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  • FIRST POST
    • Anthorn
    • By Anthorn 12th Jun 18, 6:41 PM
    • 3,818Posts
    • 985Thanks
    Anthorn
    New Day: Bye Bye Minimum Payment?
    • #1
    • 12th Jun 18, 6:41 PM
    New Day: Bye Bye Minimum Payment? 12th Jun 18 at 6:41 PM
    The Notice Of Variation sent out to New Day (i.e. Aqua and Amazon credit cards) through messaging in their online account manager appears to do away with the Minimum Payment. There will be attention paid to what New Day calls "paying down the balance". It doesn't really affect me personally but it might affect customers who can only afford the minimum payment.

    Here it is:
    What happens if you are not making sufficient payments?
    As responsible lenders, our aim is to ensure that you are repaying your balance within a reasonable period whilst also allowing you the flexibility to spread your repayments and better manage your finances. If you only pay the contractual minimum payment (or close to it) every month, the balance on your account will take a longer time to pay off and this will cost you more.
    We might recommend an extra payment
    We will look at your account regularly and if we notice that over a reasonable period of time you have not made sufficient payments to help you pay your balance down, we may recommend you make an extra payment in addition to your contractual minimum payment. This is an amount that will help you pay down your balance more quickly than if you continued with your existing repayment pattern and help you reduce the amount you are paying for credit. We will let you know how much you should pay and this recommended extra payment will be shown in your statement each month.
    If we suggest that you pay a recommended extra payment, the amount of this may vary each month and we will request payment depending on how you are paying off your balance, so we may not request it every month.
    You can let us know if you would prefer not to pay the recommended extra payment (see How you can contact us), but we may contact you, or ask you to contact us, to discuss your account.
Page 2
    • enthusiasticsaver
    • By enthusiasticsaver 13th Jun 18, 5:30 PM
    • 6,883 Posts
    • 14,831 Thanks
    enthusiasticsaver
    Paying minimums only for significant periods of time is a bad thing and in general credit cards should dissuade people from this but of course this will hurt their profits.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • dazzaofdagenham
    • By dazzaofdagenham 13th Jun 18, 5:51 PM
    • 1,203 Posts
    • 392 Thanks
    dazzaofdagenham
    Would that not be a standing order...minimum plus say 10%...sorted.
    Originally posted by Samsung_Note2
    Very true...
    • eskbanker
    • By eskbanker 13th Jun 18, 5:59 PM
    • 7,866 Posts
    • 8,705 Thanks
    eskbanker
    The minimum payment should really be more than the APR % otherwise you'll never pay the thing off.
    Originally posted by Owain Moneysaver
    For any credit cards other than those still on pre-2011 Ts & Cs, the minimum payment already is more than the interest payment and must include repayment of at least 1% of the balance as well, as per https://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card:
    For all credit cards taken out since April 2011, minimum payment levels must be at least 1% of the balance plus that month's interest, any default charges and the annual fee (if there is one).
    • Shakin Steve
    • By Shakin Steve 13th Jun 18, 7:43 PM
    • 1,506 Posts
    • 1,247 Thanks
    Shakin Steve
    From what I remember about the FCA guidance, if after a couple of years the balance on your card remains overall the same then lenders need to take action.

    A credit card is not designed as a permanent line of credit that you don't ever pay off.

    I think it's important to remember these rules are about protecting consumers from themselves or from lenders who are happy to lend at high interest rates indefinitely.

    Most people pay their cards off or pay enough off that they don't spend 1000's in interest.
    Originally posted by camelot1971
    A credit card is exactly a line of credit that you never pay off. If I spend 500 in one month, and pay the full balance the next, then I can spend the 500 again.
    I came into this world with nothing and I've got most of it left.
    • Dandytf
    • By Dandytf 13th Jun 18, 7:58 PM
    • 1,430 Posts
    • 426 Thanks
    Dandytf
    I have 2 'new days' cards with medium balances.
    Trying to pay at least min+5 per month one time.
    The larger of the two balances will take a redicules time to cleat.
    Though I'm in effect snowballing a few cards-starting with smallest balance card.
    I've read quite a few of these t+C's from various card providers lately, let's hope they don;t start enforcing exceptionally large min payments.
    Though Tesco Card does well starting at 25 minimum payment.
    With rates to rise any time, lots of card providers could follow in hiking their apr.
    sc dmp 2012 13k Jan 2018 8840 paid. 60% approx.
    Mid 2018 Help2save 50 uk pounds per month
    Mid 2018-Virgin Money E-saver V11 -250+50 uk pounds per month
    • dazzaofdagenham
    • By dazzaofdagenham 13th Jun 18, 9:10 PM
    • 1,203 Posts
    • 392 Thanks
    dazzaofdagenham
    I have 2 'new days' cards with medium balances.
    Trying to pay at least min+5 per month one time.
    The larger of the two balances will take a redicules time to cleat.
    Though I'm in effect snowballing a few cards-starting with smallest balance card.
    I've read quite a few of these t+C's from various card providers lately, let's hope they don;t start enforcing exceptionally large min payments.
    Though Tesco Card does well starting at 25 minimum payment.
    With rates to rise any time, lots of card providers could follow in hiking their apr.
    Originally posted by Dandytf
    Would you describe a medium balance.

