- 1 How to pay off your credit card
- 2 What is a Credit Card Minimum Payment
- 3 Why Paying Credit Card ‘Minimum Payment Due’ Is a Bad Idea
- 4 What is Discover payment address?
- 5 Credit card and debit card protection explained
How to pay off your credit card
Watch Hannah's video to paying off a credit card in 2017 at the bottom of the page.
You can pay off a credit card over several months or even years, but you always have to repay at least the minimum amount set by your provider each month.
If you do not pay this, you will be charged around Ј12, and the missed payment will show on your credit record.
You can find the minimum payment amount on your monthly statement. It will be at least 1% of the amount you owe plus any interest and charges. There may also be a specific sterling amount too (usually between Ј5 and Ј25).
Although you will not be charged a fee if you pay just the minimum amount, it could take years to repay what you owe and you will pay more interest.
Repaying a balance of Ј2,500 on a card with an interest rate of 17.99% would cost Ј25,379.80 and take more than 141 years if you only made the minimum payment each month.
You can choose the amount you repay on your card from the following:
The minimum payment amount
The full statement balance
Another amount of your choice
If you pay your bill in full every month, you will not pay any interest on your credit card.
However, if you want to use your card to borrow and pay off the balance over time, you should pay back as much as you can without leaving yourself short of cash for the month.
Paying back more each month means you will clear the balance quicker and pay less interest on your credit card.
If you pay by direct debit, your bank will automatically pay your credit card bill for you each month straight from your bank account, so you will not forget to pay it.
You can choose for it to pay the full amount due, the minimum payment or a specific amount of your choice each month.
You can set up a direct debit when you fill out your application form. Alternatively, you can:
Complete a form that comes with your card
Phone your card provider
Log into your online account
Yes, you can also set up a standing order from your bank account to pay a fixed amount each month. This means you can change the monthly amount yourself if you need to, but make sure it always covers at least the minimum payment.
If you would prefer to pay each bill when it arrives, you can:
Use your debit card to pay by phone or online
Pay in person if your provider has a nearby branch
Send a cheque to your credit card provider, making sure you quote your credit card number and send it several days before the payment is due
Sign in to your bank account's online banking and transfer money to your credit card provider
Repaying an outstanding balance
If you owe money on a card already, here is how to pay it off:
First, find out exactly how much you need to pay back on every card you have. Check their balances by:
Signing in to your online account
Looking at a statement
Using a cash machine
Phoning your provider
Your outstanding balances could be costing you money in interest and fees, so work out what each one costs each month.
If you have more than one card, you could save money if you pay off your most expensive one first.
You can also work out how to avoid fees; for example, if you are being charged for missing payments on a card, just setting up a direct debit for the minimum amount could save you Ј12 a month.
If you are not sure what interest and other fees you are being charged each month, ask your provider.
Decide how much to pay back each month and how you want to make the repayments.
You can make one off payments as well as monthly repayments. You can use these to clear part of the balance or even all of it, if you can afford it.
Some mortgages and loans have restrictions and charges on paying off the balance early, but these do not apply to credit cards.
You may be able to cut the interest you pay by clearing your balance in the following ways:
If you have savings as well as an outstanding credit card balance, the interest you pay on your credit card will be more than what you make on your savings.
If you owed Ј2,000 on a card with an APR of 17%, this would cost Ј340 in interest each year.
If you also had Ј2,000 in a savings account paying 1.25%, it would only earn you Ј20 in interest (after 20% tax).
Using your Ј2,000 savings to pay off your credit card would save you Ј320 in interest in this example (although you could be left without money when you need it if these savings are your emergency fund).
Decide which card to pay off first
If you have two or more credit cards, pay as much as possible towards the card that is charging you the highest rate of interest. This will clear your most expensive debts more quickly and save you money.
Make the minimum payments on your other cards so you are not charged fees.
