Standing Order Trick for Credit Cards

[Bibbytobe]

Hello,

I was searching threads for paying off CC’s and I’ve seen the ‘Standing Order Trick’ mentioned several times. I’ve been trying to find an explanation but no joy - is anyone able to explain in simple terms (baby brain) or link me to an explanation please?

Thank you

Hi OP. Credit card providers reduce the minimum payment due as your balance decreases, meaning it takes longer to clear the balance and that you pay more interest if it’s not on 0%. The standing order trick is simply to set up a standing order to pay your credit card, set it as the minimum payment plus £5 or the maximum you can afford over the minimum and pay that monthly instead of the direct debit minimum

Spreadsheets for Debt Control, Budgeting, Mortgages etc by TalkinPeace

Use the credit card calculator to see how paying more than the minimum payment pays off the card quicker.

If you pay the minimum set by the card company, it reduces as the balance reduces, and it can take about 20 years to pay it all off.

But if you pay the current minimum and keep your payment at this amount, by setting up a standing order, the balance will be paid off in about 8 years and you'll save a fortune in interest.

Even better, if you can add even £10/20 to the current minimum payment, then the balance will come down even faster.

Other thing to check I'm is whether you can transfer the balance to a 0% card, so what you pay reduces the balance not swallowed up by interest charges.

And as soon as you have cleared the balance, set up a direct debit, to clear the balance every month, so that the balance does not build up again. All the best.

I tend to use a 0% card to consolidate other cards, then work out the balance divided by the number of interest free months, then set that as the monthly payment, so you’ve paid it off before the 0% ends.

I then get a different card for purchases, so the total on the other one stays the same.