New to Credit Cards - Repaying the same day statement generated a good idea?

saintscouple

Sorry for the basic question, but I have a couple of bad credit, credit cards and want to make sure i´m doing all i can to bring credit back on track. 

I have a capital one with a £200 limit, and a Vanquis with £600 limit. 

3 months in and i am paying the balance (less than 20%) in full the same day i get notification of a statement - I use their direct pay option - guess it saves them in card transaction fees.

Just wondered if paying the same day the statement is generated is a good idea or not?
And would welcome any advice on treating the credit cards so i can be considered for higher credit limits.

One point, like recently i had a big vet bill so used the Vanquis to pay for it, but then a week after i made an additional payment to bring the balance below 20% in prep for the statement - I guess this is ok, and won´t have a negative effect making additional payments? 

Many Thanks

Nasqueron

If you pay after the statement is generated, that's fine but you do miss days of extra money in your account as it's not normally due for a fair time e.g. my CC statement is normally on the 19th and due the following 16th, so I have upwards of 27 days with the money in my account 

Just set a direct debt up to pay in full every month and forget about it (beyond ensuring you have funds to match the DD amount)

If you use the card and pay in full before the due date they'll probably up the limit after a while though both are sub-prime lenders and don't often give huge limits out because that's not their target market.

I don't know why you would worry about the 20% to be honest, it's not a relevant figure, utilisation matters not if paying the card in full every month. There is no harm paying it early but it doesn't really do anything except cost you interest

saintscouple

Nasqueron said:

If you pay after the statement is generated, that's fine but you do miss days of extra money in your account as it's not normally due for a fair time e.g. my CC statement is normally on the 19th and due the following 16th, so I have upwards of 27 days with the money in my account 

Just set a direct debt up to pay in full every month and forget about it (beyond ensuring you have funds to match the DD amount)

If you use the card and pay in full before the due date they'll probably up the limit after a while though both are sub-prime lenders and don't often give huge limits out because that's not their target market.

I don't know why you would worry about the 20% to be honest, it's not a relevant figure, utilisation matters not if paying the card in full every month. There is no harm paying it early but it doesn't really do anything except cost you interest

Thank you, most helpful.

I´m wary of setting up a direct debit for the full amount - just in case i have an emergency and cannot afford the full balance - I would then have to cancel the direct debit, and make a manual payment, which would probably be frowned upon.

I guess i´m being over cautious not to fall into the same traps as i have previously. I even have a separate bills account that I transfer money over to, ensuring all my monthly bills are paid. 

CliveOfIndia

@Nasqueron has, as always, given sound advice, so I won't reiterate what they said.  Just to highlight one particular point ...

saintscouple said:

Thank you, most helpful.

I´m wary of setting up a direct debit for the full amount - just in case i have an emergency and cannot afford the full balance - I would then have to cancel the direct debit, and make a manual payment, which would probably be frowned upon.

Cancelling the DD and making a manual payment will do no harm, in itself.  What will be less than ideal is not paying the full balance.  Obviously it'll cost you a fair chunk of interest, and always paying in full is absolutely the best option - both from your own financial point of view, and from the point of view of your credit history.

Purely in terms of your credit history, not paying the full amount is not the end of the world.  It's not quite as good as paying in full, but as long as you pay more than the minimum then it's no big deal in the grand scheme of things.

Paying only the minimum (or even worse, not paying at all) can be frowned upon, as it makes you look like you're living beyond your means.  That's not me preaching, it's just how a lender would objectively view you.

As is often advised on the Debt-Free Wannabe board, having an emergency fund is so important for precisely this reason - to cover unforeseen costs.

saintscouple

Thank you both, 

So i can pretty much carry as on as i am doing, and making additional payments when like, and continuing to pay the statement in full the way i am doing. 

Much appreciated

CliveOfIndia

saintscouple said:

So i can pretty much carry as on as i am doing, and making additional payments when like, and continuing to pay the statement in full the way i am doing. 

Yes, you can make interim payments at any time.  It won't cause any harm, though you are missing out on a period of interest-free credit.