If you owed Ј2,500 on each of two credit cards with APRs of 6.9% and 18.9% and could put Ј400 towards repayments each month, it would be cheaper to pay more towards the more expensive card.
Using a balance transfer to save money
You could move what you owe on a credit card to a new, cheaper card with a balance transfer.
Many of these deals offer a 0% interest period that can last more than three years. You can use this time to repay the balance without paying any interest at all.
Many come with a fee for making the transfer, but this will usually come to much less than the interest you would pay.
If you are paying off several balances, you can consolidate using balance transfers to one of your existing credit cards or a new card.
You could save money if the card you use has a low interest rate and there will be less paperwork to keep track of and only one monthly repayment to make.
Paying off a credit card with a loan
Some personal loans offer lower interest rates than most credit cards, so it could be cheaper to get a loan to pay off your credit card balance and then repay the loan instead.
However, a balance transfer is usually a cheaper option, so compare the costs before you take out a loan.
Use our loan calculator to work out the overall cost and how much you would have to repay each month. You can then make sure you could afford the loan and that it would be cheaper than keeping your credit card.
Debt consolidation loans allow you to pay off credit cards and other debts over a long term. Although this keeps the monthly repayments low, the total cost can be high and many will need to be secured against your home.
Can you make a repayment before you get your bill?
Yes, you can make additional repayments whenever you like. For example, if your credit card bill is due to be paid on the 24th but you want to pay off some or all of what you have spent before then, you can do this.
However, it is usually not worth paying early, because your balance will be interest free until the due date.
The exception is if you take out cash on your credit card, when it is worth repaying the amount you have withdrawn as quickly as possible instead of waiting for your statement. This is because you will be charged interest from the day you withdraw it until you pay it back.
Written by Dan, Financial Content Writer
Updated on 9th November 2016
Compare credit cards
Find the best credit card for you, whether you're looking for a 0% card for balance transfers or purchases or day to day spending and rewards.
What is a Credit Card Minimum Payment
by John_S on January 24, 2011
The credit card minimum payment is the required amount payable on a credit card balance before your financial company charges you a late payment fee. Purchases made by using a credit card have to be paid on a monthly basis, but the total due amount may not be paid in full. Card issuers allow customers to pay a certain percentage of the due amount as to maintain serviceability.
Calculation of Minimum Payment
The minimum payment will depend on the agreement the credit card holder and the company entered into. At the account registration, the agreement will specify the minimum payment that is due every month. This amount is generally based on a certain percentage of the balance owed. For example, if the minimum rate is computed at a rate of 2 percent a month, a $500.00 balance will require a minimum payment of $10.00. The percentage of required minimum payment depends on factors such as credit score and credit limit.
Covering the Minimum Payment
It is important to pay the minimum or an amount in excess of it in order to avoid additional fees. Late payment charges can significantly lower the credit score or credit worthiness of the borrower, thus casting a blow on his credibility.
However, even if covering the minimum helps avoid late charges, it is still best to pay more than this amount. Keep in mind that any unpaid balance will accrue interest and increase your debt. As long as the outstanding balance stays unpaid, the interest continues to accumulate, thus adding debt to debt. In the long run, minimum payments only create potential financial troubles in the future.
Paying More than Minimum
Borrowers who pay more than the minimum help lower interest rate charges and speed up the payment of the overall debt. Bear in mind that this practice will work in reducing your debt only when you do it on a regular basis. One way to check if an increase in the amount of your monthly payments can lower debt is to search for a credit card debt calculator. This simple tool is easy to use and illustrates why covering the minimum payments only is a bad idea.
Better yet, you can pay in full before the next billing period and avoid interest charges. Paying the full amount during the grace period will help you avoid a more serious financial concern – debt.
Minimum Payment in Canada
Credit card issuers use different methods to calculate minimum monthly payments. For instance, at Toronto Dominion it is 2 percent of the ending balance, the American Express Gold Card comes with 3 percent, while Presidents Choice MasterCard goes with 2.2 percent of the ending balance.
