Save money on credit card charges by setting up a direct debit

Whilst Government changes enforcing a positive order of repayments on credit cards are saving consumers an estimated £500 a year, research from Confused.com shows that UK consumers are collectively wasting £150 million per year on unnecessary late credit card payment charges.

The comparison website found 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;

Chris Griffiths, head of credit cards 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.  As well as late payment charges, many credit card holders are likely to have lost out on attractive low interest introductory deals or rewards as well, as these deals are often withdrawn if minimum payments aren't met. Missing minimum payments can also adversely affect customer's credit profiles, which may be detrimental when they want to borrow in the future.

"Setting up a direct debit will allow money that would have been spent on charges to be used in repaying more than the minimum amount, saving even more money as interest charges are reduced. It can also help in contributing towards a healthy credit profile.  Customers should talk to their credit card provider to get a direct debit in place."