Don’t miss a credit card payment with direct debit

UK consumers are collectively wasting £150 million per year on unnecessary late credit card payment charges, reveals Confused.com.  New research from the comparison website shows that 57.5% of credit card customers don't have a direct debit set up to make the minimum repayment on their credit card each month, making them liable for a ‘late payment' charge from their provider if they forget to make a payment.  Costing an average of £12 per time, these charges can soon stack up.

57.5% of credit card holders don't have a direct debit set up to pay off the minimum amount;

26% of credit card holders have been charged at least once in the last year for missing a minimum payment;

8.5% have been charged three or more times in the last 12 months;

1.2% have been charged ten or more times in the last 12 months - that's over £100 each in charges;

By age, 18-24 year olds are the best at setting up a direct debit, with 52% having one in place. They are however also the most likely group to miss a payment, with the average 18-24 year old being charged 0.83 times in the past 12 months;

The 55 plus age group is the least likely to have a direct debit set up, with 83% of people in this category relying on memory to get the minimum balance paid. This is also the group with the fewest charges in the last year, averaging just 0.34 times each.

Commenting on the findings, Alex Higgs, commercial analyst at Confused.com, said: "Setting up a direct debit to make a minimum payment on a credit card is such a simple thing to do, yet well over half of credit card holders haven't done it.  Collectively we are wasting millions of pounds each year on these charges, money which would be better spent elsewhere in these tough financial times.  As well as late payment charges, many credit card holders are likely to have lost out on attractive introductory deals or low interest rate offers as well.  These deals are often withdrawn if minimum payments aren't met, meaning more money is wasted as they are reverted onto higher rate deals. Missing minimum payments can also adversely affect customers credit profiles, which may be detrimental when they want to borrow in the future.

"We would encourage anyone without a direct debit set up to get one in place.  Not only will this save money on charges and help contribute to a healthy credit profile, it will allow money that would have been spent on charges to be used to repay more than the minimum amount, saving more money as interest charges are reduced."