Avoiding the Danger of Minimum Payments
It is wise to make purchases you can pay in full before they accrue interest. Or, at least, make sure you earn more money (get a side job or turn your hobby into a money making machine) to speed up the process of getting rid of the debt.
To reduce credit card problems, you might consider some of the following: avoid credit cards that come with annual fees; keep only one credit card; in case you have to carry a balance, it is best to seek out a credit card with a low interest rate; avoid reward cards as they go with higher annual fees; and, of course, pay off your balance in full and in a timely manner.
Why Paying Credit Card ‘Minimum Payment Due’ Is a Bad Idea
September 22, 2015
You just received your credit card statement. Your cash flows for the month are already stretched. You realize that you won’t be able to make full payment towards your credit card dues. You are aware that the interest on credit card debt (or unpaid amount) is extremely high. You stumble upon an item Minimum Amount Due in your credit card statement? It is a small fraction of the total outstanding amount. You are wondering what Minimum Amount Due (MAD) means? Does it mean you will not be charged any interest if you pay the Minimum Amount Due? What if you do not even pay the Minimum Amount Due? Let’s find out everything you need to know about Minimum Amount Due.
How Does Paying Minimum Amount Due Help?
Minimum Amount Due is the minimum amount that you need to pay to the bank/credit card company by the due date to keep your account regular and avoid payment of any late payment fees.
Payment of minimum amount due ensures that you get away with paying only the interest. There will be no late payment or other finance charges applicable. Additionally, if you keep the account regular by paying MAD by the due date, the bank will not report your account as irregular to the credit bureaus. If your credit card account is reported irregular, your credit history/score will be adversely affected. This can be a problem if you are planning to take a loan in the near future.
By paying the minimum amount due, you cannot avoid interest on the unpaid amount.
How Is Minimum Amount Due Calculated?
Minimum Amount Due is typically 5% of the balance outstanding on the statement date. If you have opted for EMI balance transfer or purchase on EMI, that amount will also be added to your Minimum Amount Due. Any unpaid Minimum Amount from previous statement will be added to your current minimum amount due to arrive at total Minimum Amount due.
For the rest of this post, let’s assume the following:
- Credit card is generated on 5th of every month
- The payment has to be made by 26th of every month
- Interest will charged at 3% per month
- Late payment fees of Rs 500
Let’s try to understand the calculation with the help of an example.
What is Discover payment address?
Answer: The payment address for Discover credit card is the following:
Discover Financial Services
Make the check payable to Discover and include your account number on the check.
You can also pay your Discover credit card via online at Discover.com
Alternatively, you can pay your Discover credit card by phone. Pay by Phone: 1-800-347-2683
Discover customer service telephone number: 1-800-347-2683. Overseas callers can call 1-801-902-3100.
Credit card and debit card protection explained
Paying by credit card can be convenient, but it also gives you added legal protection if the company you’re buying from goes bust or doesn’t deliver what it’s promised. You might also get some protection when paying by debit card under a voluntary scheme called chargeback. With charge cards though you don’t generally have protection. Here’s how it works and how to go about making a claim.
Credit card payment protection
If you use your credit card to buy something, such as goods or a holiday, costing over £100 and up to £30,000, you’re covered by ‘section 75’ of the Consumer Credit Act.
This means the credit card company has equal responsibility (or ‘liability’) with the seller if there’s a problem with the things you’ve bought or the company you’ve bought them from fails.
- The company has failed to supply the goods or services, or has supplied goods not up to standard, or
- The company has misrepresented what it is supplying - for example, a software supplier says a software package you’re buying will work with a particular computer when it doesn’t.
Minimum and maximum spending limits
To qualify for protection under section 75, you have to spend between £100 and £30,000.
The £100 minimum amount applies to each item or set of items you buy, as opposed to the total bill.
