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  • #1

    Credit Card Payments - Full or Minimum?

    Good Evening!

    I hope everyone had an enjoyable Christmas and New Year.

    I have a question about payments on my credit card. Each month I have a direct debit set up to pay the entire balance off which I thought was a good thing to do. I spend anything from a couple of pounds up to £1000 a month on the card but always clear the balance.

    Someone told me that you should not clear the full balance and to always leave something on there, even if for one day as it reflects better on your credit files. Is there any truth in that? Would it not look bad if you only pay the minimum or does it not actually make any difference?

    Thanks in advance for any help I may receive with this.

    Cheers,
    Beefy
    Tags: account, advice, banking, banks, card, card payments, christmas, cra, credit, credit card, creditor, data, debit, debit card, default, direct debit, extra, financial, gold, income, interest, lenders, management, mas, mbna, money, monthly, niddy, online, online banking, pay, payments, rail, rate, statements, update
  • #2
    Re: Credit Card Payments - Full or Minimum?

    If you're paying off the whole balance in full every month you won't be paying any interest on the account so the credit card provider isn't making any money out of you which they may not like. However every time you use your card the creditor is paid commission by the merchant so that'll be an income stream for them.

    If you only pay the minimum due each month credit card providers tend to think you're in financial difficulties and will often raise your interest rate to accommodate the perceived risk. Perverse logic I know.

    I'm not sure why paying off the account in full would give a negative impression on your credit file. Wait to see what Niddy has to say about that.

    Comment

    • #3
      Re: Credit Card Payments - Full or Minimum?

      It could be a common misconception, or it could be true, Niddy will confirm, but I was always lead to believe that paying the minium was better than paying in full, completely opposite to how it should work, but that's what I always understood. Of course I could be completely wrong!
      I'm an official AAD Moderator and also a volunteer, here to help make the forum run smoothly. Any views or opinions are mine and not the official line of AAD. Similarly, any advice I have offered you is done so on an informal basis, without prejudice or liability. If in doubt seek advice from a qualified insured professional - Find a Solicitor or go to the National Probono Centre.

      If you spot an abusive or libellous post then please report it by Clicking Here. If you need to contact me, for instance if I've issued you a warning, moved, edited or deleted your post, please send me a message by clicking my username.

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      • #4
        Re: Credit Card Payments - Full or Minimum?

        Um, i've read (and started a few threads in the credit rebuilding forum) and believe Niddy's advice (with view to improving credit score) is to set the Direct Debit to minimum (and allow that to collect) and then log in to the Portal/Call in and pay more/it off the day after.

        This way they report to the CRA's that you paid more than you needed to.
        Hope this helps.

        Happy New Year!
        SA
        When Gold isn't enough, there is SA Gold! New to the forum and find the UE route a bit scary? Take a look at my diary here and judge for yourself. I am now saving the money each month that was making little difference to the balance and not a bit of difference to my credit file as a result of finding AAD.


        I'm an official AAD Moderator and also a volunteer, here to help make the forum run smoothly. Any views or opinions are mine and not the official line of AAD. Similarly, any advice I have offered you is done so on an informal basis, without prejudice or liability. If in doubt seek advice from a qualified insured professional - Find a Solicitor or go to the National Probono Centre.

        If you spot an abusive or libellous post then please report it by Clicking Here. If you need to contact me, for instance if I've issued you a warning, moved, edited or deleted your post, please send me a message by clicking my username.

        Comment

        • #5
          Re: Credit Card Payments - Full or Minimum?

          Exactly SA Gold

          Basically if you pay the full balance then there's no audit trail from month to month showing other lenders an average balance as yours will always show £0. I'll explain. On your credit file, the CRA can only update your records historical data once the lender sends their monthly feed. So for arguments sake lets say you've a £1k limit and spend it all each month, but you pay it all off in one go when they take it via DD - assume this is the 20th. However, they update the CRA's on the 23rd of each month, with a new feed. In doing so your account will always show £0 as on the feed date of 23rd, your account has literally just been credited with the full balance.

          Therefore possible lenders see you having a grand limit that is unused.

