DD Payment in Full and Manual Payments

Legacy_user

Apologies in advance for the rather stupid question! I have a credit card that I've just recently started using, and I've set up a DD to pay the full balance every month. The description of the payment type is 'Last statement balance'. I can also make payments towards the balance at any time directly, through online banking.

Ideally I'd like to make payments regularly to clear the balance (when I do my budget), so there's only ever a minimal amount owing at any one time. But I don't want to cancel the DD, as I like having the reassurance that if I forget to clear the balance it will be paid off automatically before payment is due. Say the statement balance is £100 and I clear it manually before the DD, would the DD payment still be £100 (last statement balance) putting me in credit, or would it be zero? And would it make a difference when I cleared it (i.e. before or after the statement is actually issued)?

CLAPTON

x-caitlin-x wrote: »

Apologies in advance for the rather stupid question! I have a credit card that I've just recently started using, and I've set up a DD to pay the full balance every month. The description of the payment type is 'Last statement balance'. I can also make payments towards the balance at any time directly, through online banking.

Ideally I'd like to make payments regularly to clear the balance (when I do my budget), so there's only ever a minimal amount owing at any one time. But I don't want to cancel the DD, as I like having the reassurance that if I forget to clear the balance it will be paid off automatically before payment is due. Say the statement balance is £100 and I clear it manually before the DD, would the DD payment still be £100 (last statement balance) putting me in credit, or would it be zero? And would it make a difference when I cleared it (i.e. before or after the statement is actually issued)?

depends upon the card as it varies between the different banks.


if you are paying in full by DD why do you want to make separate payments:
you pay no interest if you pay the full amount each month (assuming no cash / foreign transactions)

Archi_Bald

You need to check the terms of your card to be certain but some I know of will take your manual payment as the monthly minimum payment and will not call in any remainder of the particular statement by DD. Thus you could end up having to pay interest on the remainder.

Why not keep your money in an interest paying current account instead until it is needed?

YorkshireBoy

x-caitlin-x wrote: »

But I don't want to cancel the DD, as I like having the reassurance that if I forget to clear the balance...

The problem with that approach (and assuming yours in one that doesn't take the DD if manual payments are made), is that if you forget in month 14 you'll find that the DDI has lapsed under the 13 month dormancy rule, meaning you'll miss a payment (and incur fees of up to £24)! You should really allow the DD to collect every few months.

...it will be paid off automatically before when payment is due.

Corrected that for you. DDs are collected ON the due by date, not 'before' the due by date (or next working day).

enjoyyourshoes

You may want to consider:-

Allocating all you CC purchases against the bank account you have the DD for full repayment. Ensure you include these CC purchases when you do your daily reconciliation (including other DD's, SO., ATM, Debit transactions etc)

So.. you have already pre allocated the CC purchases when the statement & DD arrive. Reconcile the CC statement against your allocated CC purchases.

Always have the money in bank for CC DD, as previous respondent mentioned, use a high interest current account for all this , so you are benefiting from compound interest.

System

Thanks for the replies, everyone. You've all said what I really should know already - that keeping the money in my accounts is better than paying off early. It's just a new experience having debt of any kind, and I can't help but worry that I'll accidentally spend what I owe before it's paid. I am keeping a record of what I owe in my main budget so that's very unlikely to happen though, so I'll just have to trust myself and get used to it, I suppose!

Atidi

x-caitlin-x wrote: »

Apologies in advance for the rather stupid question! I have a credit card that I've just recently started using, and I've set up a DD to pay the full balance every month. The description of the payment type is 'Last statement balance'. I can also make payments towards the balance at any time directly, through online banking.

Ideally I'd like to make payments regularly to clear the balance (when I do my budget), so there's only ever a minimal amount owing at any one time. But I don't want to cancel the DD, as I like having the reassurance that if I forget to clear the balance it will be paid off automatically before payment is due. Say the statement balance is £100 and I clear it manually before the DD, would the DD payment still be £100 (last statement balance) putting me in credit, or would it be zero? And would it make a difference when I cleared it (i.e. before or after the statement is actually issued)?

It might well be!

But not to worry, it will be used against future purchases


I think you really need to decide on what is the best payment method for you.
Have you ever heard the saying, "why keep a dog and bark yourself?" :cool:

Atidi

x-caitlin-x wrote: »

Thanks for the replies, everyone. You've all said what I really should know already - that keeping the money in my accounts is better than paying off early. It's just a new experience having debt of any kind, and I can't help but worry that I'll accidentally spend what I owe before it's paid. I am keeping a record of what I owe in my main budget so that's very unlikely to happen though, so I'll just have to trust myself and get used to it, I suppose!

How do you pay for your internet access?

SuperHan

I have an instant access saver account for each Credit Card I have.

i.e., I have my main current account with Halifax. I also have 3 Halifax e-saver accounts, each named after a Credit Card (Halifax Clarity, MBNA, Santander).

When I make a payment on credit card, I transfer the corresponding amount from my current account to the relevant credit card account.

Then on the statement date, I check what day the DD is going to debit my current account, and set up a transfer for the right amount a couple of working days before.

I like this way best, as a quick glance at my current account tells me how much money I have to spend without having to think about my credit card, but I am still getting cashback/points etc on all my spending.

It takes a little bit of work, but I usually do the reconciliation once or twice a week, or immediately for a big payment, and it seems to work quite well!

I have also started rounding up to the whole pound when I do the transfers, so I have a little bit left over at the month end and I put that in to savings (every little helps!)