    I to have 2 newday cards.....one from amazon...started with a 500 limit which went to 1400 and now they have upgraded me to a platinum card with a 5k limit...Im quite shocked at this and may ask them to halve the limit as I could spend that away.
    I have a standing order set up from bank to pay a 20 pounds a week and then I use fastervpayments to clear more than necessary.

    Im trying to control my credit as I got into debt several years ago and will not be making the same mistake again.

    Thanks
    • Dandytf
    • By Dandytf 13th Jun 18, 9:25 PM
    • 1,430 Posts
    • 426 Thanks
    Dandytf
    Medium balance 1275 approx -limit 2.1k
    This is by far the largest balance from all cards.
    Though mid or late 2019 I'll increase payments considerably.
    Allowing some time for interest rates starting to rise as I want to return to mortgage overpayments 1st.
    sc dmp 2012 13k Jan 2018 8840 paid. 60% approx.
    Mid 2018 Help2save 50 uk pounds per month
    Mid 2018-Virgin Money E-saver V11 -250+50 uk pounds per month
    • jonesMUFCforever
    • By jonesMUFCforever 13th Jun 18, 9:36 PM
    • 25,090 Posts
    • 12,342 Thanks
    jonesMUFCforever
    Medium balance 1275 approx -limit 2.1k
    This is by far the largest balance from all cards.
    Though mid or late 2019 I'll increase payments considerably.
    Allowing some time for interest rates starting to rise as I want to return to mortgage overpayments 1st.
    Originally posted by Dandytf
    All well and good but which debt is charged the higher rate?
    If it was me I would pay off the card first.
    What goes around - comes around
    give lots and you will always receive lots
    • Dandytf
    • By Dandytf 13th Jun 18, 9:59 PM
    • 1,430 Posts
    • 426 Thanks
    Dandytf
    All well and good but which debt is charged the higher rate?
    If it was me I would pay off the card first.
    Originally posted by jonesMUFCforever
    Yeah I'm not following the highest rate card as such,
    Though thankfuly the 1st chosen card is smallest balance at possibly highest rate -Cashplus 32% approx- cleared either June or July,
    Then Tesco is next chosen balance@550 approx -27.5 this is my recent years lowest apr considerably though I'm happy a clearing that this year.
    sc dmp 2012 13k Jan 2018 8840 paid. 60% approx.
    Mid 2018 Help2save 50 uk pounds per month
    Mid 2018-Virgin Money E-saver V11 -250+50 uk pounds per month
    • Dandytf
    • By Dandytf 13th Jun 18, 10:01 PM
    • 1,430 Posts
    • 426 Thanks
    Dandytf
    Next cards are in high 20's or low 30's apps
    To be dea,t with during 2019-all 3 are currently min+5
    sc dmp 2012 13k Jan 2018 8840 paid. 60% approx.
    Mid 2018 Help2save 50 uk pounds per month
    Mid 2018-Virgin Money E-saver V11 -250+50 uk pounds per month
    • luvsmoothies
    • By luvsmoothies 14th Jun 18, 11:48 AM
    • 536 Posts
    • 364 Thanks
    luvsmoothies
    I can see the posts now:

    I signed up for DD as recommended on this forum and by Martin. I started to get these messages about paying more than the minimum. No problem, I thought. I've done everything right: I signed a DD. But after a few years I checked a statement and found I still owe xxx. (I don't normally bother with statements, I'm too busy.) So imagine my horror when I called them up to find that the reason for this is that they didn't take the extra. The woman on the phone was very rude to me. She kept shouting and swearing at me and I felt humiliated. She tried to tell me that I must pay this money. Why should I pay xxx to greedy bankers when it was their fault I'm in this mess? My question is: Obviously I'm not paying the balance back. But how much compensation am I entitled to?
    Originally posted by chattychappy

