Set Up A Direct Debit To Save Money On Credit Card Charges

UK consumers are collectively wasting £150 million a year on unnecessary late payment charges and yet by setting up a direct debit to make the minimum payment can help change this.

According to Confused.com, nearly 60% of credit card customers don’t have a direct debit set up to make the minimum payment on their credit card each month.

The result is that many end up with a ‘late payment’ charge from their provider as they forget to make a payment. These charges, at around £12 a time, soon add up.

Missing a payment though not only costs financially it can also contribute to issues with your credit rating. This in turn can have a knock on effect when applying for a new credit card, mortgage or when seeking any further credit.

Chris Griffiths, head of credit cards at Confused.com, said: “Setting up a direct debit to make a minimum payment on a credit card is such a simple thing to do, yet well over half of credit card holders haven’t done it.  Collectively we are wasting millions of pounds each year on these charges.

As well as late payment charges, many credit card holders are likely to have lost out on attractive low interest introductory deals or rewards as well, as these deals are often withdrawn if minimum payments aren’t met.”

And adds “Setting up a direct debit will allow money that would have been spent on charges to be used in repaying more than the minimum amount, saving even more money as interest charges are reduced.”

MoneyHighStreet.com comment: A direct debit can easily be set up, just talk to your credit card provider.

If you are concerned about using your credit card, perhaps because of the growing outstanding balance on it, have you considered using a prepaid card instead?