Can I repay credit card debt early? |

A simples guide

Can I repay credit card debt early?

Us Brits made 273 million purchases with our credit cards in 2015, spending around £16 billion – which is a lot by anyone’s standards. So most of us aren’t strangers to repaying credit card debt, but what exactly are the rules when it comes to paying off your bill in monthly instalments or altogether?

Minimum payments

When you get your credit card bill, you’ll be shown the amount you’ve spent in total that month. You’ll also be given a ‘minimum payment’ option – this is the smallest amount of money that you have to pay by the date given. Paying the minimum will mean you won’t get hit by late or non-payment fees but you’ll pay interest on any outstanding balance.

The only exception is if you’ve opted for a credit card that has a 0% interest period – in which case paying off the minimum each month means you won’t incur any interest charges on your balance transfer, purchases or both depending on your card - every budgeters dream. However, if you do miss a minimum monthly repayment then you might find your 0% interest benefits taken away.

Can I repay credit card debt early?

Are there time limits on credit card repayments?

In a word – yes. Your credit card statement will show you the date by which you need to pay the minimum or whole month’s payment (whichever you choose). You should always meet this deadline because if not, then you could face costly fines.

If your credit card has a 0% interest feature, then chances are it’s an introductory offer for a limited time – such as a year. If this is the case then you’ll need to be prepared to pay off your credit card in full before that offer ends, otherwise you’ll start being charged interest on anything remaining.

The other type is a credit card with ‘revolving credit’. All this means is that you have a credit limit that you can’t go over, if you do reach that limit then you have to pay off some of your debt to lower the balance, once you’ve done that you can carry on spending up to your limit again.

Will I get charged for paying my credit card off early?

Technically, no you won’t. With a credit card you can pay as much off when you want – you just have to make sure you meet the minimum payments each month by the date shown on your bill. However, it can be easy to fall into the trap of paying too early and being charged a late fee for doing so – clear as mud right?

So, for example, let’s say you receive your credit card statement asking you to make payment by the 28th June and you pay off the minimum amount owed on the 20th – so far so good. But on the 27th, you feel a bit flush and decide to pay off a bit more of your credit card so that you don’t need to worry about it for July.

But then a bit later down the line, you find that you’re hit by a late payment fine even though as far as you’re concerned you made July’s payment early – unfair! But the key point here is that the payment due date for June was the 28th of that month – you made two payments before the 28th remember? Which means that both those payments go towards June’s bill and not July’s. So as far as the credit card company is concerned, you overpaid in June (well done) but didn’t cough up in July (oops).

This sort of well-meaning miscalculation will result in a late fee and if you do it too often you could find your credit facility benefits curbed. If you did want to make an ‘early’ July payment, you should’ve waited until after the payment due date for June had been and gone – so if you’d made payment any time after the 28th June in this case, you’d have been ok.

Getting a credit card to suit you

There’s no doubt that a credit card is a handy companion to have in your wallet, it’s easy to use and you’re in control of managing your own debt. To find your best match, just comparethemarket, tell us what features you’re looking for and we’ll do the searching for you. But before you get carried away and start booking loads of holidays, it’s worth exercising a little bit of caution and just making sure you keep on top of payments – otherwise you’ll find it impacts on your credit score.

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