For example, if you bought a dress and jacket that weren’t part of a suit, with each one costing less than £100, you wouldn’t qualify for the consumer protection under section 75.
Another example would be buying tickets for an event, or airline tickets.
A ‘family ticket’ would count as one item but individual tickets for family members would not.
You may be able to make a claim against your credit card company under a voluntary scheme called ‘chargeback’ which we explain in the Understanding chargeback section below.
Paying a deposit by credit card
You don’t need to pay the full price by credit card as paying a deposit is enough to get you the legal protection.
For example, if you bought something costing £200 but paid a deposit of £20 on your credit card and the rest by other means you’d still be covered and you would be able to claim the whole £200 (and not just the deposit) from your credit card company if the goods didn’t arrive or were faulty.
You’re also not limited to the cash price of the items.
If you could claim from the supplier for additional expenses (e.g. postage) or consequential losses (e.g. damage caused by a faulty item), you have a like claim against the credit card company.
The position is a bit more complicated if the purchase is made by a second cardholder, such as a husband, wife or partner.
Any claim has to be made by the main cardholder, as they are the one who signed the credit agreement), and the credit card company might reject a claim if it wasn’t a joint purchase (such as a family holiday_ or something for the main cardholder (such as a birthday present).
It’s a bit of a grey area so it’s worthwhile checking with the card issuer at the outset.
Paying for holidays on a credit card
It doesn’t matter whether you use your card to buy something in the UK or overseas, you’re covered in exactly the same way.
If you booked a holiday or flights costing between £100 and £30,000 and paid either a deposit or the full price on your credit card, you may be able to make a claim if the airline or holiday company goes bust or the holiday isn’t as described. But, not all situations are covered.
- The cost of your flights if the airline goes bust
- The cost of your holiday if the holiday company goes bust
- Additional expenses or consequential loss - for example, if you had to buy more expensive flights to get home after an airline failed.
- In some cases, if you buy a ‘flight only’ from a third party, such as a travel agent, you might not be able to make a claim because the third party was only contracted to provide the tickets and not the flight.
- Any costs that you didn’t have to incur – for example, if you decided to extend your stay after the airline went bust (longer than you needed to) you’d be unlikely to be able to claim for extra costs.
How to claim money back on credit cards
If you pay for something on your credit card and there’s a problem, your first step should be to contact the company you bought it from, to give them a chance to put things right.
However, if they don’t reply, or they won’t give you a refund, or it’s clear there is no point in contacting them (as they have disappeared or gone into liquidation), you can make a claim against your credit card company.
- Write to the credit card company, stating what you bought, where and when you bought it and how much you paid. Include copies of receipts if you have them (if not, you’ll need some other proof of purchase).
- Tell them that you’ve tried to contact the company you bought the goods or services from and what the response has been – if any.
- Explain what you’d like the credit card company to do, which will usually be to refund the purchase price into your credit card account – be sure to state: “I am making a claim under Section 75 of the Consumer Credit Act”.
- Keep a record of the letter or email you’ve sent.
Debit card payment protection and chargeback
Debit card payments and purchases are not covered by section 75 of the Consumer Credit Act, although they offer a similar, voluntary, scheme called ‘chargeback’.
You can also use this to make a claim if you use your credit card to buy something costing £100 or less.
Chargeback isn’t a legal protection like section 75. It’s an agreement Visa, Mastercard, Maestro and American Express have signed up to.
The scheme enables you to claim a refund from your card provider if a purchase doesn’t arrive or is faulty.
It works by the card company trying to claim your money back from the company you’ve paid, by reversing the transaction.
There’s no minimum spend in order to be covered by chargeback, but time limits apply for making a claim – usually up to either 45 or 120 days from making the purchase, depending on the type of card.
Chargeback claims can take some time to process because the card company has to get the money refunded before it can pass it onto you.
If you aren’t satisfied with the response you get from your card company read our guide below to check next steps.