Help with minimum payments

crazyshady

Hi there, basically I got the letter last month saying in May i will be paying an extra £12 per month on my credit card due to some changes the Bank Of Scotland have made. Right now I'm usually around £50 per month as minimum payment so that would take me up to £62.

Due to me being a carer and not able to work full time I am finding it hard. I called them up to explain that and I was told over the phone very clearly that the Bank of Scotland do not do anything to help customers, they cannot freeze interest or do anything to help me, all they can do is provide free advice on how to manage my money better, I don't have enough money coming in, that's the problem it's not that i'm full of money and i'm wasting it all.

And what annoyed me was I threw the letter away! And on the letter there was a specific part that said if you have trouble paying your bill to contact them immediately, I wish i'd kept it because maybe it was a special number or department, I just called up the standard credit card number. There was even a section on this site where it said that Bank of Scotland customers got a 0% interest period when they asked for help. Maybe it's out of date now.

What I was wanting to ask was for someone who understands it all to tell me what differences there could be to my bills. I have a chance of being helped out to the tune of £500 - £550 and I wanted someone to tell me if I paid that to my credit card what difference my minimum payments would be because I don't understand it and from what I have tried to find out, depending on what you have bought you could be paying different interests on different things and they try and clear the most expensives ones off first. The card has not been used in years and i always pay more than the minimum payment but I just want it cleared asap.

Here are some details from my last statement.

Credit limit, £5,200
Your new balance, £2,366.76
Next months estimated interest, £48.21

Your current rates of interest are:
25.95% p.a. (variable) for Cash Withdrawals
25.95% p.a. (variable) for Balance or Money Transfers
25.95% p.a. (variable) for all other amounts payable under
your agreement.



As you can see that's quite a bit of interest. Do you think if i called again they could do anything with the interest rates or give me a 0% period or do they just not help at all? And if i was to pay £500 to that would it really help or would i still be paying the same amount every month and still be charged an extra £40+ in interest every month.

bigadaj

How much do you earn and how much spare do you have per month, those are the key things. If you head over to the debt free wannabe board and do a statement of affairs then people can comment and advise on where you can save money and how much you can then throw at the debt.

Paying minimums is a bit of a waste of time, at your interest rate then the payments are barely covering interest and the debt will take years if not decades to be cleared.

The bank won't deal with you whilst you're still paying so your options are either to throw some serious money at the debt to clear it in the next couple of years, or default, enter a payment plan and accept a trashed credit record for six years or more.

In theory you could, apply for a 0% balance transfer card and then put all the payments into that, dependent on the fee then at £50 per month then it would still take four years to pay back the money.

Try the credit card checkers on this site for any cards that might accept the balance, a year or two would allow you to put a dent into it. Review your budgets to make savings where possible, increasing income is the other option but difficult for most people.

It may be that defaulting is an option but it's obviously not a move to take lightly and there will be hassle and stress as people try and recover the debt, it may be sold on, and you struggle to get credit elsewhere for several years but may be better than making no impact in an existing debt for even longer.

Ben8282

I find it difficult to understand what your actual problem here is. You say that as a result of changes to the way the minimum payment is calculated your monthly minimum payment will increase by about £12. You also state later in your post that you always pay more than the minimum anyway. So what is the problem? Even if the 'more than the minimum' that you pay is only 1p more, you will still only have to pay £11.99 per-month more.
You would appear to have a fair amount of unused credit on this card. If paying this small extra amount each month will really be difficult for you, you could perhaps pay the £11.99 or whatever more and make a £11.99 purchase on the card to put your finances for the month back in order.
Contacting the credit card provider and asking for assistance because of this small increase in the minimum payment was a foolish move. You have now alerted them to the fact that your financial situation is such that you cannot afford an extra £12 per-month. Not good.
From the interest rates stated you are paying the same rate of interest on everything.
Obviously reducing the balance by making a larger than usual payment will result in less interest being charged as the balance will be lower. The minimum payment due each month will also decrease.
What you really need to do is to try to shift this balance to a 0% card. Depending on your credit history this may or may not be possible. Try an eligibility checker.

cheesetoast

Wow... 25.95% interest? Take a look on the credit card eligibility checker to see if there's a card you can balance transfer too. Even transferring to a card with no transfer offers and, say, a 12.9% APR would help.

