We got an annual statement through the post from Halifax the other day which detailed our expenditure, interest charges and reward payments over the course of the year and I thought it would be interesting to see how much we had saved compared to the most popular method of spending abroad, the Caxton Pre-Paid Card.
After going through the figures, we reckon that...
After going through the figures, we reckon that...
We saved in the region of £221 by using the Halifax Clarity Card over the Caxton Card!
More on exactly how we came to that figure in a moment. Firstly, lets understand the main differences between the two cards. It's worth noted that we have all the cards mentioned in the article (Halifax Clarity, Caxton Euro, Caxton Global) so we understand and have used them. We've not included others which may be on the market, but there are others. Best check over on Martin Lewis's website (link at the end).
The Caxton Card
Caxton is a pre-paid card and as such you need to load money on the card by phone, internet or text message using a bank account linked to the card. Depending on where in Europe you are travelling you are likely to have both a Caxton Europe and a Caxton Global card (or at least you should, since the Europe card is even more expensive outside of the Euro Zone!)
With the Caxton Euro Card the balance is held on the account in Euros and you load onto the card from sterling at a pre-agreed rate with Caxton, which is usually around 2% lower then the prevailing rate on the day. The card is designed for Euro travel but if you were to travel outside of the Euro zone you would pay a 2% fee to covert £ Sterling into €uro and then a further 2.75% to convert your Euro into Danish Krone, for example, making it very expensive to be used in this way.
Caxton Global Traveller
If you were to go outside of the Euro Zone then Caxton recommend the Global Traveller card whereby the balance is held in £ Sterling. This is then translated into Euros at the point of purchase at the prevailing rate plus 2.75% fee. However you end up having to manage two different account balances.
- No credit check required to obtain.
- If you're likely to run away with your spending, it prevents you from spending any more than balance you have loaded on the card.
- You can load at a pre-agreed rate so you know exactly what conversion rate you are getting. You might be able to load before the rate drops and be able to effectively spend at the old rate.
- If the conversion rate improves in your favour, you won't benefit until you re-load currency.
- If you use your Caxton Card in the UK it will cost you up to £1.50 per transaction.
- If you use an Automated fuel pump your account may be pre-authorised for upto €150 which will be held until the actual amount is processed reducing your available funds. Could be 3-5 working days.
- Minimum load amount of £100/€150/$200
- No protection under the Consumer Credit Act (CCA), since Caxton is not "lending" you money.
- Due to the nature of pre-paid cards if Caxton was to go bankrupt you could not reclaim your outstanding credit balance from anywhere.
The Halifax Clarity Card
The Halifax Clarity Card is a traditional credit card geared up to spending abroad. They give you the actual prevailing interest rate on the day (verified by us) and transactions are free. You do pay interest on cash withdrawals but this is likely to be very tiny and is offset by a £5 reward payment if you spend over £300 in a month.
- Halifax give you the ACTUAL exchange rate on the day, not a loaded rate to take into account a transaction fee. They make their money hoping you will overspend on holiday and have to repay it over several months when you get home. We tested this by always recording our daily purchases on our log using the days rate, they were always the same OR BETTER than we recorded using XE.com's rates!
- You pay NO INTEREST on purchases using the card if you setup a direct debt to clear the balance in full every month. Simply use the card rather than cash wherever it is accepted.
- You have 2 weeks from your statement being available to view online to the direct debit coming out, so plenty of time to check and review all your transactions.
- You get upto 59 days interest free from the first day of your statement until the due dates (assuming you clear the balance in full).
- If you spend over £300/month and are a current account holder you will receive a £5 reward credit payment onto your account each month (tax free).
- You are fully protected and insured under the Consumer Credit Agreement
- You pay interest (12.9% - 19.9% depending rate given when you apply) on cash withdrawals, but there is no other fee. We withdrew £3,584.19 in cash and was charged a total of £64.82. However when you take into account the £60 reward payment this is only £4.82 and you could end up in credit depending on the amount of cash withdrawn and your interest rate.
- You will need a credit check in order to apply for a card and the actual rate offered will depend on your credit history.
- You get the best daily rate, with no opportunity to "load up" while the rate is good.
The below details our actual expenditure using the Halifax Clarity card and compares what the equivalent costs would had been using the Caxton card for the same amounts and the difference in conversion rate.
- Halifax - Our own logs of our expenditure, the days prevailing rate (checked on xe.com) resulted in a near identical if not in our favour exchange rate for currency.
- Caxton 2% - Rate checked today (3rd June) vs prevailing rate and found to be 2p in the £ below.
- Caxton 2.75% - Taken from http://www.caxtonfxcard.com/feesncharges.asp
- This table doesn't consider any benefit that could be had by pre-loading while the rate is good, but this is as much about luck as it is timing and we just wanted to enjoy our trip without rate watching!
It's important to note that not everyone spends in the region of £10,000 in Europe every year and therefore for lower amounts you have to decide for yourself if it's worth signing up for the Halifax Clarity if you are already a Caxton customer. However aside from the financial savings the increased insurances you get with a credit card and the interest free period if you was to pay using direct debit are worth considering.
In addition it's good practice to add an additional card holder for both Caxton and Halifax just in case a card gets misplaced or damage. It's free and simple to do for both. If you are already a Halifax card holder you having nothing to lose by keeping a Caxton Card stashed away for emergencies, as we do.
Martin Lewis - Travel Money