Confused.com’s Tips on Managing Your Credit Cards

• Guides
• Published: 22 Jul 2009 in Money and Credit Cards

Tips on how to avoid being stung by late payment charges 

As many credit cardholders will testify, it's easy to get stung by credit card fees if you're not careful - and with missed or late payment charges set at £12, the costs can soon rack up. But not only will these charges put a dent in your pocket, they could also have other side effects too.

Don't damage your credit rating

If you have recently missed debt repayments, defaulted on a past debt, or made late payments, this will all show up on your credit report - and make a huge dent in your credit rating. Even the smallest debts on your report could typically lead to your applications for any further credit card, loan or mortgage being rejected. Or, if you are offered a product, a damaged rating may mean you are only offered it at a much higher rate of interest.

3 Ways to Manage Your Plastic

While there is no magic wand to remove the black marks for missed or late payments, you should do everything you can do to avoid these blemishes appearing on your record happening in the first place. The key to keeping your credit record spotless is by careful management of you cards.

1. Set up a direct debit

The best way to ensure you make your payments on time is by setting up a monthly direct debit for a fixed sum, or for the minimum repayment. Having a direct debit in place will ensure you never miss the deadlines - and never get stung with late charges. And, if you do find yourself with cash to spare, you can always pay back a little extra over the phone or online to clear the card more quickly.

2. Make more than the minimum repayments

While it's absolutely crucial to make the minimum repayment on your credit card each month, you should try, if at all possible, to make more than the minimum payment - as this will enable you to build up a positive credit record payment history. Plus, if you only pay the minimum each month, it could end up taking you decades to pay off even the smallest of debts - and the interest could be huge.

3. Pay it all off

While your finances may be extremely tight in the current recession, the best way of managing your credit card borrowing is by paying it off in full each month. This may take a bit of discipline - and may mean reigning in your spending elsewhere - but if you are able to do this, you will really reap the benefits, as you can avoid paying interest at all.

What if you can't make a payment?

If, however, you find yourself in dire financial straits and, for whatever reason, are unable to make a payment on time - or at all - you need to contact your lender as soon as possible, and ask them for advice on choosing the least damaging option.