bigadaj

Ben8282 wrote: »

I find it difficult to understand what your actual problem here is. You say that as a result of changes to the way the minimum payment is calculated your monthly minimum payment will increase by about £12. You also state later in your post that you always pay more than the minimum anyway. So what is the problem? Even if the 'more than the minimum' that you pay is only 1p more, you will still only have to pay £11.99 per-month more.
You would appear to have a fair amount of unused credit on this card. If paying this small extra amount each month will really be difficult for you, you could perhaps pay the £11.99 or whatever more and make a £11.99 purchase on the card to put your finances for the month back in order.
Contacting the credit card provider and asking for assistance because of this small increase in the minimum payment was a foolish move. You have now alerted them to the fact that your financial situation is such that you cannot afford an extra £12 per-month. Not good.
From the interest rates stated you are paying the same rate of interest on everything.
Obviously reducing the balance by making a larger than usual payment will result in less interest being charged as the balance will be lower. The minimum payment due each month will also decrease.
What you really need to do is to try to shift this balance to a 0% card. Depending on your credit history this may or may not be possible. Try an eligibility checker.

Think you've missed the problem.

Sounds like the OP has a very tight budget and hadn't realised that the debt wasn't reducing or was happy just making minimum payments. The minor increase is the straw that has broken the camels back.

0% card would be good but may not be possible, which is why I listed the options above. Still I could be wrong and we'll have to wait for the OP to return and comment, though the note about being a carer and struggling for full time work would suggest that the actual debt and cosmequent interest is the problem.

Dan83

See if you can get a new credit card with a 0% balance transfer, with 0% interest.

That way, the £50 you pay each month will go towards paying off your debt, not covering interest.

crazyshady

I have tried the eligibilty checker, the only one that came up was the Tesco one and they said no right away.

The debt going up to £62 a month is not far off what I've been paying anyway so the way they work it out is I pay that and then I get hit with £40 interest so i'm only really paying £20 a month or so.

Being a carer means I can only earn so much a week in a part time job so no that's probably why I can't get a 0% card and I don't have enough income for it. It would be ideal but right now they're just accepting me for one.

I know the interest rate is high. It's my fault for not paying a lot more than the minimum. I suppose if i'm honest i was blind to it all. I was blind paying what I did and then when they said it's going up again and what it's going up to is what i'm paying already, it means to make it right i'd need to pay £72+ a month which just isn't gonna happen.

That's why I said if i paid £500 towards this would it make a big difference or any because if it's not gonna make a big difference and i'm still £50 or £60 a month then i'd rather leave it and try get a part time job and try and work some hours out or work something out and see if someone will take me on and just work for nothing and just try and clear it that way.

YorkshireBoy

Looks like they've moved you from 2% minimums to 1% + interest.

Paying off £500 will reduce your new minimum payment by around £10 a month (from £70 to £60). Still more than you were paying before, but not as bad as it could have been.

crazyshady

That's what I was meaning, it's not money that i have but it's offered to me but I would never just take it for the sake of taking it. I wanted to know if i used it to pay the credit card would it make a big difference for me because if it doesn't i'd rather not take the money and try other things.


I know this isn't the right place to ask but do any of you know if there are work from home jobs for people that are computer literate? I've heard in the past people talk about doing data entry and working on spreadsheets and some did call centre work from home but i never knew if it was legit or not. Is there anything like that I could be doing to increase my income because I am allowed to earn a certain amount of money per week.

bigadaj

There will be work from home jobs maybe ask on the employment or other boards.

It's an area where you need to exercise a lot of caution though, it's often heard of people being scammed for upfront payments, struggling to get paid and other issues. You would probably be defined as self employed, have to deal with your own tax and these sort of jobs often work out as piece work being paid well below the equivalent of the minimum wage.

redpete

crazyshady wrote: »

That's what I was meaning, it's not money that i have but it's offered to me but I would never just take it for the sake of taking it. I wanted to know if i used it to pay the credit card would it make a big difference for me because if it doesn't i'd rather not take the money and try other things.

Paying £500 off the CC will save something over £10 in interest each month meaning that an extra £10 per month goes towards paying off your debt.

Worth doing this as well as trying other things in my opinion.