Credit cards - being late will cost you

More than a quarter of UK credit card holders have been charged a late payment fee at least once in the past year, according to research carried out by In total, UK consumers are collectively squandering £150 million a year on unnecessary late payment charges.

Perhaps unsurprisingly, 18-24 year olds are the odds on favourite to miss a payment. Yet they are also the most likely group (52 per cent) to have set up a direct debit so that the minimum payment is automatically paid in time. That means more than half of them are making sure they don't have penalties to pay - unless they have no money in their bank account of course - while the remainder run a high risk of being penalised due to late payment.

Conversely, the 55s and over are the least likely bunch to have a direct debit set up and 83 per cent of them simply rely on their memory to get the minimum balance paid. The good news is that their memory very seldom lets them down and they aren't wasting their money on penalties.

But it's not just penalty charges you have to worry about if you miss making a minimum payment. You could also lose any special introductory deals that came with your credit card, such as low interest rates. And missing minimum payments can adversely affect your credit profile too, which may be a huge problem if you want to borrow in the future.

So, why run the risk? Here are some things to bear in mind to make sure you manage the minimum payments on your credit cards efficiently.

  • The minimum payment varies from month to month as it is based on a percentage of the balance you owe - generally speaking it will be 2-3 per cent of the balance, starting with a minimum of £5.
  • Setting up a direct debit to pay the minimum payment on time is a simple thing to do, so if you haven't already done so, you should look into it now. Because the minimum payment varies, it isn't like other regular payments that might come off your bank account. So you need to keep close tabs on how much it is and make sure you have the funds in place to pay it.
  • If you're wary of setting up a direct debit for your credit cards then get into the habit of going into your online bank account the moment your bill comes in and setting up the payment for the due date.
  • Alternatively, you could set up email or text alerts to remind you of the date you need to take action and get things paid by cheque or at the bank.
  • To make sure you stay in control of all your money and bills, consider using online personal finance software to help you budget. Some allow you to bring all your online finances together in one read-only secure place, so you can see your precise financial state of play at any point in time.
  • Finally, don't fall into the trap of only paying the minimum amount each month on your credit card bill. Ideally pay your bill off in full. If you can't then you need to review your finances, see where you can tighten your belt and come up with a realistic budget to pay the bill off over a set period. Online financial management software will help you budget better too.
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