credit card repayments by standing order?

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beeshwa99
beeshwa99 Posts: 1 Newbie
in Credit cards
Hi all,

I am new here so bare with me getting the lingo,

I have a credit card (vanquis) and never seem to be clearing any of the balance by paying the minimum payment.

I saw somewhere that if you pay by standing order instead of a direct debit it clears the balance quicker, can anyone here clarify this?

at the moment the max we can afford is the min payment so I need to find a way not to tread water and actually deal with it.

Thanks in advance

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  • Tixy
    Tixy Posts: 31,455 Forumite
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    It doesn't matter whether you pay by standing order or direct debit or faster payment.

    What matters is how much you pay off and when. Be very careful about just setting up a standing order, as the date your payment is due can vary from month to month and you could miss a payment.

    If you are not paying off in full each month then the sooner you pay the slightly less interest you will pay (as interest is calcualted daily). So ideally pay as much as you can as soon as the statement is generated.

    I'd also look very carefully through your finances as to how you can increase the payments somehow as even paying a few pound more a month will make a big difference to how long it will take to clear the debt.
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  • InsideInsurance
    InsideInsurance Posts: 22,460 Forumite
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    beeshwa99 wrote: »
    I saw somewhere that if you pay by standing order instead of a direct debit it clears the balance quicker, can anyone here clarify this?

    The only difference between DD and SO is if its a "pull" or "push" of money. With DD the credit card company calculates how much you need to pay and pulls that amount from your account. With an SO you decide how much you want to pay and push that from your account.

    If you make the same payment on the same date by SO and DD you will have identical balances.

    Most CC companies only have two options for DD which is either minimum payment or full balance. Some people want to pay off more than the minimum but cannot afford the full balance and so use a SO as the method to get something between the two. Only by overpaying do they clear the balance quicker.
  • redpete
    redpete Posts: 4,692 Forumite
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    The problem with relying on a SO is that the amount is what you set it at - as the minimum amount might vary each month you can't guarantee that the amount is sufficient every month. With a DD the CC company will take out the correct amount automatically.

    As others have pointed out DD or SO will make no difference to how quickly you pay it off - that only depends on how much you pay.
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  • eddddy
    eddddy Posts: 16,441 Forumite
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    A number posters have said that they pay their CC by Standing Order and have been caught out by changes in payment due dates - resulting in late payment fees (and maybe adverse entries on credit reports).

    So the safest solution may be to continue with a DD for the minimum amount, and create a SO to 'top it up' each month.
  • InsideInsurance
    InsideInsurance Posts: 22,460 Forumite
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    eddddy wrote: »
    So the safest solution may be to continue with a DD for the minimum amount, and create a SO to 'top it up' each month.

    Though you need to be sure you know how your card provider treats additional payments if it comes in before the DD goes out. From my experience:

    Natwest - still take full DD as per statement
    Barclaycard - reduce DD by amount of early payment
    Santander - stop DD even if it wasnt minimum payment made

    Its workable but if the idea of the SO is to top up the repayment you need to be careful as with both BC and Sant this wont top it up and indeed may leave you short with Sant.
  • Fruit_and_Nut_Case
    Fruit_and_Nut_Case Posts: 4,617 Forumite
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    Welcome to MSE :wave:
    beeshwa99 wrote: »
    I am new here so bare with me...
    We don't know each other that well yet :)

    Some good advice up there by the previous posters BTW
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