Money alert: New Halifax interest rate increase

Halifax has raised the interest rate by almost half, increasing the charge from a 12.9 per cent to 18.9 per cent

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The Halifax Clarity credit card is a good way to pay abroad as it has no hidden currency loading fees or transaction charges. We’ve consistently recommended it for holidaymakers.

But at a stroke, the bank has made it much less attractive. How? It has raised the interest rate by almost half, increasing the charge from a competitive 12.9 per cent to a, frankly, relatively high 18.9 per cent.

Why? “The reduction in revenue from interchange fees has already seen credit card rewards being slashed or withdrawn by some providers and I’m sure this is part of the reason that we’ve seen this massive increase in pricing from Halifax,” reckons Andrew Hagger, of Moneycomms.co.uk.

He points out that if you had a balance of £2,000, existing Clarity customers – who keep the low 12.9 per cent rate – would be charged £21.91 in interest in a month.

New customers paying the higher rate will be charged £32.10. It means that if you can’t afford to pay off the balance, it may be better getting a lower-charging card, despite the benefits when spending overseas.