Paying Credit Card in full or not

Not true, either case. One credit card company took me from a £250 limit to a £10k limit over the course of 2 years, with me paying the bill off in full. I left them after a dispute because I couldn`t understand their managements response. There was a disagreement over £80, for which they lost a card that by their own reckoning was used to spend over £40k per year. Didn`t make sense to me then or now, but I`m happier with the new credit card company anyway :-)

Reply to
Simon Finnigan
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Yes, if you don't quite pay the full amount off, you are still charged interest on the whole amount.

For an extreme example, if you spend £1000 on a card, but pay off £999 of it the next day (or perhaps the same day, or even the day before!), if you don't pay off the remaining £1 on the due date, you will be charged up to 6 weeks interest on the £1000, not the £1 of credit you actually used (ie. some £25 instead of 2.5p)

The small print of their T&Cs says they can do this.

Another example which really annoyed me: I'd already spent £700 on a card, then withdrew some £100 cash abroad.

Back, in the UK, I immediately paid off that £100 cash, plus a bit extra to cover the few days' interest. Unfortunately that £100 was used to reduce the £700 balance, even though that was for purchases supposed to be interest-free until the due date. Meantime, I was still paying 30% interest on the cash.

Again the T&Cs meant they were in the right. However, I also had another card with the same bank, which happened to have a zero balance; if I'd used that instead, and paid off the cash in the same way, it would have worked as I'd expected. So I was penalised simply for using Visa over Mastercard for getting the cash; completely illogical and crazy.

Perhaps together with the T&Cs they should supply a Plain English guide, together with examples, of all the different ways they can screw you out of your money.

I'm lazy in paying bills, I see a credit card bill due 3 weeks hence so I put it aside, forgetting there's some bank holiday weekend coming up, so even if I remember in time with apparently a few days to spare, it's often too late to get the money to the bank. So a £25 shopping bill suddenly becomes 50% more than I expected.

So now I tend to use debit card or cash, it works out cheaper, is less hassle and you don't have to pay for everything 'twice' (once at purchase, again when you get the credit card bill for something you've completely forgotten about), so less surprises.

Reply to
BartC

Bitstring , from the wonderful person Simon Finnigan said

Indeed, and with the right credit card you can get 1% cashback too, so that's another £240 a year for your couple of grand a month expenditure. Tax free.

You have to be stupid to not use a credit card, if you have the option ... and much stupider (or more desperate) to use one and not pay it off in full each month by DD.

Reply to
GSV Three Minds in a Can

My credit card certainly doesn't work that way! If I did the above, I would have an outstanding amount of a quid at the end of the month when my statement is created. Any interest due is on the balance each month if it is not paid in full by around 12th, not the maximum amount spent at some point.

[...]

I remember Capital One were doing this and not making it clear. Caused a bit of a stink.

Chris

Reply to
Chris Lawrence

An actual example in my case was paying off £240 of the £320 due, on the due date, paying the remaining £80 a couple of days later. I was charged interest on the full £320 not £80.

Since they had effectively ignored the £240 payment (other than meeting the minimum payment), presumably it would have made no difference exactly when it was paid, even if was at the same time as making the purchases.

From this you can only deduce that spending £1000, paying only £999 of that (at any time on or before due date) and leaving £1 unpaid, then the same consequence would apply. (Subject to some minimum amount which the credit card company doesn't like to disclose; I doubt if this would happen with only 1p outstanding.)

Reply to
BartC

Ah, it sounds like you're describing making a payment *after* the monthly statement has been created. In that case yes, the amount is whatever it is, and interest is considered against it.

I thought you were referring to making a payment during the month

*before* the statement was created, thus reducing the balance in time for the statement. Indeed if I spent 1000 quid on the card on 20th, and then paid 1000 quid back on 21st, when my statement was created around 28th it would be for zero balance and nothing would be due.

Chris

Reply to
Chris Lawrence

Suppose you paid only £900 on 21st, and nothing more? Your statement would be for £100, but if you didn't pay that in time, what would you pay interest on, £1000 or £100?

(Actually I'm not sure if the early payment in my scenario would work if nearly all the balance was paid before the statement date.

But in this case consider a slightly different example where you spend £1000 the day before the statement date, and pay £999 of it the day after the statement date. As for as I know, you will be charged 3 weeks' (or so) interest on £1000 if that remaining £1 isn't paid in time; not 2 days' worth.)

Reply to
BartC

Yes, I think you're right, but I don't think it matters whether you pay before or after the statement.

Also, typical T&Cs embody a special concession that *only if* you pay off the whole balance by the due date, then interest on the spend is waived entirely, but otherwise it is not (and the concession is not available on cash advances and the like).

Consider the following dates: B is when you make the purchase (B for buy) P is when you make the payment S is the statement date D is the due date

D is typically a couple of weeks after S, and P is generally between S and D but could be before S or after D.

If you spend £1000 and pay it all off, then if P is on or before D, you will pay no interest. If P is after D, even if only by a day, you'll pay interest on the whole £1000 for the period BP.

