Setting up a DD to pay Minimum payments?

sammie383

Hi there!

First post, but have been reading for a while!

I have recently got my first credit card ( Capital 1 classic £100 limit ) as I am wanting to buil up my credit rating. ( Nothing wrong with it except I am only 20 and dont have much of a history )

So anyway : I have setup a DD for my Next account, for more than the minimum, and wanttp set up a DD for my Capital one, and my Littlewoods accounts so as not to miss anything. But my question is, say a minimum payment was due on the 10th september, what date would the DD be taken out? Its just that I get paid on the last working day of the month, and dont want to be in a situation where a DD is requested before there are any fund in my account!

( I know that wouldnt happen for a 10th september payment, but my Littlewoods one is due 31ts August and often near when my wages go in )

At the moment with Cap1 I am paying bits off every week as I spend it basically, as I pay my shopping with my TC, and get these weekly so use my CC for the food, then pay it off a couple of days later anyway.

But want DD in place for any discrepencies or forgetfullness on my part! lol

Thanks!

Sammie xxx

Ivan_Konstantinov

sammie383 wrote: »

But want DD in place for any discrepencies or forgetfullness on my part! lol

good idea,just try to keep a little extra in your account so you don't get charged for bouncing it

exel1966

Sensible to think of these things now before it's too late.

You won't believe the number of people who come on here complaining that they've been charged a late payment fee or lost an introductory offer because of their forgetfulness/laziness.

Most DD's specify that they can be taken on or within 3 days of the due date. That's +/- 3 days so a payment due on the 15th could be taken anytime between 12th and 18th. This to cover the weekend period as DD's are not taken on Sat/SUn/Bank Hols.
Your Cap 1 statement tells you this directly under your purchase details for the month. Can't advise re Littlewoods directly, it should say on your statement.

Many people seem to overlook the 3 day fact and assume the DD will be taken on the due date which is NOT always the case.

EDIT : Having just looked at my own DD payments to Cap1 for the past 9 months they appear to go ON or up to 3 days after the due date rather than before, but remember they can collect before so ensure you have the funds in your acount.

sammie383

Thank you!

'good idea,just try to keep a little extra in your account so you don't get charged for bouncing '

Great advice, thanks, I am planning on doing this after end of August, I haven't been able to previously due to only just went back to work after having my daughter + moving into Married Quarters, and having a rough year or so with unexpected expenses. I have been living practically in my overdraft full time for months now, and this is now being sorted out now I am working.

Thats why I don't want to get into a situation where I am incurring charges, as this would just set me back again!

Thanks for all your advice!

ICan'tStandIt

Most credit card companies set up direct debits for either the full or the minimum payment, so not sure how you have been able to do a different amount.

Do you mean a bank standing order instead ?

A direct debit is a really good idea, but you should always remember that this will only be about 3% of your balance and therefore you should always make a manual payment yourself.

Credit card companies love minimum payment payers as they get more interest that way.

benf90

ICan'tStandIt wrote: »

Most credit card companies set up direct debits for either the full or the minimum payment, so not sure how you have been able to do a different amount.

They do?

I've always paid mine off in full. However, when setting up Direct Debits the options have always been either the minimum amount, the full balance or an amount of my choice.

Egg are the easiest of my cards to change the DD details and they give the option online to pick your own amount. I'm pretty sure most credit card companies allow you to pick your own amount if you call them.

sammie383

ICan'tStandIt wrote: »

Most credit card companies set up direct debits for either the full or the minimum payment, so not sure how you have been able to do a different amount.

Do you mean a bank standing order instead ?

A direct debit is a really good idea, but you should always remember that this will only be about 3% of your balance and therefore you should always make a manual payment yourself.

Credit card companies love minimum payment payers as they get more interest that way.

In my first post I meant I had already set up a DD for Next - not my CC. My next DD is for a fixed amount above my minimum.

Also for the CC payment, I would only be setting up a DD for the minumum to avoid forgetting or missing paying on time for a due date ( something I have never failed to do yet, but better to be safe than sorry ) and I do plan to make extra payments every month, the DD is merely to ensure nothing gets missed.

Thanks everyone.

sammie383

Again, thank you for yoru reply, however ( not meaning this to be arrogant ) I did say in my first post that if I spend on my CC the balance on it usually gets paid of a few days after its been spent, as I am only using it to build my credit rating, so have started paying for my weekly food shopping on it, then paying it off when I receive my Tax Credits every week.

Thank you for the advice though x

Milarky

sammie383 wrote: »

I have set up a DD for my Next account, for more than the minimum, and want to set up a DD for my Capital one, and my Littlewoods accounts so as not to miss anything.

What you could very easily 'miss' is the first minimum payment. Sometimes (often?) this will not be collected by the DD - and only begins the following month. It is vital that you confirm when the first DD payment is collected and make arrangements if necessary to pay that first month yourself. [The statement will automatically say whether the next payment will be collected by DD. Only make payment if it doesn't say anything therefore]

But my question is, say a minimum payment was due on the 10th september, what date would the DD be taken out?

That depends on the card issuer themselves - for Captial One the actual date moves around as you've probably noticed.

