Trick for making minimum payment??

Yorkshire_Pud

MyLittleChickadee wrote: »

Hi all, wondering if this "trick" I've just come up for paying my credit card minimum payment with will work??
For the next couple of months I will be short of cash each month as there is not enough overtime at work. I always pay at least the minimum payment on my credit card which is around £100 per month. In order to 'avoid' paying this I had an idea to make a purchase on the card which I would be spending anyway and pay that off as my minimum payment?
For example I currently pay my council tax by direct debit however if I change this to manual payments and pay it on the credit card, approx £140, then I pay that £140 out of my bank, I'm assuming that would count as the minimum payment cleared for that month?
The current balance is 0% interest so no worries there and because I would be paying the council tax balance within the same month, I don't think there would be any interest on that either. Just wondering if this would actually work in practice?
I understand that I wouldn't be reducing the real credit card balance at all, but it's only to get me through a couple of months. Just trying to avoid the minimum payment becoming additional debt until overtime is back up!
Any thoughts?
Slightly worried that the credit card company might not like it if they see a pattern emerging?

Not sure this works as stated but could be a work around.

Martins no1 mantra about 0% balance transfer cards, NEVER NEVER I REPEAT NEVER spend on a balance transfer card (something like that, look it up!) because it ruins the 0% bit. Unless you also concurrently have a 0% offer on PURCHASES? If not they pay off the new spending and then hammer you for interest on the WHOLE balance that was at 0%. Don't do it!

My workaround? Open a new 0% on PURCHASES credit card and use that to pay your bill(s) and opt to pay the minimum. Then you still have most of the money to pay the minimum on the balance transfer card.

Risk here though is spiralling debt that you can't service later on unless you know you are going to have an upswing in income in the near future.

I would go to Citizens Advice CAB and ask to talk to someone financially savvy so you don't end up in debt you can't manage. You don't want a short term fix that turns into a long term nightmare!

Hope this helps, I might be missing something obvious as some seem to think your original plan works but I don't think it does.

[Deleted User]

Yorkshire_Pud wrote: »

Martins no1 mantra about 0% balance transfer cards, NEVER NEVER I REPEAT NEVER spend on a balance transfer card (something like that, look it up!) because it ruins the 0% bit. Unless you also concurrently have a 0% offer on PURCHASES? If not they pay off the new spending and then hammer you for interest on the WHOLE balance that was at 0%. Don't do it!

That's not quite accurate. What happens is that payments are allocated to the new spend (as it's at the highest rate) but you'll pay interest on it as you haven't cleared the whole balance.

You'll continue to be charged 0% interest on the rest as normal.

mwarby

I belive the rules changed a few years ago, so spending on 0% transfer card isn't so bad.

It used to be that credit card companies would structure it so you always paid the lowest rate debt off first, which meant interest would build up on the higher rates (like cash or purchases)

Now its the rule for all credit card companies that the highest rate gets paid off first, which avoids that trap

Yorkshire_Pud

mwarby wrote: »

I belive the rules changed a few years ago, so spending on 0% transfer card isn't so bad.

It used to be that credit card companies would structure it so you always paid the lowest rate debt off first, which meant interest would build up on the higher rates (like cash or purchases)

Now its the rule for all credit card companies that the highest rate gets paid off first, which avoids that trap

OK but at the very least you will be paying the full interest on the new spend going forward OR you can't opt to pay ALL the new spend off without the rest of the balance then incurring interest going forward?

So a new 0% card for spending would work better but not if the OP gets into spiralling debt hence go to CAB.

Either way it speaks of increasing debt for the OP.

[Deleted User]

Yorkshire_Pud wrote: »

OK but at the very least you will be paying the full interest on the new spend going forward OR you can't opt to pay ALL the new spend off without the rest of the balance then incurring interest going forward?

Not quite. You can pay off the new spend and once that and any trailing interest is cleared, you're just left with the 0% balance.

No matter what other transactions you make, the 0% balance stays at 0% unless you breach the terms.

Ben8282

There is no problem as such to spending on a 0% balance transfer card providing that
(a) you are prepared to pay interest on the purchase spend
and
(b) you time your payments correctly so as to ensure you repay the purchases and not the 0% balance ie do not repay a purchase until it has appeared on a statement.
The 0% balance will remain at 0%.

MyLittleChickadee

Thanks everyone for your input and notice of potential pitfalls.
I contacted my credit card company and specifically asked if I would be charged any interest if putting a purchase on the card but paying it off the same month. (I did not mention this was with the sole intention of clearing the minimum payment) For info, here is their reply...

"You are completely right in saying that if you make a purchase on the account and if you pay that purchase balance in full each month then there will be no interest applied on the account.

Also, I would suggest you that let the purchase balance get billed first and then make the payment so that it clears your purchase balance and not your promotional balance."

[Deleted User]

That's true of a couple of cards, but very much the minority. Which card do you have?

MyLittleChickadee

Oh really? I must be in luck then! Its a Barclaycard

Terry_Towelling

MyLittleChickadee wrote: »

Oh really? I must be in luck then! Its a Barclaycard

Barclaycard and Nationwide are the only two card providers I know who separate their promotional balances from new spending in this way - there may be others, though. So, yes, as long as you wait for the new spending to appear on a statement and then pay the value of that new spending (subject to also meeting the minimum payment requested) you will not be charged any interest.