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

izools

chattychappy wrote: »

"If you're affected (see the table below to be sure) and want to pay extra"

Oh I think I might be a victim. Can I get compensation please for being missold DDs?

What's with the term "overpay" anyway?

If you aren't paying off the total of what you owe your creditor, you aren't overpaying them. Paying more than the minimum should never be considered an "overpayment". That suggests that paying just the minimum is "correct" or the "right amount", which of course it isn't, unless you're on a 0% deal.

Anyone who pays only the minimum on an interest bearing credit card clearly doesn't understand how cards work or has overspent beyond their means.

Plastering the term "overpayment" in this article will only reinforce the psychology behind people paying too little towards their cards and not taking full ownership for the debt.

sharpy2010

Or, alternatively to all this, DON'T pay with a direct debit, pay with Internet banking when YOU are ready to make the payment!

Direct Debit is nothing but hassle, and I don't know about anyone else, but I don't want companies dipping in and out of my account until I say so.

izools

sharpy2010 wrote: »

Or, alternatively to all this, DON'T pay with a direct debit, pay with Internet banking when YOU are ready to make the payment!

Direct Debit is nothing but hassle, and I don't know about anyone else, but I don't want companies dipping in and out of my account until I say so.

I'd say that certainly is down to personal preference.

I have a balance on one of my cards as my car had to be replaced at very short notice and I have a DD set up for the minimum amount and pay whatever extra I can afford whenever I can, which granted is every month and usually for the same amount but having the DD in place ensures if I am absent minded I won't miss the monthly repayment.

chattychappy

sharpy2010 wrote: »

Or, alternatively to all this, DON'T pay with a direct debit, pay with Internet banking when YOU are ready to make the payment!

Direct Debit is nothing but hassle, and I don't know about anyone else, but I don't want companies dipping in and out of my account until I say so.

Actually I've never signed a direct debit in my life for the reasons you give.

The problem with DDs is they go back to a pre-online era when they were often the only alternative to sending of cheques or paying cash over the counter. Nowadays they are a device which encourages people not to say in touch with their finances. Suppliers give discounts for DD saying they are cheaper to administer (which may well be true when it comes to cheques) but a principal reason is that the churn is lower. How many threads have we seen from people who do a BT, sign a DD, and then don't check their statement for months?

I'm sure for regulars on this thread DDs are fine because they are prettty savvy. I feel more in control without them.

Gordon_the_Moron

Consumerist wrote: »

Then the direct is taken on the due date and your overpayment is rather more than you expected.

Brilliant.

Not true, on a card that reduces the amount of the direct debit because of any other payments made, if you make the minimum payment (or more) manually before the direct debit is due they simply won't collect it.

Consumerist

Gordon_the_Moron wrote: »

Not true, on a card that reduces the amount of the direct debit because of any other payments made, if you make the minimum payment (or more) manually before the direct debit is due they simply won't collect it.

The whole point of the original article is that some cards will collect the full amount of the direct debit even if you make an additional payment - and even if that means putting your account in credit.

sfax

Consumerist wrote: »

The whole point of the original article is that some cards will collect the full amount of the direct debit even if you make an additional payment - and even if that means putting your account in credit.

The whole point of the article is the opposite. Some cards will reduce the DD so your "overpayment" is cancelled out.

DJ_Mike

Such a non-story - if you plan to make overpayments in this way, better to not have the direct debit at all and just pay manually each month.

Consumerist

DJ_Mike wrote: »

Such a non-story - if you plan to make overpayments in this way, better to not have the direct debit at all and just pay manually each month.

A lot of posts for a non-story.

Thanks for bumping again, though. :T

Willing2Learn

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.

mr_jrt wrote: »

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!

Same as purple.sarah. I pay my full balance every month by Faster Payments even though I also have a DD set up for minimum payments. Capital One have never used the DD for me (I don't want them to) due to me already having paid the balance within a a couple of days of statement. The only reason I have the DD is for when I'm in hospital as I have constant fluctuating health problems and this prevents any risk of late payments or default whilst out of action having hospital treatment.

From my experience, information in the article re Cap1 is incorrect.