When should I pay?

princessk_3

Hi all, I'm looking for some advice please. I've been looking through the threads but can't seem to find an answer to my question.

I get paid weekly and currently am making monthly payments to my credit cards. Would there be any value in making the payments weekly instead?

I would be paying the same amount but my thinking is that I'm being charged a daily interest rate which is calculated monthly, or am I misunderstanding my t&c?

What do you think?

Simon_Preston

I'd say the best answer is to pay as much as you can when you can.
However, I'd save each of my weekly payments and put it into one monthly payment just after my statement is printed. Paying it off weekly would be quite pointless.

princessk_3

Thanks for the advice Simon. I'll keep paying monthly then, always pay as much as I can anyway.

YorkshireBoy

Simon_Preston wrote: »

Paying it off weekly would be quite pointless.

How so? Interest accrues daily on the daily closing balance. If the daily closing balance is reduced (by earlier weekly payments) then less interest is charged to the account on the next statement date.

OP, what you're proposing will save you money.

Simon_Preston

Surely by paying off a large lump sum at the start of the month (that being when the statement is printed) will save more on interest than paying smaller amounts over the course of that month?

nzseries1

I have to agree with YorkshireBoy. The sooner you pay the better (because of interest being calculated daily), so no point holding off payments until the end of the month.

EDIT: I think it depends on whether the payments would be made at the start or the end of the cycle... I think we'd need specific dates to know for sure. I got the impression that the OP was talking about the END of the cycle (month), not the START.

Simon_Preston

There are two scenarios here then, it would seem. If you go with my method and pay it all in one lump sum just after the statement is printed then this WILL save you money. However, if you save all your weekly payments and then pay it off at the due date then this is less cost effective and weekly payments will save you on interest.

Hope that clears it up.

YorkshireBoy

The best way is to pay as much as you can when you can. Indeed, there was a thread running (a while ago now?) on the DFW board board entitled "a payment a day". That's a bit unrealistic for most people, but the principle's the same...the sooner you pay the cheaper the debt becomes to service.

The only thing to watch out for in the OP's case (assuming she revisits the thread and doesn't blindly take the first advice given) is that she doesn't overcommit one month and then doesn't have enough cash to make a payment of at least the minimum amount between the next statement date and it's respective payment due date (perhaps due to other bills coming in).

Eydon

Aren't there some credit card operators that limit the number of payments you can make during a month - or has the heat gone to my head?

david39

I think the point that the OP is making is that the money becomes available to him in weekly wage payments. He does not have sufficient spare cash to make the full monthly payment at the start of the month-cycle but saves it up in stages from his weekly wages. He can only afford to pay a contribution at the end of each week or as a lump sum at the end of the month.

It is correct that weekly payments will cost him less in interest than paying at the end of the month-cycle. I often make several payments per month to MBNA, LLoyds and Mint with no problems from them.

You just have to make sure that you keep a tally on what you pay each week to make sure that at least the minimum payment for the month is met.

lisyloo

There are two scenarios here then, it would seem. If you go with my method and pay it all in one lump sum just after the statement is printed then this WILL save you money. However, if you save all your weekly payments and then pay it off at the due date then this is less cost effective and weekly payments will save you on interest.

Yes Simon, initially you were talking about saving it up which means the lump sum is paid LATER than the weekly payments, this incurrs more interest.
If you can pay the lump sum up front i.e. EARLIER, then this is better, but of course people that can't be done if you don't have the money, so if the money comes in weekly then it's best to pay it ASAP (assuming this is the highest rate debt to be paid off).