Direct debit for minimum payments

*Scarlett

Hi

I have 2 cards at the minute with balances on 0% (both MBNA).

I have always made on time payment online with debit card but am a bit paranoid about missing a payment and voiding the 0% offer.

Is it worth setting up a direct debit for the minimum amount and are there any pitfalls / disadvantages of doing this?

At the minute I get my statement either online or by post and then wait a while before paying it but am worried I might forget a payment.

But I also don't want to make a payment sooner than I have to.

Do they give you a date for the DD or can you choose it?

Is the DD cancelled when the balance is paid or do I have to do that?

Many thanks.

rb10

There is no question - a direct debit is undoubtedly the best way to pay off a credit card.

If you set up a minimum payment DD then they will automatically take this amount on the payment due date. If you paid it in any other way you'd have to pay it (at minimum) a few days before the date, so this way you hold on to the money for the longest time.

If at any point there is no balance on the card, then the minimum payment will be £0, so no direct debit will be taken.

*Scarlett

Thanks for that.

Off to set up DDs on these accounts.

YorkshireBoy

*Scarlett wrote: »

Do they give you a date for the DD or can you choose it?

You can choose it indirectly, by changing the statement date.

If you have a particular payment due date in mind, ie to suit payday, then give them a call and they'll work it back for you.

NB: MBNA offers generally run until a statement date, so the later in the month this is...the longer the promotional period runs for.

chattychappy

rb10 wrote: »

If you paid it in any other way you'd have to pay it (at minimum) a few days before the date

Depends on card. MBNA/Barclaycard I can pay by debit card on their website ON THE DUE DATE, payment still reaches them in time.

rb10 wrote: »

There is no question - a direct debit is undoubtedly the best way to pay off a credit card.

A sweeping statement not supported by the number of threads from people who have trouble with them.

They have their advantages, and disadvantages. If the OP is worried about forgetting a payment, then a DD might be suitable. But someone forgetful might not have the funds available when the DD is taken - and then the charges are higher than they would be had you simply forgotten to pay the credit card as you can get charges at both ends.

There has also been problems when the money is "asked" a few days in advance of it being called and there are insufficient funds. DD is not a modern real-time process (such as Faster Payments).

Also confusing is what happens if you make additional payments - depending on the timing and which card, different things can happen.

Then there is this recent thread where £5500 instead of £500 was taken by DD: https://forums.moneysavingexpert.com/discussion/2715869.

I'm also worried about forgetting to pay - I use a spreadsheet and after 25 years of having credit cards have never missed a payment despite never signing a DD. For me this is "undoubtedly the best way to pay off a credit card, no question".

Whether or not the OP goes with DD, you do have to keep a watch on your account at all times.

thecableguy12

now I once had this discussion before and got ripped to shreds because I dont pay by direct debt, I have no problem with direct debits for all my bills etc but what everyone forgets is if you pay by direct debit and pay the min this will poss show as a negative on your credit files, as peaple maybe aware there is a section on your credit files that state Min Payment Y/N, if everyone pays the min im sure it will show as a Y next to the credit account and may indicate you are struggling fianacailly, now somebody said before just pay dd for the min and then do a bacs if you want to pay more, this will still show as a min payment recieved YES, now when I pay via bacs or faster payments I never pay the Min I always pay more even if its just 1 pound over this wont show up on the CRA. example if you have 4 credit cards paid by dd everymonth on time all 4 of those accounts will show on the CRA as min payments revieved YES, It would not not look favourable on future credit applications

redpete

chattychappy wrote: »

A sweeping statement not supported by the number of threads from people who have trouble with them.

If more people started new threads with "I had no problems with my credit DDs this month." it might redress the balance.

exel1966

rb10 wrote: »

There is no question - a direct debit is undoubtedly the best way to pay off a credit card.

If you set up a minimum payment DD then they will automatically take this amount on the payment due date. If you paid it in any other way you'd have to pay it (at minimum) a few days before the date, so this way you hold on to the money for the longest time.

If at any point there is no balance on the card, then the minimum payment will be £0, so no direct debit will be taken.

Payment is possible on the due date itself with many cards, AMEX, MINT, LLOYDS, MBNA, Capital One to use a few examples, however employing a payment method of this kind is not suitable for most and a DD is the best way to go as judging by what I read here the public at large seem to be quite forgetful in many cases.

Originally Posted by chattychappy
A sweeping statement not supported by the number of threads from people who have trouble with them.

They have their advantages, and disadvantages. If the OP is worried about forgetting a payment, then a DD might be suitable. But someone forgetful might not have the funds available when the DD is taken - and then the charges are higher than they would be had you simply forgotten to pay the credit card as you can get charges at both ends.

There has also been problems when the money is "asked" a few days in advance of it being called and there are insufficient funds. DD is not a modern real-time process (such as Faster Payments).

Also confusing is what happens if you make additional payments - depending on the timing and which card, different things can happen.

Again from what I read here (and as eluded to above you'll never here of the positives, only the negatives) the vast majority of DD problems seem to be from a lack of understanding from the account holder, a lack of funding by the account holder at the appropraite time or just plain ignorance from the account holder in not reading what's clearly put before them. DD payment dates are clear, whether payment is taken on the day, 3 days within, 3 days before, 3 days after etc.Spending 5 minutes to educate yourself though seems to be not worth it to many.
Yes occasionally there will be the odd problem (though I've never had one and I don't think it's down to luck), no system is infallable due to human input, but these problems are a mere drop in the ocean when you compare to those transactions which pass smoothly each and every day. DD is for the absolute majority, the way to go.

Fiddlestick

rb10 wrote: »

If you set up a minimum payment DD then they will automatically take this amount on the payment due date. If you paid it in any other way you'd have to pay it (at minimum) a few days before the date, so this way you hold on to the money for the longest time.

You hold onto the money for the longest time, but you pay the most interest.

Remember that interest is calculated DAILY, so the lower your daily balance is then the loss interest you will pay

rb10

Fiddlestick wrote: »

You hold onto the money for the longest time, but you pay the most interest.

Remember that interest is calculated DAILY, so the lower your daily balance is then the loss interest you will pay

No - see the original post, and you will see that the cards concerned are at 0%, so there is no interest to be paid on the card.

Typhoon2000

thecableguy12 wrote: »

now I once had this discussion before and got ripped to shreds because I dont pay by direct debt, I have no problem with direct debits for all my bills etc but what everyone forgets is if you pay by direct debit and pay the min this will poss show as a negative on your credit files, as peaple maybe aware there is a section on your credit files that state Min Payment Y/N, if everyone pays the min im sure it will show as a Y next to the credit account and may indicate you are struggling fianacailly, now somebody said before just pay dd for the min and then do a bacs if you want to pay more, this will still show as a min payment recieved YES

I have 2 MBNA cards on 0% and by minimum by DD and add pay extra by debit card and the 'Min Payment Y/N' is always No on my credit files.