Card Balane Settlement Best Practise

taste3171

Aye up ,

After careful consideration I have just decided on a consolidation loan for 4 cards. I have secured a flexible personal loan k15 at 9.15 % apr over 60 months from my own bank Lloyds

I was stuck in min payment limbo and getting no where, balances are as follows

Lloyds MC 5821
Barclaycard 2737
American Express 1948
RBS Mint 3981

All cards are at apr's above 17%.

I take it all interest is accrued daily applied monthly and I currently have DD's set up for all the payments. The cash should arrive in the next few days.

Is there a best practise strategy of going about this eg cancell dd's, manually calculate the extra to allow for interest and pay immediately ?

It always seems to me that you are aiming for a moving target and I thought perhaps there was a smarter way to approach this ? Also is there a potential to boost your credit score angle that is worth considering ?

All comments most welcome.

taste3171

Apologies one and all for the typos my connection dropped and I double posted before completion , not sure how to edit the title ?

YorkshireBoy

taste3171 wrote: »

Is there a best practise strategy of going about this eg cancell dd's, manually calculate the extra to allow for interest.

You'll need to pay two consecutive statements in full, and by their respective due dates (the 2nd one clears any residual interest) to stop the interest accruing.

Two options:

1. As above, ie two statements.

2. Overpay the balances, after first roughly calculating interest/charges to be applied. Probably too late for this now, being as it seems you've sent the payments?

Do not do anything with the DD until you have a) received a zero/positive balance statement and b) received an 'account is closed' letter from them...assuming you're closing the accounts?

taste3171

Thanks for the advice.

The cash should arrive the middle of next week.

My DD's all go out soon after the 24th. The timing always appears an issue with them as when I have managed a small overpayment in the past if I don't time it after my DD and before the interest is applied they simply reduce my min DD payment by the same amount that month !

I took the 15k as I secured a better apr over the 14999 table Lloyds has so I do have some extra to go for the over payment ( what ever is left will go as an over payment on my 1st loan repayment).

Also can confirm I do intend to close the cards down , my strategy is to operate a 6.9 % Halifax Easy Rate card with a max limit of 500 for emergencies.

YorkshireBoy

taste3171 wrote: »

I took the 15k as I secured a better apr over the 14999 table Lloyds has so I do have some extra to go for the over payment ( what ever is left will go as an over payment on my 1st loan repayment).

I'm not familiar with loan T&Cs these days (thankfully!), but is there a financial benefit to you from doing this? If not, then start a rainy day savings account with it so you don't need to use a credit card next time there's an emergency.

Also can confirm I do intend to close the cards down , my strategy is to operate a 6.9 % Halifax Easy Rate card with a max limit of 500 for emergencies.

Do you already have the card?

chexum

taste3171 wrote: »

Also can confirm I do intend to close the cards down , my strategy is to operate a 6.9 % Halifax Easy Rate card with a max limit of 500 for emergencies.

Good idea to avoid traps again! Well done!

I agree with YorkshireBoy, don't touch the DDs, all issuers work differently with regards to taking DDs already announced, even when you paid extra. If they face any problems taking the DD, you'll get charged only because you agreed to this charge - not good.

The best is to pay the remainder, with the added daily interest (should be doable from the statements) on, or after the DD date, supposedly before the statement date. Then, with the new statement, you have a clear picture. If you got something wrong, you'll need to wait two more statements, and pay every pence in full as soon as possible.

I wouldn't touch the DDs even after that, but if you insist, you'd be better off telling the card companies to cancel it, and make sure the next statement does not mention it - only then it is safe to cancel it with your bank (if it's still showing).

In the meantime, you could check which cards can take faster payments, I know Barclaycard does, so you can pay the leftover statement amount on that day which will reach your account the same day. (This still can be difficult because you may not see the statement until the day after.. sigh)

I would also check as many previous statements as I can for any annual/quarterly debit with companies that could continue to charge you, possibly even after closing the account. If you then ignore the (possibly online-only) statement, and you don't have a DD still set up, it will be back to haunt you

taste3171

I naively thought I would try and see what credit limit Halifax would give me in the best buy table featuring card. The 6.9 % would represent a cheap loan result , so I dutifully completed all the balance transfer requirement details ( there is also a no charge for balance transfer feature ) Bearing in mind I have a fairly good credit rating they only auth the 500 limit.