The only two things to watch are ....  Firstly, don't clear the entire balance just before the statement is generated.  It'll not do any harm, but when the credit card company reports to the CRAs it'll look like you're not using the card (as the statement will show a zero balance), so you're defeating the whole object of using it to build up a good credit history.

Secondly, irrespective of any interim payments you may make, make sure you always pay the balance that's shown on the statement when it arrives.  The way transactions are processed can seem a little confusing, and sometimes the statement may not be quite what you expect if you've made an interim payment.  There's nothing dodgy going on, it just depends on the timings of when the transaction was statemented and when any interim payment was received.

Bottom line - there's no need to fret over it, as long as you pay the full statement balance (or, in extreme circumstances, pay at least the minimum as shown) then you'll be fine.

Brie

I have found it useful for certain cards to pay a set amount on the DD.  So if I set the amount for £100 I know that if the statement balance is £95 that's all that will get taken.  But if it's more than £100 all they take is £100 and then I can decide if I can afford the extra or not.  It helps to ensure you don't miss a payment but still allows you a bit more control than having a DD paying off in full each month.  

fergie_

The trap to watch for with some cards is if you have a DD and then make a payment, they don't collect the DD - even if its less than the amount due / outstanding balance.

The way you have described gives you control of your repayments, but you need to be disciplined and make sure you don't miss any payments. With a low credit limit, you also need to stay inside of it, so making interim payments also lets you spend more on the card - which can be useful for the CC protection or if it were a rewards card.

lr1277

I went through a time when I had cashflow problems, so I set the direct debit to only take the minimum on the stated date. I would then make a payment to cover the remainder. However once or twice I got my timings wrong and the additional payment went through late. Can't remember if this generated interest or not, but did cause me a lot of stress. So I took the decision to have sufficient money for the direct debit to be paid in full on the date required by the bank. Much less stressful for me now.

Out of curiosity, if you have a bill paying current account, can the full direct debit not be paid from that?

You could transfer the relevant amount to your bill paying account every time you use the credit card. Or when you get the card statement, put the statement balance in the bill paying account. Just a thought.

saintscouple

lr1277 said:

I went through a time when I had cashflow problems, so I set the direct debit to only take the minimum on the stated date. I would then make a payment to cover the remainder. However once or twice I got my timings wrong and the additional payment went through late. Can't remember if this generated interest or not, but did cause me a lot of stress. So I took the decision to have sufficient money for the direct debit to be paid in full on the date required by the bank. Much less stressful for me now.

Out of curiosity, if you have a bill paying current account, can the full direct debit not be paid from that?

You could transfer the relevant amount to your bill paying account every time you use the credit card. Or when you get the card statement, put the statement balance in the bill paying account. Just a thought.

Yeah if i were to pay via direct debit it would be the billing account - but at this time i decided to do what i´ve been doing and just paying on receipt of invoice seeing that it won´t harm my credit doing it this way. 
Maybe not the best option in regards to duration in having 0% interest, but my one spend is usually just a few days after payment, so not that fussed.

Main reason for wanting a larger credit limit is like for a cruise, where they take a pending transaction each night for the day before spend, which eats in to your available limit until they drop off. A card with a £2k limit would be perfect but not sure if the likes of capital one or vanquis go to that level?

Nasqueron

lr1277 said:

I went through a time when I had cashflow problems, so I set the direct debit to only take the minimum on the stated date. I would then make a payment to cover the remainder. However once or twice I got my timings wrong and the additional payment went through late. Can't remember if this generated interest or not, but did cause me a lot of stress. So I took the decision to have sufficient money for the direct debit to be paid in full on the date required by the bank. Much less stressful for me now.

Out of curiosity, if you have a bill paying current account, can the full direct debit not be paid from that?

You could transfer the relevant amount to your bill paying account every time you use the credit card. Or when you get the card statement, put the statement balance in the bill paying account. Just a thought.

If you don't pay the balance off in time, in full, they charge you the interest on the whole statement, even if you only had a few pounds left so it can be an expensive mistake.

You could also get a fee for paying late if the minimum wasn't already paid just for OP