2,500 * 6 / 12 * 10.9% = - €136.25 interest
+ €100 free
Net: - €36.25

Click to expand...

Not such a clear cut decision when you factor in that the OP has the means to clear to loan. Technically, they would be losing the earning power of the €2.5k (@ ~5%) available in Option 2 and not paying the interest on the €2.5k (@ ~10%).

So, by taking the free €100 they miss out on ~€62.50 (gross of DIRT assuming 5%) worth of interest on the €2,500. Giving the result that Option 1 will leave them better off by (€100 - €62.50 =) +€37.50.

The figure (the difference between the two options) changes if you use Option 2 to drip feed the money into the account (e.g. the assumptions above assume the full €2,500 is on deposit for the full 6 months, if the money is drip fed the difference increases).

As the maximum figure you can profit by in this situation is €100, I'd suggest going with whatever option gives you the most flexibility. It's all good and well trying to max the profit in every transaction, but having flexibility of choice to what is most convienient can sometimes outweigh the financial benefits.

brokeagain said:

Just one word of warning... You cannot view your Halifax CC statement online. You have to ring them to find out if transactions have gone through or wait for your statement. I changed back to my original CC provider because of this as I had to pay for the price of the call everytime and was often put on hold for ages.

Click to expand...

Emm, that's interesting and not good.

"At Halifax we provide an online banking service for the Halifax current account. Once customers are registered, they can view the balance of all of their Halifax accounts. At present, we do not offer a full online banking facility for our credit card customers.Therefore, unfortunately at the moment, customers are unable to view their credit card transactions or balances online. We do intend to have the full online banking service in the future, however, I am unable to provide you with a definite date as to when this service will be available. Our online banking division are passionate that we meet our customer needs and this will help ensure this development receives the priority it deserves."

They also do not offer online access to savings accounts if you do not have a current account. Online access is pretty important to a lot of people these days, its strange that they do not have this kind of thing in place fully for all who want it, perhaps there is security benefits to keeping the online access numbers as low as possible.

Its a pity though as I'd switch in a heartbeat if they provided full online access.

If you plan to use your credit card after your trip its worth noting how your monthly payments are allocated... I think you might find 0% doesn't quite mean 0%



From the halifax website:

2.4 We use all payments you make to pay off your balance in the following order:
(a) Transactions that appear on your statement, starting with those on which we do not charge interest (for example, any Government stamp duty), then those on which we charge interest at the lowest rate and so on up to the highest rate of interest;
(b) Transactions not yet shown on your statement in the same order as above. In this condition, “Transaction” includes the amount of the Purchase, Cash Advance or Balance Transfer plus any interest, fees or insurance payment charged as a result of that transaction. For example, a Cash Advance fee is included as part of a cash transaction. If a payment is not enough to pay all Transactions charged at a particular rate of interest, we will use the payment firstly to pay off any applicable Government taxes or charges (including stamp duty), the interest, then any fees, insurance and finally the amount of the Purchase, Cash Advance or Balance Transfer within that interest rate band.



So I interpret this as the following: you have an outstanding balance of €2,500 and new transactions of (for example €400). You pay €500 each month. This reduces your 0% balance to €2,000 but you still have to pay interest on the €400 new business. This will happen every month i.e., 0% part gets smaller but the the amount you are paying interest on increases.



In other words if you plan to use the credit card at all over the 6 months you will end up being charged interest until your balance is reduced to 0.