The card should also arrive next week but I wont know if I secured the headline apr until the paperwork arrives. If not I will cancel this on receipt. I know there are better cards out there for "emergencies" if you intend to clear the balance every month ( cash back etc ) I just figured the Halifax was already done and I really don't want to go down the route of applying for any more CC's.

The positive feature ( if there are any for a loan ) with the Lloyds flexible loan for me is that not only does it sit in your internet banking drop down and you can see your balance reducing , you can overpay as often as you like thereby reducing the term. ( providing you don't repay the total amount outstanding )

This may sound like an expensive variation on the simple advice in all MSE's articles about tackling the expensive APR card first min on the rest and picking them off one by one , it just doesn't seem to work if you are in the in between place of just affording the min payment with very infrequent overpayments. Yes the 3749 the loan is costing me is allot of money but the > 17% apr of the card strategy bearing in mind how infrequent my overpayments were will cost more...( he says trying to convince himself ;0)) At least now I have an end date !

YorkshireBoy

taste3171 wrote: »

Bearing in mind I have a fairly good credit rating they only auth the 500 limit.

Don't wish to offend, but unless you have a very good salary, how can your credit rating be good with (at least) nearly £15K of credit card debt? It's this current debt that's resulted in them only giving you a token £500 limit.

...I wont know if I secured the headline apr until the paperwork arrives. If not I will cancel this on receipt.

What difference does the APR make with such a low limit and it only being for emergencies?

I know there are better cards out there for "emergencies" if you intend to clear the balance every month ( cash back etc )

An emergency purchase of £400 may get you £4 cashback...which could be wiped out completely by one month's interest on your cashback card at 15.9% APR.

Forget secondary benefits of cashback...the only card you need now is for emergency use. No emergencies = no cashback.

Take this the right way, but you've had your fingers burnt once with credit cards...change your approach to credit.

taste3171

Fair comment YB ... The "fairly good credit rating" comment was perhaps stretching it a tad , though the Lloyds loan apr was allegedly offered due to my credit rating and internal account history ... it does appear quite competitive in relation to the headline loan rates out there not to mention the typical apr rates.

Bottom line is though you are spot on, the k15 is serious and I need to step up and deal with it. The low apr consideration was more a safety feature for not clearing the card every month and must concede hardly signifies a change in my attitude to credit.

Believe it or not actually typing this stuff out and reading the replies out is not bad as finance therapy goes ;0)

Appreciate the attention to tone btw , kindly phrased !

timbo58

applied for the 0% for existing customers and got accepted! yay.............
Until I read further down the page and found it was for the 'loan-shark special' card of 21.9% (i.e. 7%+ more than I currently pay!)

Whats more: I then spend 30 minutes trying to get through (in a queue) to be told the department I want are closed at weekends and to go to the branch instead.
No email address either.

No thanks: I've just written them a stinking letter about sending unsolicited documents to sign/'accepting my application' (when I didn't apply for the 21.9%) and their lack of contact facilities.
I've told them what they have sent is likely to cause the less wary to be duped into taking credit they cannot afford and is at the very least dubious.

I've told them to stuff the 21.9% card and make sure I see the 0% one instead or at least don't have any credit scoring as a result of this application and a letter confirming that.
I did ask why they think it good business practice to insult long standing customers in this way, after all, only a moron would apply for 0% and accept 21.9% instead!

Since I am likely to change my mortgage pretty soon (being bought out of my share of existing equity) and I have only just changed my bank account to them (and I still have the old current account with Natwest open) and I'm looking at closing my savings account anyway with them: they have a lot to lose and I WILL pass on my complaint if I don't get an apology too.
GRRRR.
:mad::mad::mad::mad:

YorkshireBoy

timbo58 wrote: »

...<(unwarranted) rant snipped>...

The 21.9% rate is the 'go to' rate after the 0% introductory period, and is clearly explained on the pre-application page, in the summary box, and in the T&Cs.