Minimum Payments

stucosby

I'm sure this question has been done to death but...

I have 2 credit cards with £6.5k spread across them from a car purchase. I receive approximately a £1.5k bonus every 2 months which I use to supplement my salary, savings etc.

What's to stop me from only paying the monthly minimum payments on these cards so that I'm more cash rich (and able to put money aside/in savings) and then when the 0% expires on each card, ditch and get a new card?

In theory, i could do this perpetually. I know this would take a decade to clear down the balance but is there any harm in this? Is it a normal 'done thing'?

Thanks again.
Stu

[Deleted User]

It's fine until you can't get a new deal. Or if you're not earning more than the BT fee in interest.

And the history of min payments and debt would negatively impact any further credit you might want.

But otherwise ok. It's known as stoozing - there's a separate board for it.

thebritishbloke

If you're planning to do that, always pay the minimum payment + £1 so that you don't get a minimum payment marker on your credit report.

It's worth doing for the term of your 0% deal. Say you have 18 months 0% on those cards, just keep the money in a savings account earning interest, then at the end of the 18 months, pay off the remainder of the cards. No point in incurring more BT fees for it etc.

YorkshireBoy

stucosby wrote: »

What's to stop me from only paying the monthly minimum payments...

Some say it's better to pay a little more (say £1) than the minimum, since many (most/all?) lenders now inform the CRAs if you're making only minimums. However, they also inform them if you're on a promotional rate...although don't say whether it's 0%.

I've never paid more myself, despite stoozing successfully for nearly 10 years, but it's something you may wish to consider.

If you do decide to follow it through, be sure to plug your numbers into a calculator to check it's profitable to do so...

http://www.stoozing.com/calculator/stoozcalc.php

stator

You need to be honest with yourself. Will you be able to keep the money in a savings account and leave it there until the 0% ends? If yes then go ahead with the advice above.
If you think you will be tempted to spend the savings on something else, pay off the CC. There is no guarantee you will be offered another 0% card so it's important you have a realistic plan to pay it off when the 0% ends.
I used to do "stoozing" myself. I can be fun for a while, but if you are think if of applying for a mortgage any time soon you might want to just simplify your credit file by dropping down to one or two cards that you use sensibly with no long term balances.

stucosby

I'm aware of stoozing but that was specifically to profit from your activity rather than just avoiding clearing the balance! Thanks for all the answers - i think i'll continue with minimum payments - plus an additional £1 each month on both cards. I'll also chuck some money at the cards on bonus months where i feel i can.

Ultimately, my worse case scenario should i be unable to get a new credit card in the future is that i sell the car. It will have depreciated in value but not significantly enough to cause a problem.

Fruit_and_Nut_Case

OP: You may be up to speed on this but it's worth putting a reminder here that these days the best places for cash savings trend to be Current Accounts rather than so-called Savings Accounts.

bargainbetty

Alternatively, you could pay off the credit cards altogether, and be richer each month because you aren't in debt. Just a thought, but not having it there is generally a bit better overall than having it and risking it costing you in the long run.