Do you get anxious trying to remember to pay off your credit card bill, worrying that you might have forgotten and missed the payment date?
Or, does the idea of it deter you from getting a credit card completely?
If so, then setting up an automatic GIRO payment for your credit card might be the solution you need.
In this post, I’ll tell you why you should set up an automatic GIRO payment for your credit card, how to do it, and points of caution to take note of.
What Is GIRO?
GIRO stands for General Interbank Recurring Order, which is a low-cost, direct debit mechanism developed to help billing organisations (BO) collect payments from customers.
GIRO can be set up for both single and recurring transactions, though it’s often more useful for processing recurring transactions.
In a GIRO transfer, banks directly transfer money from the specified debiting account to the specified recipient’s account without any action required from the payer.
The process usually starts with the payer (ie the customer, you and me) initiating a request to set up a GIRO payment to a billing organisation (ie the credit card company).
The customer will be required to fill up a form, wherein details like the debiting bank account must be provided.
After the request is initiated, the credit card company will set up the GIRO transfer channel with the debiting bank account.
When our credit card bill is due, the credit card company will request for payment, and the debiting bank will perform the fund transfer accordingly.
In other words, after the customer has successfully set up a GIRO transfer, they are typically not required to take any action to fulfil the payment.
Why You Should Set Up An Automatic GIRO Payment
There are many methods available to make payments for your credit card bills.
Some popular methods include FAST interbank transfers and AXS (physical or mobile) bill payments.
While these methods will get the job done, there are some problems that can arise.
FAST/AXS – Prone To Errors
First, both of these methods require you to make payment manually, by yourself, so there’s always a risk that you’ll forget to make payment.
What happens if you forget to pay your credit card bill?
For one, you’ll be slapped with a late payment fee by your credit card company, which seems to be around S$100 as of writing this post.
Next, any unpaid balance on your credit card bill will accrue interest at an exorbitant rate – usually upwards of 25% – and subject to a minimum fee.
This interest accrues on a daily basis until payment is made.
Basically, failing to pay off your credit card bill results in a lot of additional charges.
While the bank might be willing to waive them off if you request it, they are not obligated to.
Next, since payment is made manually by you, there’s also a chance that you make an erroneous payment even if you do remember to pay off your bill.
For example, entering the wrong amount to be paid.
While overpaying doesn’t result in consequences other than the opportunity cost of your overpaid monies, underpaying will cause you to again incur additional charges.
Finally, as a result of either of the above issues, your credit score will be dinged.
This isn’t too serious of a problem in most cases, but if you’re planning to take out a loan anytime soon (ie housing loan, car loan), it can impact the terms of your loan.
A poorer credit score can result in a lower loan sum, higher interest rate, shorter repayment period, etc.
These issues are avoidable with an automated GIRO transfer, and there are other benefits to be enjoyed as well.
Benefits Of Automated GIRO Payments
1: Automatic Payment
Firstly, the GIRO payment will be automated.
You won’t have to worry about forgetting to pay your credit card bill – it will be taken care of automatically.
This omits the risk of missing your bill payment and incurring unnecessary, additional charges.
2: Full, Exact Payment
Secondly, the GIRO payment made will be the full, exact amount that is due as per your credit card bill.
You won’t have to check your due amount and ensure that you enter the correct amount for payment – it will be taken care of automatically.
This omits the risk of making an erroneous payment which might incur additional charges.
It should be noted that for some banks, it is possible to set up the GIRO payment for the minimum payment amount rather than the full amount.
However, this is not recommended as any unpaid balances will incur high interest rate charges.
3: Optimised Payment Date
Thirdly, GIRO payments have optimised payment dates which allows you to maximise the interest earned on your monies and reduce cashflow issues.
GIRO payments are usually triggered 1 – 3 days before the billing due date.
This means that the money used to pay for your credit card bill will be able to sit in your bank account for as long as possible before being used to pay the bill.
If you use a high interest savings account like OCBC 360 or UOB One, maximising your interest this way is financially efficient.
If cash flow is a problem for you, this also gives you time to sort out any cashflow issues before actually paying your bill.
To be fair, this can be done without setting up a GIRO payment – you can choose to make payment 1 – 3 days before your bill’s due date even if you make manual payment via FAST or AXS.
But doing so can be risky if you end up forgetting to make payment when the time comes, which isn’t an issue with GIRO payments since they are automated.
4: Earn 1% Bonus Cashback With HSBC EGA
Finally, I’ve saved the best for last.
Paying off your credit card bill via GIRO will allow you to earn a bonus of 1% cashback on the bill amount if you debit the payment from an HSBC Everyday Global Account (EGA).
Yes, you’re reading it correctly – that’s 1% cashback on your credit card bill amount just for choosing to pay your bill via GIRO from the HSBC EGA.
And yes, this is the main reason I’ve decided to set up GIRO payments for my credit cards, though the automation is a nice benefit as well.
And yes, it’s 100% legit – I’ve personally received the cashback for GIRO payments made for my credit card bills.
This is a part of the Everyday+ Rewards Programme that is only open to HSBC customers with an EGA.