Its just that I get paid on the last working day of the month, and dont want to be in a situation where a DD is requested before there are any fund in my account

It's going to be cheaper for you to have a sufficient overdraft to cover the minmum payments where you haven't yet been paid. It isn't possible in practice to have all your debits simply falling conveninetly after you get paid. Either carry a sufficient buffer in the account at all times or have the bank provide you with such a buffer in the form of an arranged overdraft. Otherwise it's likely to cost you £12 + £25 + loss CC of deal (if you were on one)

At the moment with Cap1 I am paying bits off every week as I spend it basically, as I pay my shopping with my TC, and get these weekly so use my CC for the food, then pay it off a couple of days later anyway.

Well here, the fact that you pay it off bittily means you are carrying a revolving balance - and thus paying Captial One interest anyway. In a ideal arrangement you wouldn't do this at all. The payments you make also come off the minimum payment due by DD some of the time - and some of the time they don't - it all depends on when these payments reach Captial One. The principal point of having a minimum payment DD is to avoid the £12 charges so you want to cut out making these separate payments, leave the cash available for the next DD amount, and you won't go far wrong.

But want DD in place for any discrepencies or forgetfullness on my part!

It's not 'forgetfulness' - it's just that by mixing up manual and DD payments you won't know where you are. The priorities you should have are roughly as follows:

1) Have sufficient banking balance+overdraft at all times to cover DDs in particular
2) Have DD set up on credit cards to avoid £12 charges
3) Reduce revolving balance in a planned way and then stick to the plan (I note you are setting a DD above the minimum on Next - consider doing this on Capital One also)
4) Eliminate the revolving balance entirely (i.e. pay the card balance in full by the DD date) at some point. Then
5) Set the DD to 'full' balance.

If you have got to '5' you will then cease paying any interest on your credit card and the beauty of the DD is that you never need to pay it 'in person' again - simply aim to keep sufficient in the bank at all times the DDs themselves - and you won't pay any bank account interest either!

sammie383

Milarky wrote: »

What you could very easily 'miss' is the first minimum payment. Sometimes (often?) this will not be collected by the DD - and only begins the following month. It is vital that you confirm when the first DD payment is collected and make arrangements if necessary to pay that first month yourself. [The statement will automatically say whether the next payment will be collected by DD. Only make payment if it doesn't say anything therefore]

That depends on the card issuer themselves - for Captial One the actual date moves around as you've probably noticed.

It's going to be cheaper for you to have a sufficient overdraft to cover the minmum payments where you haven't yet been paid. It isn't possible in practice to have all your debits simply falling conveninetly after you get paid. Either carry a sufficient buffer in the account at all times or have the bank provide you with such a buffer in the form of an arranged overdraft. Otherwise it's likely to cost you £12 + £25 + loss CC of deal (if you were on one)

Well here, the fact that you pay it off bittily means you are carrying a revolving balance - and thus paying Captial One interest anyway. In a ideal arrangement you wouldn't do this at all. The payments you make also come off the minimum payment due by DD some of the time - and some of the time they don't - it all depends on when these payments reach Captial One. The principal point of having a minimum payment DD is to avoid the £12 charges so you want to cut out making these separate payments, leave the cash available for the next DD amount, and you won't go far wrong.

It's not 'forgetfulness' - it's just that by mixing up manual and DD payments you won't know where you are. The priorities you should have are roughly as follows:

1) Have sufficient banking balance+overdraft at all times to cover DDs in particular
2) Have DD set up on credit cards to avoid £12 charges
3) Reduce revolving balance in a planned way and then stick to the plan (I note you are setting a DD above the minimum on Next - consider doing this on Capital One also)
4) Eliminate the revolving balance entirely (i.e. pay the card balance in full by the DD date) at some point. Then
5) Set the DD to 'full' balance.

If you have got to '5' you will then cease paying any interest on your credit card and the beauty of the DD is that you never need to pay it 'in person' again - simply aim to keep sufficient in the bank at all times the DDs themselves - and you won't pay any bank account interest either!

Thank you very much for this, I do understand that paying it off as I have spent it is incurring interest at the moment. But as I said I have been in a rut financially and have been living almost constantly in my overdraft. I only started working at the end of june, and spent most of my first wage on visiting family ( Husband in teh army and we hadnt seen them in 7 months ) So this month is the month I will keep most of my wages in the bank to cover the overdraft, so that is then there to cover any DD's that do come out. I have a seperate "Bill" account that all my usual DD's come out of, and find this the best way for us.

I will definately be taking your points into consideration when sorting out my CC DD's.

sammie383

loaner wrote: »

You'll end up paying interest all the time on the full balance if you don't pay it off in full. There's a fine line between building up a credit rating, and getting into debt.

I agree completely with you, that there is a very fine line. However, my late mother brought me up very well, and there is no way I will ever put myself into a situation where I get so much credit, that I cannot pay it off.

I don't mean to be rude, but I havent once said I am in debt, yes I have credit in 3 places, which I pay more than minimum every month. My drive for getting the CC is to ensure I have a Credit history, so that in a few years, when my husband leaves the army we could have a good enough credit rating for us to get a mortgage.

x