Confused about minimum payments!

emilyka

Good Morning,

I'm hoping one of you friendly people can help me! I'm currently trying too dig myself out of debt by paying off my credit card as much as I can each month. I have paid off £180 on the 6th April, I thought this meant that I wouldnt be charged the minimum payment (£27) as I have already paid much more that that in the same calendar month? Am I wrong and do you get charge the minimum payment regardless of what you pay off each month? Don't thing I read the T&Cs when I took out the card :mad:

Help would be much appreciated! You would think as I've had credit card debt for a number of years I would understand the ins and outs but I don't :eek:

Thank you

chattychappy

You are not really "charged" the minimum payment. Are you referring to an amount that is billed to your bank account by DD?

Anyway the minimum amount you must pay is calculated on the statement day according to the rules of the particular card. You can pay anything you like between that amount and the full balance. You must pay it between the statement date (day after, really) and the deadline. Anything paid between the day after the statement date and the next statement date will go onto the next statement date. Ie if you pay more then the minimum, it won't be "carried forward".

So that's the minimum payment.

You can pay by a number of methods. I don't use DD, but if you use DD then an amount is taken in time for the deadline according to what you agreed to (perhaps the minimum payment). What happens if you make an additional manual payment depends on timing and the card concerned - but I'm not sure if that is what you were getting at. If you are, someone else will have to answer.

dylanuk

It sounds like you might be getting confused between the 'minimum payment' and the monthly interest charge.

The minimum payment is the smallest amount you have to pay - you're not 'charged' this (unless you mean by direct debit?) - but you will be charged default fees if you don't pay at least the minimum payment amount.

If you've been paying off the minimum, and then you pay off more one month - you'll still be charged roughly the same amount of interest because you're being charged interest on the balance owed over the last month - so you haven't yet reduced the balance to reduce any interest charges.

Because you have paid off more than you normally do this month, then next month you will be charged slightly less interest, and then again, and again if you keep paying off more than the minimum.

I hope this helps!

zfrl

Your payment is treated as additional. The CC company will still take its minimum payment if that is what you have arranged. To change this cancel your direct debit - however if you do this & miss a payment you will incur hefty charges.
The best way is to deduct the minimum payment by what you are paying on top. This ensures the card is paid off quicker & you do not run the risk of an unexpected charge.

LeeSouthEast

It depends who the card is with as well. For instance with Barclaycard if your minimum payment is £10 and is due on the 20th of the month, but you pay £100 by other means on the 10th, they won't take your direct debit that month.

emilyka

It's a Natwest Mastercard and have just over £1000 left on it. I am paying off an average of £300 a month. My direct debit goes out around the 9th for the minimum payment to be taken from my current account. I guess I just assumed this wouldnt be taken if I'd already paid over the minimum payment a few days previously.

If I cancell the direct debit for the minimum payment and just ensure I pay what the £300 or so a few days before the minimum payment would usually go out will this solve the problem?

Thank you all very much for your help

Danny_G

Confused about minimum payments ?

Theres a process called 'reading' where you can read the terms and conditions!

Have a go at that!

stephane_2

Danny_G wrote: »

Confused about minimum payments ?

Theres a process called 'reading' where you can read the terms and conditions!

Have a go at that!

Do you ever say anything helpful...you are in the wrong forum!!

chattychappy

stephane wrote: »

Do you ever say anything helpful...you are in the wrong forum!!

Yes. Particularly unhelpful since the operation of DD is not really part of the T+Cs.

I wouldn't rely on the date a DD is taken in order to make a manual payment hoping it will get there on time. Check what they say on the statement. As a general "rule of thumb" I allow a calendar week, assuming no bank holidays. Having said that, usually they go through quicker - 2 working days is typical and sometimes even same day.

I never use DD. Although you must be more disciplined I find it simpler and less work - I just make the payment I want to make when I make it. I don't have to adjust for what is expected to be taken, check it happened etc. So in your situation I would go ahead and cancel the DD - but obviously you must realise that if you forget you could be up for a £12 fee and potentially a black mark.

ceh209

I had a Natwest credit card, and a direct debit set up to make the minimum payment - i think this is the same as you.

I found that even if I paid off the full balance on it, the direct debit was still taken, putting the card into debit!

So just remember that it will be taken on top of whatever else you pay, and you'll be fine

cifpower

With Natwest, RBS, Ulster Bank and Tesco cards (all part of the RBS stable), if you have a direct debit set up for the minimum payment and make an additional payment, the direct debit will still be taken.