If you spend £1000 and pay the first half of it off on date H, and the rest on date P, and P is after D, then you would expect to pay interest on £500 for the period BH plus interest on £500 for the period BP.

Reply to
Ronald Raygun

I prefer the clubcard points option from Tesco rather than cashback. Points everytime I shop, and then quadruple thir value using their deals scheme.

Again yeah, you make money using the CC and also get more protection.

Reply to
Simon Finnigan

£100 pounds, that is all you owe at that point.

Yes, that is a different example, with a different outcome. In this situation you`re making the payment after the bill is created.

Reply to
Simon Finnigan

At 15:00:01 on 12/04/2009, Bart delighted uk.finance by announcing:

On a current account?

I pay no surcharges. And I know exactly what I spend.

Nope. Direct debits are quite useful.

What things? I've made 3 claims in the last few years. I've also had someone make fraudulent online charges against the card. The good thing about credit cards is that, since it's not my money, it didn't disappear from my account whilst it was being sorted out.

Reply to
Alex

At 16:36:57 on 12/04/2009, Gordon H delighted uk.finance by announcing:

How do you cope with cash? How would you cope with debit card? It's exactly the same. I know exactly what I spend.

Reply to
Alex

I pay interest on whatever the balance of my statement is each month if I don't pay that balance off by around 10th. In this example the balance would be 100 pounds and that's what I would pay interest on if for some reason I didn't pay the balance in full.

I don't think they care - it's just down to whatever the balance is on the statement. In this case it would be 1000 pounds.

Chris

Reply to
Chris Lawrence

In message , Alex writes

No it isn't, there's a delay, which is advertised as an interest free loan every month by the CC companies. Debit cards do what it says on the tin, - debit your account there and then.

That's because you are a very responsible, intelligent person with great will power.

What makes money for the CC companies is the behaviour of the less sensible clients, who slip into the habit of spending more than they can pay off at the end of the month.

As for cash, I usually leave my wallet & cards at home when I go to the gym, and then decide to call in for some shopping on the way home, using the emergency tenner I keep in the car or sports bag, to save a special journey later.

It is a good exercise to shop with cash from time to time. The number of magazines and other unnecessary purchases I replace when I find I haven't enough cash for the important things saves me quite a few quid. ;-) It also make me realise how carefully the majority of pensioners have to spend their measly pensions.

Reply to
Gordon H

In message , BartC writes

All this discussion makes the case for preferring debit cards of course.

8-)
Reply to
Gordon H

No. If you've got £300 cash and spend £200 of it, you've got £100 left. You can't spend any more.

If you've got £300 cash and spend £200 on a credit card, you've still got £300 cash left. But now you have to remember that £200 is needed to pay off the credit card, six weeks in the future.

Reply to
BartC

I tried a direct debit on a rarely used credit that I was always forgetting to pay off.

The very first month, I had a problem: I'd spent £100 on a cash withdrawal. I paid it off early, after it had already appeared on the statement, to avoid accruing interest charges. But the automatic direct debit mechanism still wanted to pay off the £100 at the end of the month; it worked only with the balance at the statement date.

So I had to pay the money twice, and fortunately I had funds in my bank to do so. I now had a credit on my credit card, and had to remember to spend it.

Reply to
BartC

At 12:55:10 on 13/04/2009, Gordon H delighted uk.finance by announcing:

No it doesn't. It just makes the case for paying in full every month.

Reply to
Alex

When I first got a credit card from TSB, I set up a direct debit to take the minimum payment.

When I wrote a cheque for the difference between the minimum payment and the statement balance, they didn't take the direct debit as apparently they thought my cheque was instead of the direct debit. I thought it was in addition to the direct debit.

I cancelled the direct debit, and have paid manually ever since. I have a recurring task on my PIM to remind me every month.

Reply to
Jonathan Bryce

That's what I've endeavoured to do for the 25 years or so I've used credit cards.

It hasn't stopped me facing unexpected charges, interest payments and fees every so often, with the companies gradually introducing new rules to catch people out.

Once you make a cash or debit card payment, that's it; end of story. But any single credit card payment could be a time-bomb which can cost you, if you're not careful, £20 late payment charge (as it was once), extortionate interest, and adverse credit rating which can affect other aspects of your life.

A credit card can even cost you money when you *don't* use it! Not knowingly anyway:

I had both a debit card (Maestro) and credit card (Mastercard) from the same bank. The bank had tried it's utmost to make the cards almost identical: same Bank logo along the top, same card logo: 2 overlapping circles of 2 different colours, the same first 5 letters of the card name (Maest and Maste).

So of course I used the wrong one when I needed to withdraw cash. The difference? The credit card incurred a withdrawal fee and hefty interest, when there was absolutely no need. Fortunately I spotted it quickly so was able to cut short the interest, but still annoying. The bank denied the cards looked the same, but when I asked the lady to tell me the colours of the circles without looking, she refused!

Reply to
BartC

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