Best way to pay off a credit card

Miss_J

I'm in a position where I can pay off some of the balances on my credit cards and wondered the best way to do it.

Most of my credit card payments are due at the end of the month and are set on direct debit payments. So should I wait until these are paid and then pay the rest of the balance off or is there a better way of doing it? i.e avoiding extra accrual of intrest.

Also should I avoid paying off the balance in full and leave a very small amount on the cards? I've seen things in the past where people have paid off the balances and there have been further payments required after balance paid off?

Finally (sorry, lots of questions) should I close the cards down once I've paid them off?

Many thanks

bengal-stripe

The earlier you pay, the less interest will be charged. (Interest is calculated daily and charged monthly.) Some cards will take the DD regardless of any additional payments, others will cancel the DD. Check with your card.

Pay the card(s) with the highest interest first, if you can in full.

Ben8282

As bengal-stripe says, the earlier you pay, the less interest will be charged. As today is 26th March, your direct debit payments due at the end of the month will be being paid very soon now anyway though.

Decide how much you want to pay off of each card and then pay that amount minus the direct debit amount

There is no reason to leave a very small amount on each card. The reason that there will be a further payment required after the balance has been paid off is that there will be a further interest amount debited to cover the period of the latest statement which will be debited on the next statement.

Closing or not closing the accounts is entirely up to you. If you think that having the cards will be too much of a temptation and you will use them to get yourself into debt, close them. Otherwise, keep them.

blacksta

it depends

Barclaycard cancels that month's dd if you pay more than the minimum amount but it needs to done at least 1 week before the dd instruction goes out.

Miss_J

Thanks for that. Think I will call them to pay the balances and inform them that I will cancel this months direct debit (which I can do online immediately). So next month I will still get a statement to say what the outstanding amount is I have to pay for the interest on this months balance. After which I can then close the accounts.

Eydon

I wouldn't cancel the DDs at this late stage.

I know you can cancel them online immediately, but the credit card companies may have already initiated the process of collection for this month and if it gets declined (because you have cancelled them with your bank) you may get charged.

Miss_J

Also thinking that if I pay off the balance in full and leave it open, within a couple of months I may be offered another 0% balance transfer offer? Which would be handy because I will still have some balances open on higher APRs.

Ben8282

Don't cancel the direct debits. Let them go through (if they do) and adjust next month if necessary.

Ben8282

Miss_J wrote: »

Also thinking that if I pay off the balance in full and leave it open, within a couple of months I may be offered another 0% balance transfer offer? Which would be handy because I will still have some balances open on higher APRs.

Good idea but why don't you pay off the balances with the higher APR's instead of the balances with lower APR's???

Miss_J

Eydon, I called my bank who I have one of the credit cards with and they said I would need to pay in full and by 29th March as the direct debit request will be sent then for payment on the 2nd. Because I can also do a faster payment with them if the funds aren't available by the 29th to pay off the balance I can do a faster payment on that date for the minimum payment and I'll still be paying them on time to avoid any charges, so I've cancelled the direct debit and will see on the 29th if I can pay off in full. Good advice though, so thanks for the header.

Miss_J

Ben 8282

I will be paying off the balances with the higher APRs (MBNA 20.9%) but I will still have some balances left on 18.9%, so hopefully, once my balances are cleared on the other credit cards I may be offered a 0% deal again thereby allowing me to transfer some of the higher APR balance over to a cheaper 0% balance transfer offer, although I'm aware MBNA will no longer be offering credit card services, hopefully my other accounts will offer a 0% (or cheaper APR) to transfer other balances to.