A bit confused and worried about my credit card :| Help, please?

LookingFor

Hey all,

I hope someone might help clarify things for me a bit. This all might seem really naive and financially illiterate, so apologies in advance My situation is I have a credit card with BoI, and I had set up a direct debit payment to pay off the balance each month (or the balance, minus the previous month's additions to the card..in other words, the full balance that appears on the statement that comes at the beginning of each month).

In the last couple of months, I've run into some..financial tightness..and the direct debit payments have failed because there hasn't been enough in my current account.

On each occasion I've subsequently made payments to my card 'manually' at the bank, but these payments haven't been enough to clear the balance that would normally be paid, thus I've now been incurring interest. These payments have been a fair bit less than what the direct debit would have been seeking.

I got letters from BoI card services regarding the failed direct debit payments, culminating in a letter today saying that the direct debit would be cancelled since the last two month's payments failed. It also added that it was 'imperative' I make a payment on the card immediately via alternative methods. I also got one letter at the end of last month saying that a payment of a certain amount was now overdue..this amount being 'small', as they acknowledged themselves, and far less than the full balance of the card..but that I needed to pay this amount ASAP in order to avoid overdue charges. I made that payment at my bank the next day. I don't know how they arrived at that figure..my statements don't show how much is REALLY actually needed, just the whole balance up to the date the statement was issued. But this letter seems to suggest there's a different amount that needs to be paid in order to keep you out of 'overdue' territory?

What I'm worried about and wondering is..and this may seem really naive..but when they say it's imperative I make a payment on the account now...does that mean I need to pay off the whole balance immediately? I have these visions in my mind of the next letter saying I've defaulted on the debt and they're going to repossess goods from me or take me to court or something I have friends who have many times the credit card debt I have, however, and they seem to just pay what they can when they can..so that makes me think I'm fretting too much? FWIW, the total balance on the card is just over 1k euro.

I'm quite worried about this Thanks for any help/insight..

amcalester

Just look at your statement / bill and it will tell you what the minimum payment is, pay that and they'll be happy.

Also might be an idea to change your Direct Debit to an amount you can afford each month so as to avoid all these rejected direct debits.

drunkmonkey

You can drop down your minimum payment to 5% I think (i'm with aib)

so for example if you owe them €1000 you will only have to pay back a minimum of €50..

Call them and drop it down to the minimum %, you could also take it off direct debit and just pay the bill as you get it...

do yourself a favour (i'm talking from experience) stop spending on it until you can get on top of it again....I didn't and paid dearly for it;)

BuffyBot

Call them. I know it sounds obvious, but call them.

They have people especially to deal with these sorts of situations and they may be able to re-arrange payments/reduce minimum payments etc until you sort this out. It's very unlikely they'll demand full repayment now. It's in their interest to help you.

The worst thing you can do is not talk to them - so call them asap

LookingFor

Thanks for your reply. Hmm. Thing is, the minimum payment shown on my statement each month is basically the full balance on the card up to that point..does that sound correct?

I think I remember ticking an option when I applied for the card saying I wanted to pay off the whole amount up to the statement-date each month, in order to avoid interest etc. There may have been another option to pay less, but I can't fully recall.. I'm not sure why the bank doesn't just asking me for 'the real minimum' now if it's evident the direct-debit payments for the full balance aren't being met.

Or (hello naivety), is everyone expected to pay their full balance up to the statement date each month? I'm thinking not because, like I say, I have friends with balances running into double-digit thousands in some cases, and I know for sure they're not paying anything like that each month!

LookingFor

OK, thanks DrunkMonkey and BuffyBot. This sort of reassures me that I can adjust my minimum payment, and that 'full balance up to statement date' isn't necessarily expected!

I swear to god, I've been so nervous..I got this latest letter this evening..

I will call them first thing tomorrow..but I'm not sure if I'd have slept without some more immediate reassurance!

Thank you!!

edit - and I have drastically reduced my spending on the card since xmas..it's just a few small monthly payments on it now..my 'in-branch' payments in jan/feb have exceeded those ongoing monthly additions to the card balance.

IsThatSo?

If the balance is high, and your financial tightness is going to continue, would you consider taking a loan to cover full payment of the outstanding balance and then you could pay back the loan (regular small payments that would be arranged when you set up the loan and paid by DD). The interest rate on a loan would be a lot lower than on the CC. You could cut up the card then and not be tempted to use it.

This is just a suggestion and you may not want to go down that route at the moment, but keep it at the back of your mind if you find your CC spending is continuing. The interest on CC is crippling and it can end up being a very stressful debt. Much easier to sort out early on.

Good luck, hope things pick up for you

LookingFor

OK, got it sorted..

Once the direct debits were cancelled, they actually automatically reduced the minimum payment to 2.5% of the balance.

They just didn't mention that in any of the letters or statements I was getting. They said my account was in order, and they'll send out a direct debit form if I want to resume dd payments at the new minimum rate.

Thanks for all your help guys. Phew! Don't worry though, like I say, I'm spending very lightly on it now.