    You're entitled to zero compensation
    • eskbanker
    • By eskbanker 14th Jun 18, 12:36 PM
    • 7,866 Posts
    • 8,705 Thanks
    eskbanker
    I can see the posts now:

    I signed up for DD as recommended on this forum and by Martin. I started to get these messages about paying more than the minimum. No problem, I thought. I've done everything right: I signed a DD. But after a few years I checked a statement and found I still owe xxx. (I don't normally bother with statements, I'm too busy.) So imagine my horror when I called them up to find that the reason for this is that they didn't take the extra. The woman on the phone was very rude to me. She kept shouting and swearing at me and I felt humiliated. She tried to tell me that I must pay this money. Why should I pay xxx to greedy bankers when it was their fault I'm in this mess? My question is: Obviously I'm not paying the balance back. But how much compensation am I entitled to?
    Originally posted by chattychappy
    I have highlighted the errors of your ways!
    Originally posted by Blackbeard of Perranporth
    You're entitled to zero compensation
    Originally posted by luvsmoothies
    Doesn't anyone on here have a sense of humour anymore (or the ability to read the first line of a post)?! Unfortunately it says quite a lot about the sense of entitlement shown by many posters that a clear parody seemingly isn't recognisable as such by some....
    • chattychappy
    • By chattychappy 15th Jun 18, 8:36 AM
    • 6,860 Posts
    • 3,724 Thanks
    chattychappy
    Thanks, at least a few got the humour!

    It was an attempt at making the point that the very people that these measures are designed to help may be confused by them - and then look to blame lenders for not doing more. It is difficult to implement a policy such as this without adding complexity.

    I would suggest a better approach would be a "variable minimum payment". The range would be stated up front: eg 1% to 5%. Where the "responsible" lender is concerned somebody is only paying minimums, then the minimums would be jacked up. This way people on DDs will automatically pay more. That said, it probably throws up as many difficulties as it solves.
    • cjv
    • By cjv 15th Jun 18, 6:51 PM
    • 249 Posts
    • 127 Thanks
    cjv
    Could be potential problems arising out of this, for people who don't actively monitor their statements or are already struggling financially if they have more money taken from their banks than expected.

    This is from the Terms and Conditions:

    "if you pay by Direct Debit we will automatically collect both your
    recommended extra payment and your contractual minimum payment each month."
    • Anthorn
    • By Anthorn 16th Jun 18, 12:14 PM
    • 3,818 Posts
    • 985 Thanks
    Anthorn
    Paying minimums only for significant periods of time is a bad thing and in general credit cards should dissuade people from this but of course this will hurt their profits.
    Originally posted by enthusiasticsaver
    The problem I have with this is that if we "dissuade people from" paying the minimum then that minimum no longer exists. It would be simpler to increase the minimum payment, say from 1% to 2% instead of burying the increased minimum payment in the Ts & Cs surrounded by jargon which some customers might not understand.

    As an example and analogy, if the minimum payment is 25 and the lender adds an extra payment of 25 to pay down the balance in accordance with the Ts & Cs then the minimum payment is 50.
    • Somerset La La La
    • By Somerset La La La 16th Jun 18, 12:46 PM
    • 579 Posts
    • 179 Thanks
    Somerset La La La
    Good in principle, but ultimately it's not to help the customers... it's to help the LENDERS.

    Reading their accounts (and Provident's) it's clear persistent debt will hit profit.

    Essentially what they're doing is upping the minimum before the card can hit the persistent debt threshold. Thus getting normal repayment, at full interest rates, from everyone that isn't overly struggling. If calculated properly, the account should then never hit the persistent debt threshold.

    Those that are genuinely struggling and can't afford the extra will have their account blocked (up to 18 months earlier than the persistent debt definition would come in!) so they can't spend more.

    Will interest for the latter be frozen? Even if it is, if the customer is then not spending on the card (enforced) they won't hit the persistent debt threshold and thus NewDay won't have to write off interest already included within the balance

    * Unless of course that action forces customers into Bankruptcy/IVA etc, but that's presumably going to be few and far between.....

    The more companies that play this game (I vote for Vanquis next.....), the more customers will actually be under pressure in the short term and therefore be forced to take drastic action such as letting the account(s) default or ultimately bankruptcy/DRO/IVA
    • Dandytf
    • By Dandytf 16th Jun 18, 6:06 PM
    • 1,430 Posts
    • 426 Thanks
    Dandytf
    Congrats Aqua card aka NewDay
    Since got a statement reminder e-mail today for 1 of 2 aqua cards.
    Wasn't planning on increasing payments yet until 2019 until...
    According to Aqua payment tool -I've just save 10 years and 1.8k interest isince I increased DD from 27 to 35 per month -amazing 2041 clear date has changed to Aug 2021!
    I've also increased second card as well-not as much balance or payment though upping to 30 per month saves a few years and considerable interest which could have been 1275 approx.

