Just opened our credit card statement

[Mooycow]

And am so shocked , it’s over 25.000, ! My husband deals with all the bills ( I do everything else) ,he gets online billing and tears up the statement when it arrives , we have together spent the money ,it’s all way too easy ,obs, AIBU to be shocked that we owe that amount .

A direct debit the bank control how much you pay
A Standing order you control

Totally agree with fixing the amount you pay - this can also be done via direct debit when you manage your account online (and probably over the phone too). On the Direct Debit instruction you can choose

• The full balance
• The minimum balance
• A fixed amount

If you add debt so that your fixed amount is below the minimum, the minimum will still be taken.

As others have said, key is to not do this!

TalkinPeace - ah, I see, yes, I have never willingly done a DD, except for my mortgage company, who insisted on it. It's just the bank we're with (not in UK) would charge us huge fees at every turn if we were to set up a standing order. In any case, we usually aim to pay off our full credit card debt every month, but unfortunately we're not always able to (and can't foresee when that will happen).

I don't understand why people with good incomes have credit cards.

In addition to the reasons Brownelephant listed, I use my credit card for most everyday transactions as there are charges associated with using a debit card unless you keep more than a minimum balance in the account. I keep my balance in an account that pays interest, use credit card unless there is a charge for that. If there's a charge (e.g. holidays) I transfer money to the current account and use a debit card.

However, I pay off the credit card every month in full. It makes no difference whether you use credit card, fee-free debit card or cash to pay everyday costs so long as you pay off the bill every month and avoid going into the red with the debit card.

Debt is a bugger - my spreadsheet helps people get out of it

It does - but I noticed you've not addressed the affordability issue after you patronised me.

As you have said, debt comes down a lot quicker if you can afford to pay a regular standing order and you do not add to the debt.

However - the OP and her DH seem to be using their credit card for everyday spending and this has built their debt up.It's true they have been paying back a bit more than the minimum repayments.

If they CANNOT afford to do "the standing order trick" because they are now no longer using their credit cards for everyday spending, would you offer different advice?

Could someone explain as if I am 5 what the spreadsheet is doing. I don't understand it

Could someone explain as if I am 5 what the spreadsheet is doing. I don't understand it

You are basically paying off much more every month than is being added in interest.

Yeah, I did sign up to another rating company (another free one) and my score was way higher on that one! I know they're inconsistent, but as someone who was in massive debt and who is rebuilding my rating now it's good to see it changing month by month, even though it's no guarantee I'll be accepted for credit when I attempt to do something that requires a good rating.

That's interesting about mortgages, do you have a reputable link I can read? I'm hoping to buy in the next two or three years and it would be good to know that my credit rating might not hold me back as much as I think it might. I have a great salary, as does my partner, by the time we're ready to buy we'll have a solid deposit (around £30k which is good for our cheap area), no debt between us, but my prior DRO from five years ago seems it will follow me and make mortgage lenders turn me down. However by the time I want to buy it'll have been over six years so it should be off my record.

dinosaur
There is chapter and verse and discussion on the spreadsheet here
www.mumsnet.com/Talk/legal_money_matters/1987219-SPREADSHEETS-for-Debt-Control-Budgeting-Mortgages-etc

kalapattar
If people are not paying the minimum, the card company will stop the card.
Therefore the OP would have noticed when they did that.
They haven't. She didn't. They aren't

Namechanger I don't understand why people with good incomes have credit cards. I think some of those people are going to become unstuck if Brexit ends up being a disaster

Like you we don't have a mortgage, we own our house, we have a very good joint income, we don't need any credit, but having a credit card makes buying things a lot easier, and gives protection more than a debit card can. Last year we went to USA, family of four adults, the payment to travel company - for flights, car hire and some hotels - was huge, had they gone bust before we flew, then we would quite possibly have lost the holiday, whereas by paying with CC, we had protection.

We pay the bill off every month, we have significant savings so will never come unstuck, regardless of Brexit!!

if they saved most of what they earned they wouldn't need debt for anything

We save most of what we earn - have no debt - but that doesn't mean we don't find credit cards an easy way to pay for things.

We have encouraged our DS to also have a credit card, so that when he finishes uni he will find it easier to rent a house or ultimately buy (he has an inheritance so will be in the position to buy a lot sooner than most). He is very sensible, using it for 1 or 2 small transactions per month, with a DD to pay off the full amount.

As for credit files, well there seems to be plenty of people on MN who can't rent or buy because of a poor credit rating, so it seems it does count.

Used sensibly, credit cards are fine.

Thank you kalapattar

Thank you kalapattar

If people are not paying the minimum, the card company will stop the card

I know. But the debt is increasing.

Why do you think the debt is increasing?

It could be that they are putting essential items on the credit card.
It could be that they are getting cash advances to pay for the other card.

talkinpeace

What makes you think they can afford a standing order if they have been building up their debt putting essential items on it?

We'll only know when the OP returns.

I totally agree that the standing order idea works - provided that no essential spending goes on the credit card, the debt is left to fall and if people can afford it.

I would suggest that someone with a £25,000 debt needs to look at their spending. Then pay off as much as they can per month on a regular basis.

minimum payment is sometimes less than the interest. so the debt grows even if you don't add any more purchases to the card.
check the small print.

I don't understand why people with good incomes have credit cards.

Then you are clueless.

I would suggest that someone with a £25,000 debt needs to look at their spending.
That depends entirely on their income.
If that £25k is a fraction of their annual income its not a problem at all.

I know people who run up debt on their cards at 25% and put money into savings at 1.5%
and cannot see the fail in their logic

minimum payment is sometimes less than the interest. so the debt grows even

That was happening to me - I was trying to pay more but couldn't afford to. I knew how long it would take to pay off and was eventually struggling to meet the minimum repayments. Meanwhile the interest added up. No standing order plan would have helped me - even though I know exactly how it works.

I did make that phone call to Step Change and it was the best thing I did.

minimum payment is sometimes less than the interest
I thought that had been disallowed?

Minimum is normally between 3% and 5% of the balance
and interest is rarely over 36% per year
therefore a teeny bit of capital will always be paid off

I thought that had been disallowed

That was happening to me last year.

Thank you , thank you , thank you TalkingPeace , I have had a frank talk with DH , not only is all above board , but I also came in with a solution that is doable and will actually free us from a huge debt , I am looking to retire in 5 years (nhs) and this would have taken a huge chunk from my pension before even had a chance to enjoy it, I too was to blame it’s easy to add on to a credit card when you have no idea ( and no interest) in the actual amount already owed . Am regretting the electric blinds in all bedrooms now , but onward to a debt free life xx

Am regretting the electric blinds in all bedrooms now , but onward to a debt free life

So you've sat down, looked at your budget, looked at what you are spending and are not going to use your cards anymore?

And are going to pay back a lot more every month?

@mooycow
GOOD
And if the two of you work together from now on to whump the debt
and improve your spending habits
you'll have a very enjoyable retirement.

kalapattar
That was happening to me last year.
Which card issuer had the minimum set at less than the interest in 2017?

If that £25k is a fraction of their annual income its not a problem at all

It depends on their spending and their disposable income.

You can have a great income - but spend a lot on a mortgage etc.

If you don't have great disposable income, you are going to struggle to pay minimum repayments.

That simple eh @mooycow