MSE News: Beware the credit card overpayment that isn't an overpayment

Consumerist

zerog wrote: »

BTW does anyone know the situation with Tesco? If I want to pay £1 more than the minimum, do I pay £1 and wait for the DD, or £1+min and no DD?

On the back of Tesco statements (page 1), right down the bottom it reads as follows :-

" Direct Debits - additional payments made between your statement date and required repayment date may affect the amount of the Diect Debit

My emphasis.

I make extra payments electronically, just before the DD is due for payment i.e. too late for Tesco to change the DD.

Edit
Technically speaking, you should be given notice of the amount and date of a payment due by DD and if it changes without notice you should be able to recall it under the Direct Debit guarantee. Since an extra payment is only likely to reduce the amount of the DD payment, I'm not sure how that guarantee would apply.

zerog

Consumerist wrote: »

On the back of Tesco statements (page 1), right down the bottom it reads as follows :-
My emphasis.

I make extra payments electronically, just before the DD is due for payment i.e. too late for Tesco to change the DD.

Haven't received a statement yet. Maybe it's in the T&Cs... well I'll just experiment

Wywth

One Santander customer, Anthony (full identity withheld), contacted us to complain: "My minimum payment of £28.38 was due on 16 November. But I also posted a cheque for £5.

"But what does the bank do? It deducts the £5 from the total, not allowing me to make an overpayment. For me and thousands of others it means trying to make any overpayment is extremely difficult."

If he paid not £5 by cheque, but £33.38 by cheque, would Anthony (and the thousands of others who allegedly find themselves in a similar situation) not easily have achieved what he was attempting to do?

SCO

zerog wrote: »

BTW does anyone know the situation with Tesco? If I want to pay £1 more than the minimum, do I pay £1 and wait for the DD, or £1+min and no DD?

Tesco do not reduce the DD. i overpay every month and they have never reduced the DD.

jpb77

Wywth wrote: »

If he paid not £5 by cheque, but £33.38 by cheque, would Anthony (and the thousands of others who allegedly find themselves in a similar situation) not easily have achieved what he was attempting to do?

Just shows these people do not have the brains to work it out for themselves.

I came across this myself at one time, made an extra £200 payment and DD was reduced by £200 = no DD taken for that month. So instead i manually paid a further £200 which in this instance I did make the extra payment. Not rocket science.

So what are these guys complaining about, I do not know. Surely if these guys make 'over' payments regularly and to see that their DD is reduced, some kind of bell would ring and so they should wait for the DD to come out, then make the 'over' payment before the next statement is due.

Frustrates me how these kind of people manage to look after themselves in this big wide world and need their hand held....

Consumerist

Wywth wrote: »

If he paid not £5 by cheque, but £33.38 by cheque, would Anthony (and the thousands of others who allegedly find themselves in a similar situation) not easily have achieved what he was attempting to do?

If the £33.38 is received by Santander before they have set the minimum repayment, it will be deducted from the outstanding balance and the DD will be set according to the new balance.

You really need to make the overpayment when it is too late for Santander to change the DD amount (i.e. just before the DD is due to be paid).

Esoog

I imagine this article is aimed at the lowest common denominator, of which there are plenty (check the benefits board :A), I'm sure this is news to some people. If not, why feel the need to slag off the author?

mr_jrt

purple.sarah wrote: »

My CC provider, Capital One was listed as not reducing your direct debit when you make an overpayment but IME they do. However this doesn't affect me negatively as I only have the direct debit set up to pay the minimum so I don't forget. If I overpay I take it into account.

It's funny this article was posted when it was - I discovered on Friday that the payment I made on the 25th was disregarded when Capital One decided to take the full DD amount on the 6th, leaving me massively overdrawn. I have my DD set up as full amount to a cap of £500 (so I don't go overdrawn), and the balance was considerably higher than the cap due to Xmas/car insurance/etc. Figuring I'd minimise the interest, as soon as I got paid on the 24th I paid £600 as I'd saved some cash over the month to do this. Then on Friday I took a look at my current account to find myself £350 overdrawn as they'd also taken the full balance amount on the 6th.

I'm somewhat irritated as this is very counter-intuitive to what I would have expected. I figured once I'd made a payment over the minimum they would not request anything. ...and the crazy thing is that they're losing out on the interest whilst my bank is getting overdraft fees! Silly Capital One, and more importantly, silly me. At least I know now. I'd always reduced the DD on the odd occasions I'd done this before out of caution as I just didn't know how it worked, and I guess I was right to do so!

Consumerist

Esoog wrote: »

I imagine this article is aimed at the lowest common denominator, of which there are plenty (check the benefits board :A), I'm sure this is news to some people. If not, why feel the need to slag off the author?

It's probably aimed at the most common denominator but you always get the wise guys on MSE who think they know it all. Best to treat them with the contempt they deserve.

Pincher

I usually paid in full already, so I WANT the DD to be reduced to zero. If the the DD still takes the minimum, I will have SURPLUS cash in the credit card.

When you set up the Direct Debit, you usually tick a box out of three:

1. Full amount owing.
2. Minimum amount.
3. Fixed amount of your choosing.

The intention of option 2 is to prevent penalty charge in case you under pay, NOT to help you reduce the balance owing. In fact, EVERYBODY advise against paying minimum amount because it can take a life time to repay.


For 0% Balance Transfer deals, you want to pay as little as possible without incurring penalties for the duration of the 0% period. You have only yourself to blame if you complicate matters by using the card for spending as well. E.g. if you buy a Playstation III just before a statement date, and then get a £200 refund after the statement date, does it count as a payment or not?