Which Kind of Direct Debit for Card?

alric

Setting up a Direct Debit to pay the Fluid Credit Card, there are 3 main choices.

• Payment Requested - Contractual minimum payment:plus an optional recommended extra payment which may vary depending on your balance
• Fixed amount: Allows you to pay a set amount each month. If this fixed amount is less than the contractual minimum, your payment will automatically be increased to cover the minimum amount and any arrears.
• Boosted Payment: An extra payment on top of your contractual minimum to help you clear your balance faster and save on interest. 

I want to pay the minimum each month, but this is not an (obvious)option.
Since I have no idea what these extra payments will be, is it best to opt for a fixed amount and set it  just below what I plan on paying each month? So that I dont get hit with any unexpected extra debits?

MyRealNameToo

alric said:

Setting up a Direct Debit to pay the Fluid Credit Card, there are 3 main choices.

• Payment Requested - Contractual minimum payment:plus an optional recommended extra payment which may vary depending on your balance
• Fixed amount: Allows you to pay a set amount each month. If this fixed amount is less than the contractual minimum, your payment will automatically be increased to cover the minimum amount and any arrears.
• Boosted Payment: An extra payment on top of your contractual minimum to help you clear your balance faster and save on interest. 

I want to pay the minimum each month, but this is not an (obvious)option.
Since I have no idea what these extra payments will be, is it best to opt for a fixed amount and set it  just below what I plan on paying each month? So that I dont get hit with any unexpected extra debits?

The minimum is option 1 but paying just the minimum isnt a great thing for your credit history unless it's a 0% interest card. 

There is normally a fourth option though which is oddly missing of paying the full statement balance. 

CliveOfIndia

Every card I've ever had gives you 3 options:

1)  Minimum Amount (which will vary depending on the outstanding balance that month)

2)  A fixed amount

3)  Full statement balance

For a standard interest-bearing card, option 3 is the best as it means you'll never pay any interest.  Option 1 is good if you are on a 0% promotional rate, so long as you also put money aside into a savings account to clear the remaining balance when the promotional rate expires.  Option 2 is also useful for a 0% promotional rate, if you just want to pay an equal amount each month such that balance will be cleared by the time the promotional rate expires.

Arguably option 1 is slightly better in this case, since you could be earning interest on your savings whilst only paying the minimum to the card each month.  But that takes discipline to make sure you don't touch the savings, plus you have to remember to pay off the balance at the end.  If the potential interest you could earn is negligible, option 2 just makes life a bit easier.

alric said:

I want to pay the minimum each month

This is not the best idea if the card charges you interest, it's only really recommended if you have a 0% rate in force.

MyRealNameToo

CliveOfIndia said:

Every card I've ever had gives you 3 options

Have seen some other options too recently like a percentage of the balance but they were the original 3 options. 

alric

I should have said that its a 0% card
Ive no wish to pay the full balance yet

Is option 3 going to be a fixed amount, decided by me, on top of the minimum?
Is option 1  an extra amount to be decided,each month, by the bank, on top of the minimum?

MyRealNameToo

alric said:

I should have said that its a 0% card
Ive no wish to pay the full balance yet

Is option 3 going to be a fixed amount, decided by me, on top of the minimum?
Is option 1  an extra amount to be decided,each month, by the bank, on top of the minimum?

Never seen 3 before but yes thats what you have said it is

No, 1 is simply the minimum 

CliveOfIndia

alric said:

I should have said that its a 0% card
Ive no wish to pay the full balance yet

In that case you probably want to go for option 1, but without the optional extra amount - i.e. just the minimum.

It appears to be worded somewhat confusingly, but I'm guessing that option 3 is the "optional extra" referred to in option 1.

For a 0% card you're safe to pay just the minimum, and that's actually the most efficient way if you can earn some interest on your savings.

But as I said originally, you absolutely must plan on being able to repay the balance in full once the 0% deal expires.  You may be able to transfer any remaining balance to another BT card, which would be a bonus.  But you absolutely mustn't bank on being able to do so.

There are very often posts on here along the lines of "My 0% deal has run out, I can't afford to pay it off and I can't get another BT deal, I'm now paying loads of interest, what do I do?"

alric

#1 and #3 are different.
#1 is minimum payment:plus an optional recommended extra payment which may vary

Is it only me that finds this confusing?
I DONT want an unknown VARIABLE amount coming out of my account each month, I want to pay the minimum, plus whatever I wish to pay, which will vary each month.

Nasqueron

Just pay the minimum and manual payments then!

alric

Nasqueron said:

Just pay the minimum and manual payments then!

I would if I knew which option that is.
I guess I have to call them to find out.

Nasqueron

alric said:

Nasqueron said:

Just pay the minimum and manual payments then!

I would if I knew which option that is.
I guess I have to call them to find out.

Option 2 - either a fixed amount or the minimum if less, so set the fixed amount as £1 or something

Personally with BT cards I err on the side of safety and do balance total / number of months and pay that so I know I am at least clearing the card down if the worst happens