          To to play the system to your advantage, set the dd to pay the minimum only. Then a week later go in and pay the balance directly via online banking/cheque/debit card. That way your credit file reads a balance, the dd payment, the extra payment and it shows other lenders you're a responsible risk as you go in and manually pay the balance after the stAtement was issued (this is what banks like to see)....

          So to summarise, pay the minimum by DD and a week later, pay the remaining balance. This is how to best fix your credit file so other lenders see your excellent account management.
          I'm the forum administrator and I look after the theme & features, our volunteers & users and also look after any complaints or Data Protection queries that pass through the forum or main website. I am extremely busy so if you do contact me or need a reply to a forum post then use the email or PM features offered because I do miss things and get tied up for days at a time!

          If you spot any spammers, AE's, abusive or libellous posts or anything else that just doesn't feel right then please report them to me as soon as you spot them at: webmaster@all-about-debt.co.uk

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          • #6
            Re: Credit Card Payments - Full or Minimum?

            Originally posted by Never-In-Doubt View Post
            Exactly SA Gold
            yay, im learning!
            When Gold isn't enough, there is SA Gold! New to the forum and find the UE route a bit scary? Take a look at my diary here and judge for yourself. I am now saving the money each month that was making little difference to the balance and not a bit of difference to my credit file as a result of finding AAD.


            I'm an official AAD Moderator and also a volunteer, here to help make the forum run smoothly. Any views or opinions are mine and not the official line of AAD. Similarly, any advice I have offered you is done so on an informal basis, without prejudice or liability. If in doubt seek advice from a qualified insured professional - Find a Solicitor or go to the National Probono Centre.

            If you spot an abusive or libellous post then please report it by Clicking Here. If you need to contact me, for instance if I've issued you a warning, moved, edited or deleted your post, please send me a message by clicking my username.

            Comment

            • #7
              Re: Credit Card Payments - Full or Minimum?

              Many thanks for all your advice. I have amended my direct debit to minimum payment. I just want to make my file look as good as possible next year when my last default drops off.

              Many thanks again,
              Beefy

              Comment

              • #8
                Re: Credit Card Payments - Full or Minimum?

                I would advise caution, not that I want to disagree with Niddy!

                Very much depends on the company. MBNA tend to set their payment dates early to mid month. They dont update until month end.

                You could end up paying interest as you didnt clear the full balance by the due date.
                I'm an official AAD Moderator and also a volunteer, here to help make the forum run smoothly. Any views or opinions are mine and not the official line of AAD. Similarly, any advice I have offered you is done so on an informal basis, without prejudice or liability. If in doubt seek advice from a qualified insured professional - Find a Solicitor or go to the National Probono Centre.

                If you spot an abusive or libellous post then please report it by Clicking Here. If you need to contact me, for instance if I've issued you a warning, moved, edited or deleted your post, please send me a message by clicking my username.

                Comment

                • #9
                  Re: Credit Card Payments - Full or Minimum?

                  I guess I will try it for a couple of months and see what they report to the CRA.

                  I will keep the balance fairly low so I don't end up paying a lot of interest.

                  Comment

                  • #10
                    Re: Credit Card Payments - Full or Minimum?

                    Originally posted by oscar View Post
                    I would advise caution, not that I want to disagree with Niddy!

                    Very much depends on the company. MBNA tend to set their payment dates early to mid month. They dont update until month end.

                    You could end up paying interest as you didnt clear the full balance by the due date.
                    yes agreed you might have some trailing interest but this isn't about spending a few quid extra, it's about preserving your credit file. If mbna statements are the start of a month then their CRA feed should be within a week. If not change payment date to a week before the "last updated" on your credit file.
                    I'm the forum administrator and I look after the theme & features, our volunteers & users and also look after any complaints or Data Protection queries that pass through the forum or main website. I am extremely busy so if you do contact me or need a reply to a forum post then use the email or PM features offered because I do miss things and get tied up for days at a time!

                    If you spot any spammers, AE's, abusive or libellous posts or anything else that just doesn't feel right then please report them to me as soon as you spot them at: webmaster@all-about-debt.co.uk

                    Comment

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