Paying a ‘fixed amount’

Clueless196

Hi all.
So I have some debt on a Barclays credit card, I had a look on the new replacement calculator they have and it shows me I’ll save (time and interest) considerably by paying a ‘fixed amount’. Is this something I need to set up to do? Can anyone explain to me how/why it’ll bring the balance down faster? I googled it and I was shown standing orders is this the same thing? Thanks for any help.

System

Paying a fixed amount vs....? what?

I mean it's pretty simple. The more you pay the more it will bring down the balance. If you are paying interest then throw all the spare money you have at it each month to get it cleared.

Clueless196

I’ll explain a bit more and tell you what it shows me.
So say I pay £85 per month now, it says I’ll be repaying for 28 years and pay £8348 interest. I click compare to a fixed amount - the payment I make is the same -£85- but it says it will take 4 years and pay £4781 interest. A big difference
So I’m just wondering what a fixed payment is

MallyGirl

It is probably comparing to paying off just the minimum which will decrease each month if you don't make further spends. Tiny amount of difference though
Just pay as much as you can as soon as you can, at least covering the minimum payment

Willing2Learn

You could set up a Direct Debit or Standing Order for the fixed amount, (more than the contractual minimum payment) so that it is all done automatically. Just use the calculator first, to work out how much you want to fix the payment amount. Then set it up!!!

Edit: And welcome to the forum Clueless196

phillw

A fixed amount stays the same no matter how much you owe. Paying the minimum may be the same repayment today, but when you've paid off half then the minimum payment will also be halved. As they are adding interest then its in your long term benefit to pay as much off every month as you can afford.

System

Pay as much as you possibly can.

Ben8282

Clueless196 wrote: »

I’ll explain a bit more and tell you what it shows me.
So say I pay £85 per month now, it says I’ll be repaying for 28 years and pay £8348 interest. I click compare to a fixed amount - the payment I make is the same -£85- but it says it will take 4 years and pay £4781 interest. A big difference
So I’m just wondering what a fixed payment is

This makes no sense. If you are currently paying £85 per-month every month without exception and that amount remains constantly at £85 per-month then you are already paying a fixed amount of £85.
I would assume a fixed payment is changing your direct debit to take a fixed amount of £85 each month or setting up a standing order to pay £85 per-month or paying £85 every month by other means.

boo_star

Ben8282 wrote: »

This makes no sense. If you are currently paying £85 per-month every month without exception and that amount remains constantly at £85 per-month then you are already paying a fixed amount of £85.
I would assume a fixed payment is changing your direct debit to take a fixed amount of £85 each month or setting up a standing order to pay £85 per-month or paying £85 every month by other means.

As MallyGirl has said it's likely they're comparing it to the minimum payment figures as either the OP only has a DD set up for the minimum payment which they're topping up manually or perhaps they have no formal arrangement set up at all (paying by bank transfer or debit card when they get the bill for example.)

It is perhaps a little odd that they wouldn't pick up on it but sometimes these things don't exactly work out.

Terry_Towelling

Clueless196 wrote: »

I’ll explain a bit more and tell you what it shows me.
So say I pay £85 per month now, it says I’ll be repaying for 28 years and pay £8348 interest. I click compare to a fixed amount - the payment I make is the same -£85- but it says it will take 4 years and pay £4781 interest. A big difference
So I’m just wondering what a fixed payment is

Surely the calculator makes it clear that the comparison is between paying either the minimum payment and making a fixed payment. The calculator doesn't know you are always paying £85.

Ben8282

Of course the very best solution would be to try to get this balance transferred to a new 0% card.