Halifax to ditch monthly £5 Clarity card reward
Halifax Clarity card customers will soon no longer be able to earn £5 a month in rewards, as the bank is scrapping the scheme following changes to so-called industry “interchange fees”.
Currently, customers with the credit card who switch to a Halifax current account, which they deposit £1,000 or more into each month, or who open or hold a Halifax Ultimate Reward Current Account can get a £5 monthly reward if they also spend at least £300 a month on their Clarity card, stay within their credit limit and make the minimum monthly payment by the due date.
But the bank is scrapping this offer, which it says about 150,000 (15% of) Clarity card customers regularly use. This will take place in “phases” according to when the card was opened. Affected customers will be written to by the end of January 2017 and told the dates that the change takes place for them.
In a letter from the bank seen by Moneywise, one customer was told their rewards would stop from 30 September 2016.
If you’re not a Clarity card customer at present, you’ve got until 9 August 2016 to apply online and still benefit from the £5 a month for the time being. The £5 monthly reward is no longer available to people who apply by telephone or in branch.
All other features of the card - including no foreign exchange fees worldwide and fee-free worldwide ATM withdrawals (interest is charged from withdrawal even if you repay in full in time) - will remain.
The move also doesn’t affect the £5 monthly bonus Halifax’s Reward current account customers get providing they stay in the black.
Is the card still worth it?
If you only use the credit card to get the £5 per month reward, you may want to consider ditching the card for a different cashback or rewards offering.
Asda, John Lewis, Sainsbury’s Bank, and Tesco Bank all have credit card reward schemes where you earn points or cashback on spending in their shops, while American Express pays 1.25% cashback on all purchases.
- See our weekly updated Best credit cards for rewards and cashback.
However, the Halifax Clarity card is still a strong option and worth keeping for overseas use due to its lack of foreign exchange and cash withdrawal fees.
Why is Halifax scrapping the reward?
Halifax says in a letter to customers seen by Moneywise that it’s scrapping the perk due to new “interchange” rules introduced by the EU on 9 December 2015, which sees the amount credit card companies can charge retailers to process transactions capped.
It’s the latest in a long line of credit card providers including Capital One, NatWest and Tesco Bank, to axe perks following changes to these fees.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.