Do minimum payments on a 0% card look bad?

exel1966

Ravenshade wrote: »

Ps. The credit card holder who always pays off in full at the end of each month is a nightmare. You can't make any profit out of these guys. >=D

The credit card holder who regularly uses their card and pays in FULL/minimum each month earns the card company an awful lot of money from merchant fees. Earnings from card usage vastly outweigh earnings from interest charged.

rolstherat

Think about how much you will need to pay off at the end of the 12mths at 0%!

[Deleted User]

rolstherat wrote: »

Think about how much you will need to pay off at the end of the 12mths at 0%!

Then put that amount in an instant access ISA.

dalesrider

Bedsit_Bob wrote: »

If I were a lender, provided the applicant had a decent income, compared to their level of debt, I'd see minimum payments as a good thing, as it would indicate the applicant was financially savy.

Lender happy with min payment.... Yep so long as interest is paid on the remaining balance.

Financially savy on 0% YES....
Once interest is being paid. No....

TBH. They wont care. So long as at the end oof the day the debt is paid off.

As to the other cards. Well if they are not being used. Get rid of them.
Maybe keep one as a back up in case of issues. But all they really are is a chance to get deeper into the debt mire.

Ravenshade

exel1966 wrote: »

The credit card holder who regularly uses their card and pays in FULL/minimum each month earns the card company an awful lot of money from merchant fees. Earnings from card usage vastly outweigh earnings from interest charged.

You do have a point... but if you're using the credit card and only paying off the minimum amount, surely that is better for the credit card company in the longer term than those who pay off in full each month. After all, they're still paying out the same amount...

Also, just a note but the merchant transaction fees for say LloydsTSB tends to be between 3 and 9% of each transaction. Now...bear in mind that my interest rate is approximately 30%... on the face of it, there's quite the mark up on charging interest to the end user rather than the merchant. Paypal don't charge that much to process cards either...

CLAPTON

Ravenshade wrote: »

You do have a point... but if you're using the credit card and only paying off the minimum amount, surely that is better for the credit card company in the longer term than those who pay off in full each month. After all, they're still paying out the same amount...

Also, just a note but the merchant transaction fees for say LloydsTSB tends to be between 3 and 9% of each transaction. Now...bear in mind that my interest rate is approximately 30%... on the face of it, there's quite the mark up on charging interest to the end user rather than the merchant. Paypal don't charge that much to process cards either...

more complicated than that as it depends on usage

so say some-one has maxed out their card at say 2000 then
interest in a year is 30% of 2000 (approx) if minimum only repayments so CC gets £600 per annum

for some-one that pays in full and spends say 2,000 per month but pays in full then CC earns say 3% x 2000 x 12 = 720 and is very low risk of default

so it all depends upon the full circumstances

hillcats

I held a 18 month interest free card until recently (6 months approx) that I paid only the minimum for 17 months then settled in full the week before the term ended. This kept the money offsetting our mortgage very nicely until the final week then they received the complete outstanding balance and I then shut the account down, thanks and goodbye!

I have since recently taken out TWO 4 year interest free option purchase agreements with no problem at all, and again I have the money just sitting there earning ME money, slowly being paid to the lender on a monthly basis. Suits me perfectly this option .....

gglaze

My take on this is: everyone seems to have a different opinion, and I'm pretty sure there is no one "right" answer - I would bet even between different banks and different types of cards, there are different considerations in regards to min payments. But I do believe it is possible that only min payments are considered to have a (small) negative impact on creditworthiness - and therefore, why not go ahead and add a small £1 to the min payment each month, just in case? I really don't think it can hurt, and it could help. And it doesn't cost much (well, £1).

sfax

gglaze wrote: »

My take on this is: everyone seems to have a different opinion, and I'm pretty sure there is no one "right" answer - I would bet even between different banks and different types of cards, there are different considerations in regards to min payments. But I do believe it is possible that only min payments are considered to have a (small) negative impact on creditworthiness - and therefore, why not go ahead and add a small £1 to the min payment each month, just in case? I really don't think it can hurt, and it could help. And it doesn't cost much (well, £1).

I agree with gglaze. No point tempting fate. I always pay over the min amount on my 0% BT cards. I find it easier to have a DD for a fixed amount too so I know exactly what the close balance will be when the deal comes to an end

rb10

Gromitt wrote: »

I've only ever made the minimum payment on 0% offers.

I notice it does say on my report whether or not a card is on a promotional offer.

So I'd therefore say:
Minimum payment when paying interest = bad (ie, why would you pay interest if you could afford to pay off the statement in full?)
Minimum payment when not paying interest: No effect on credit.

This is absolutely correct - it's the whole reason why the promotional rate marker was added to credit reports.