    I've never been as tempted to destroy some credit cards as I know if I'm tempted to use them then I'll be stuck paying them for almost unlimited years.
    Excellent 'tool' going to see a lot more of these across a few providers over next few years.
    All it takes is for card users to spot the tool option and run different payment scenarios.
    Last edited by Dandytf; 16-06-2018 at 6:09 PM.
    sc dmp 2012 13k Jan 2018 8840 paid. 60% approx.
    Mid 2018 Help2save 50 uk pounds per month
    Mid 2018-Virgin Money E-saver V11 -250+50 uk pounds per month
    • Anthorn
    • By Anthorn 19th Jun 18, 1:46 PM
    • 3,818 Posts
    • 985 Thanks
    Anthorn
    Good in principle, but ultimately it's not to help the customers... it's to help the LENDERS.

    Reading their accounts (and Provident's) it's clear persistent debt will hit profit.

    Essentially what they're doing is upping the minimum before the card can hit the persistent debt threshold. Thus getting normal repayment, at full interest rates, from everyone that isn't overly struggling. If calculated properly, the account should then never hit the persistent debt threshold.

    Those that are genuinely struggling and can't afford the extra will have their account blocked (up to 18 months earlier than the persistent debt definition would come in!) so they can't spend more.

    Will interest for the latter be frozen? Even if it is, if the customer is then not spending on the card (enforced) they won't hit the persistent debt threshold and thus NewDay won't have to write off interest already included within the balance

    * Unless of course that action forces customers into Bankruptcy/IVA etc, but that's presumably going to be few and far between.....

    The more companies that play this game (I vote for Vanquis next.....), the more customers will actually be under pressure in the short term and therefore be forced to take drastic action such as letting the account(s) default or ultimately bankruptcy/DRO/IVA
    Originally posted by Somerset La La La
    The email communication today from Virgin Money regarding its credit cards T&Cs is more informative about persistent debt and it generally avoids what some customers may regard as a threat to discuss the account. But VM also includes a remedy of increasing the credit limit or suspending the card.

    According to VM "persistent debt" is when over a period of 18 months more is paid in interest than is paid off the card balance. Then follows "Extended Persistent Debt" which is the same as "Persistent Debt" but over 36 months and carries the remedy of increasing the minimum payment or suspending the card.

    According to VM the change is the result of an investigation and new rules of the FCA with which lenders have to comply by September 2018. There is a light at the end of the tunnel for those in Persistent debt although how brightly it shines remains to be seen:

    Once a consumer has been in persistent debt for 36 months, their provider will have to offer them a way to repay their balance in a reasonable period. If they are unable to repay the firm must show the customer forbearance. This may include reducing, waiving or cancelling any interest, fees or charges.
    https://www.fca.org.uk/news/press-releases/new-credit-card-rules-introduced-fca
    Last edited by Anthorn; 19-06-2018 at 1:50 PM.
    • Dandytf
    • By Dandytf 20th Jun 18, 7:35 PM
    • 1,430 Posts
    • 426 Thanks
    Dandytf
    The email communication today from Virgin Money regarding its credit cards T&Cs is more informative about persistent debt and it generally avoids what some customers may regard as a threat to discuss the account. But VM also includes a remedy of increasing the credit limit or suspending the card.

    According to VM "persistent debt" is when over a period of 18 months more is paid in interest than is paid off the card balance. Then follows "Extended Persistent Debt" which is the same as "Persistent Debt" but over 36 months and carries the remedy of increasing the minimum payment or suspending the card.


    According to VM the change is the result of an investigation and new rules of the FCA with which lenders have to comply by September 2018. There is a light at the end of the tunnel for those in Persistent debt although how brightly it shines remains to be seen:

    https://www.fca.org.uk/news/press-releases/new-credit-card-rules-introduced-fca
    Originally posted by Anthorn
    Over 36 months-potential forced large payments at least much more than minimum payment.
    This could happen I think considering uk's trillion debt owed from consumers-myself included.
    sc dmp 2012 13k Jan 2018 8840 paid. 60% approx.
    Mid 2018 Help2save 50 uk pounds per month
    Mid 2018-Virgin Money E-saver V11 -250+50 uk pounds per month
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