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How To Pay Your Credit Card Bill
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Paying your Credit Card bill is simple, there are 3 choices -
  1. Pay the full amount by the due date (always better to pay it a week early so the money has plenty of time to clear)

  2. Pay the minimum amount by the final payment date, interest is then charged on the balance

  3. Pay an amount higher than the minimum amount but lower than the full amount. Interest is obviously charged on the remaining balance

As for the method of paying the bill there are a few options -

  • Online option 1 - If you've signed up to internet access for your card you can pay via the card provider's website

  • Online option 2 - Most bills including credit card ones can be paid direct from your own online banking account - See 3 easy steps to safe internet banking

  • Post - Post a cheque in the envelope provided with your account

  • At a bank - The monthly statement also comes with a paying in slip to use at a bank

  • Phone - Call them up and you'll normally get the choice to pay via speaking to a real person using your debit card or via an automated payment process where you use the phone's keypad to type your details in. In both of these cases only a debit, not a credit, card can be used

  • Direct Debit - This can be set up to pay either the balance in full whatever the amount or the minimum balance
Personally I use online banking to pay my credit card bills and I find that works well. However, some people suggest the following is the best way -

Set up a direct debit to pay the minimum balance each month

Late paying the bill - What happens
Every credit card statement has to be settled, by at least the minimum amount (usually 2% - 3% of the overall balance), at a set date every month, for example by the 20th.

If you fail to pay by this date it's not good news for 3 reasons -

  • You'll be billed around £12 as a late payment charge

  • The Credit Card company informs the credit agencies (such as Experian) of your payment record. If you make a payment by the correct date you'll receive a small positive tick, pay late and that will turn into a small negative cross. Continue to be a late payer and those negative crosses will add up and you may find it difficult to get accepted for new credit (credit cards, loans, mortgages, 0% deals from shops etc)

  • Be a chronic late payer (missing say more than 4 payments in a year) and you could find your interest rate raised by the credit card company, and raised considerably perhaps from 17.9% to 29.9%
Important - Miss 1 payment with a special offer Credit Card and the deal is OFF
0% credit cards or ones with discounted interest rates are all examples of special offer credit cards. Buried in their Terms & Conditions will be a clause saying if just a single payment is missed, even by a day, the deal is cancelled.

This will normally mean the interest rate is raised from say 0% to 18.9% (or higher) with immediate effect. Sadly, there is little if anything you can do in such a situation as it's one of the credit card company's traps designed to catch their customers out.

A golden rule therefore with any credit card that offers a special promotion (0% interest being the main one) is to make sure you never miss a payment. Do this by either setting up a direct debit to automatically pay at least the minimum every month, or pay (at least the minimum) within 1 week of the statement coming through the post.

See also

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How to Audit your Credit File

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How a clean credit rating can save you money
4 steps to a clean up any mistakes
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