Overpayments not making much difference

Brokechick

I've got a balance of roughly £5600 on MBNA. Over the last two months I've overpaid by £75 yet the min repayment and the interest seem to be coming down slower than when I was only paying the minimum. Any ideas guys? Thanks

Fruit_and_Nut_Case

Brokechick wrote: »

...the interest seem to be coming down slower...

Only seems to be? Check what is actually happening. Post numbers please.

d70cw6

if you're overpaying your balance shouldn't it be in credit?

agrinnall

d70cw6 wrote: »

if you're overpaying your balance shouldn't it be in credit?

If you don't understand how credit card repayments work should you really be commenting?

kittybee

Have you checked whether they have bumped up your interest rate ? Barclaycard did that to me when I started to overpay.

Brokechick

New to this so not sure if replying correctly but here goes
Jan - bal 5942 dd 140 int 74
Feb - bal 5875 dd 132 int 68 o/pay 75
Mar - bal 5736 dd 125 int 66 o/pay 75
Apr - bal 5602 dd 122 int 65
I know it's only a few quid but the interest and min payments went down by more in jan and feb than the later months when the £75 overpayments were made.
I really want to pay it off but it's demoralising when the balance doesn't seem to be going down ��

NHS_worker_bee

What's the APR % on your MBNA card ? If it's high it could be that your minimum payments + overpayment are only making a small dent in the balance after you have paid the interest off, but the balance should be slowly reducing, can you look online at your last few months of CC statements?

Are you in a position to switch some/all of you MBNA card balance to a 0% balance transfer card(s)? That's what I did and I only wish I'd done it sooner.

MSE Martin's guide to 'balance transfer credit cards' really helped me.

Brokechick

kittybee wrote: »

Have you checked whether they have bumped up your interest rate ? Barclaycard did that to me when I started to overpay.

Thanks, I'm sure I've checked, as soon as I can wrestle back the iPad to check the statements I'll have another look. If not sure ill phone them.

[Deleted User]

Please list the following.

Current Balance.

APR.

Monthly payment you were making originally.

Monthly payment you are now making, including the overpayment.

YorkshireBoy

NHS_worker_bee wrote: »

What's the APR % on your MBNA card ?

Doesn't look too high to me. Quite the opposite in fact...on the numbers posted it seems like it's 14.9-15.9%



"Feb - bal 5875 dd 132 int 68"


68/5875 x 100 = 1.157% monthly (which equates to 14.8% APR)


Could be a little higher due to number of days in statement period?

PeacefulWaters

Interest is reducing each month.

Balance is reducing by direct debit plus overpayment (and increasing by interest charge).

Paying £75 extra on a 15% rate will reduce the interest charge by around £1 a month. So you wouldn't expect to see any significant improvement at the start and it could be masked by number of days in the statement period differing.

In other words it's highly unlikely that there's any error on the part of the card issuer.

Multiple months of £75 overpayments will have a cumulative effect though and this will accelerate the interest saving over time.

The other issue is that as the debt reduces so does the minimum direct debit payment. This means that your combined minimum payment plus £75 is reducing each month. You might be better paying a fixed total (e.g. £210 a month) rather than a fixed overpayment.

You're expecting too much too soon. Long term discipline will get you out of debt and you've made a good start. Keep at it.