This topic contains 12 replies, has 10 voices, and was last updated by  Peter 6 months, 3 weeks ago.

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  • #1381

    Peter
    Participant

    So I’ve got a credit card that I live off throughout the month for convenience, and then pay off each pay day, regular as clockwork.

    As a failsafe I set up a direct debit for the minimum amount just in case I forgot, or wasn’t able to log on to do it.

    At the start of this month I wasn’t able to pay it off before the payment date so I thought ‘Meh, the direct debit will kick in”. First time in about three years that’s been the case

    Logged on a few days ago to pay off the entire balance, only to see a failed direct debit notice and a £12 non-payment fee. Seems the DD went dormant after so long without being used.

    CC company were quite reasonable – waived the charge after seeing my history of always paying it off on time. Just thought a direct debit was always there once it’s been set up. This is probably common knowledge to everyone else who pays attention to the small print

    Be warned!

  • #1382

    sammy
    Participant

    Interesting to know… Could have caught me out

  • #1383

    Duck
    Participant

    A quick google shows that banks invariably cancel direct debits after 13 months inactivity.

  • #1384

    sar
    Participant

    I didn’t know this happened, though I have a DD to pay off the balance every month.

    What I have had trouble finding out and still haven’t is trying to get a list of automatic renewals on my Credit Card, the best they can offer is wait for it to renew, then ask them to cancel. I said but what if I’m out of the country, I don’t get the chance to find out they’ve done it until I get back!!

  • #1385

    nobroo
    Participant

    “So I’ve got a credit card that I live off throughout the month for convenience, and then pay off each pay day, regular as clockwork.”

    How is that more convenient than simply using a debit card ?

  • #1386

    scarymary
    Participant

    Good debt helps boost your credit ratings.

    Also I find having to pay the bill monthly makes me more aware of my spending.

  • #1387

    Mick
    Participant

    @nobroo The best reason to do it (and the reason why I do it) is that if your card is subject to fraud, as mine has been a few times, you simply lose access to that credit card while it is resolved (I’ve got two, which is fairly sensible if you’re using that method). Even if you only have one credit card, you’re still not unable to withdraw cash.

  • #1388

    Adam
    Participant

    Taking a credit card and repaying it always on time will actually lower your credit rating. I have, since the age of about 18, done that (with very occasional borrowing from one month onto another and the odd bit of 0% card borrowing) and my credit rating is excellent, I have never been refused any credit I applied for, and I have more credit limit on the two credit cards that I know what to do with[1]. So I am unconvinced that that is in any way true.

    [1] Worth having if, for example, I had to buy a new car quickly and then arrange a personal loan for it.

  • #1389

    Peter
    Participant

    @nobroo Salary gets paid into bank, sits there all month, earns a few pennies of interest, pays off balance from credit card at the end of the month without incurring any interest charge.

    There’s also reward points on some of the cards, 0% on purchase offers that come up from time to time, so I’ll shove the money I would be spending into as high an interest bank account as I can until the balance has to be paid off).

    It’s only a couple of quid extra, but it’s a couple of quid I wouldn’t have if I was using cash / debit card

    Just my own little bit of ‘getting back at those corporate fat cats’ that must have them quaking in their boots every night

  • #1390

    el
    Participant

    From the website of Direct Debit themselves – I didn’t know this, and banks frequently get you to set up a DD to cover minimum payment in the event you forget to pay. Sounds like it’s up to the organisation you’re paying to keep on top of this, not up to you.

    https://www.directdebit.co.uk/DirectDebitExplained/FAQs/pages/inactivedirectdebits.aspx

    What happens when a Direct Debit is inactive?

    This is covered by the dormancy period rule. All banks hold details of Direct Debit Instructions on file for a minimum period of 13 months from lodgement of the Direct Debit Instruction, in the event of no collections, or from the date of the last payment. After the dormancy period has passed, the bank will remove details of the Instruction from their system. Before claiming further Direct Debit payments the organisation must obtain a new Direct Debit Instruction or your authority to continue collecting. If this is not done your Direct Debit payment may be returned by your bank.

  • #1391

    jack
    Participant

    Taking a credit card and repaying it always on time will actually lower your credit rating. Been doing it for about twenty years and the last time I took a credit score check (mortgage application) it was in the mid 900’s according to Experian. Maybe it’s being shored up by all the other good behaviour.

  • #1392

    Peter
    Participant

    “Been doing it for about twenty years and the last time I took a credit score check (mortgage application) it was in the mid 900’s according to Experian. Maybe it’s being shored up by all the other good behaviour.”

    To be clear the overall score you get from Experian and others will not be impacted, positively or negatively, if you have a credit card and repay every time.
    However you will be seen as less profitable customer, simply because the bank essentially manages your stuff for free. That means you may not get the best offers on the market when it comes to some forms of consumer credit.

  • #1393

    Peter
    Participant

    I had a look into “stoozing” (I think that’s the term) a few year ago and it seemed to me that I would spend several hours overall per year making sure I don’t get screwed, and the potential gain was inferior to what I would earn if I just worked doing something actually useful during that time. And that was when interest rates were high and without factoring in the risk of actually getting occasionally screwed.

    However an interesting development in fintech at the moment are Ai enabled bot financial advisers , they will be able to always move money around between accounts and credit cards to optimise our finances without effort. The big banks are already predicting this will fundamentally change the structure of customer’s contribution to revenue in retail banking.
    Because let’s be honest a big part of their profit model currently is based on people mismanaging their finance and accidentally ending up paying fees and interests.

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