Welcome back!In our last lesson, we learned about the information that must be included in your credit agreement.
Definitions of the week: DEBIT ORDER A debit order is an agreement between you and a third party (your credit provider), which gives the third party permission to collect money directly from your bank account each month. This way, you do not need to make manual payments to your credit provider. You need to sign a consent form for the credit provider to set up a debit order.
In today’s lesson, we will talk about making credit payments. Remember, your credit agreement states when and how payments will be made, the number of payments, and the date of the first and last payments. After signing your credit agreement, it is important that you start paying from your first instalment, and that you pay every instalment. Usually, instalments need to be paid once a month, at the end of a month, or the beginning of the next month. A credit provider might require a stop order (an instruction you give your bank, to pay a fixed amount each month to a third party), or a debit order. If the credit provider does not tell you how to pay, you may choose to make an EFT (Electronic Funds Transfer) into the credit provider’s account, or make a cash deposit at the bank. In some cases, you may be allowed to send a cheque. The problem with making an EFT or paying cash, is the risk of forgetting to make your monthly instalment. Also, there is also a possibility that you might spend the money that you have budgeted for your credit repayments. If you choose to pay your credit instalments yourself, consider using internet banking. With internet banking (or even mobile banking), the last few EFTs you have made is usually listed when you browse the ‘Payments’ section. Most banks have the online option to click ‘Pay Again’ on a previous payment. You can add the banking details of your credit provider to your ‘Beneficiaries’ list (a list of the accounts you regularly pay money to). A debit order is the easiest and safest way to pay your credit instalments. Debit orders are easy to trace, and they also ensure that the credit provider is paid on time. They also help with debt management, because you are less likely to skip a payment when using a debit order than when making direct payments. Remember, every time you skip a payment, your credit provider will report it to the credit bureau. You will be flagged on your credit provider’s system, and this will negatively affect your credit profile. To see if you have skipped any payments, you can visit www.mycreditcheck.co.za for your full credit report, at a small fee. You are also able to register for alerts which tell you when there are any changes to your credit report.
Helpful Hint: If paying your credit instalments via debit order is not specifically required, you should look at all the different payment options available. Choose the one that best suits your needs and payment behaviour. Remember, if you choose to make your own payments each month, rather save your credit provider as a beneficiary and pay via internet banking.
This was Part 2/3 of the series on the responsibilities of credit. In our final lesson next week, we will talk about the consequences of defaulting on your credit agreements.