There are 2 criteria you need to fulfil before you’ll be eligible for the Everyday+ Rewards Programme:
- Transfer a minimum of S$2,000 into your EGA (can be transferred out after that)
- Make 5 qualifying transactions (card payments or FAST to a non-HSBC account)
These criteria are extremely easy to fulfil.
For point 1, it is not necessary to maintain the S$2,000 in your EGA for any specified period, and it does not need to be fresh funds.
Initiating the transfer via FAST from your non-HSBC account counts as well – it does not need to be via a salary credit or GIRO transfer.
For point 2, you can simply make 5 FAST payments to your own non-HSBC account – they do not need to be “genuine” retail transactions.
I’ll write a guide on the HSBC EGA and the Everyday+ Rewards Programme soon enough, but for now, it’s good enough to know that this exists.
How To Set Up Automatic GIRO Payment
Here is an overview of how to go about setting up an automatic GIRO payment:
- Fill up & submit the GIRO application form for credit card payment
- Wait for GIRO to be set up and activated
- Wait for GIRO deduction upon your next credit card statement due date
Now, let’s take a look at these steps in detail, and I’ll go through them using an example of setting up a GIRO payment for my UOB Lady’s card from my HSBC EGA.
1: Fill Up & Submit GIRO Application Form For Credit Card Bill Payment
In essence, this step sounds simple, but it is more involved than you might think.
The first thing to note is that the GIRO application form must be obtained from and submitted to your credit card company – not the company from which you wish to make payment.
For example, if I want to set up a GIRO payment for my UOB Lady’s card, I would obtain the GIRO application form from UOB and submit it to them.
The next thing to note is that depending on whether your debiting bank account is the same or different bank as your credit card issuer, the GIRO application process can be more simple or more complex.
Intrabank GIRO payment can usually be done online via Internet banking.
Meanwhile, interbank GIRO payment often requires the filling up of a physical form and mailing it in via snail mail.
For example, if I want to set up a GIRO payment for my UOB Lady’s card from a UOB account, I can submit the application via Internet banking.
But in my example, since I want to set up the GIRO payment from my HSBC EGA, I would need to fill up a form and post it by mail to submit the application.
The GIRO application form can be obtained from the credit card company’s website.
For UOB credit cards, it can be accessed at this link.
So, to proceed with my application, I’ll download this form, print it out, and fill up the details accordingly.
Filling up the form is quite foolproof – there are typically multiple sections in a GIRO application form, but we only need to fill up the section meant for the cardholder.
The information we need to fill up usually includes the following:
- Name of the debiting bank (ie HSBC)
- Credit card details of the cards for which to set up the GIRO payment
- Name as per the record in the debiting bank
- Account number from which to debit the GIRO payment
Now that I’ve filled in the details, the next step is to mail the form.
The UOB GIRO application form comes with a business reply service on the first page.
A business reply service allows us to send mails to companies without the need to purchase a stamp.
Instead, we can use that slip of paper as the envelope and it will be mailed out successfully.
Not every bank’s GIRO application form comes with this service – Citibank, for example, does not – so you would need to buy a stamp from the post office (ie SingPost) or any S.A.M. kiosk.
To convert the printed slip of paper into an envelope, we can simply fold it such that the GIRO application form can be contained within it.
Then, seal the sides of the paper together using glue or clear tape – but do not staple the sides down as SingPost will reject such letters.
Finally, I can take the sealed letter and drop it in any post box.
Technically, that’s all it takes to set up the GIRO payment.
But since as customers, we have no visibility of the status of the GIRO setup and activation process, the next few steps will give us a better idea.
2: Wait For GIRO To Be Set Up & Activated
Once the credit card company, UOB in my case, receives the applicaiton form, they will initiate the process of setting up the GIRO payment with HSBC, my debiting bank.
This process can take up to 3 – 4 weeks, so it’s quite a long wait.
The debiting bank should inform us when our credit card company has requested to set up a GIRO transfer.
At least, in my experience, HSBC informed me via SMS.
But note that this only signifies that the GIRO has been set up – payments will not be made until it is activated.
How can we know when the GIRO is activated?
Well, we can’t really – there’s no real way to check, and even if we check in with our credit card company’s customer service, chances are they won’t know either, or they might give us information that isn’t accurate.
So, the only way to find out is to see whether a GIRO payment is triggered when our next credit card bill is due.
3: Check For GIRO Deduction
After receiving notice that our GIRO payment has been setup, we’ll need to keep a look out for our next credit card bill’s due date.
As mentioned earlier, GIRO payments are generally made 1 – 3 days before the bill’s due date, and varies from bank to bank.
For exampe, Citibank initiates the transfer 3 days before the due date, while UOB initiates the transfer only 1 day before the due date.
This information will be specified on the bank’s website.
On the expected GIRO debiting date, if a GIRO payment was made, we should receive a notice from our debiting bank.
In my experience, I received an SMS from HSBC each time, and GIRO payments were made in the afternoon.
If we receive such a notice, and we confirm that the payment has been debited from our debiting account, then congratulations – the GIRO payment has been successfully set up and activated.
If no notice is received, and no payment was debited from our debiting account, then chances are that the GIRO has not been activated yet.
In this case, make manual payment for this statement, and check again for the following statement – it should be activated by then.
Cautions When Using Automatic GIRO Payment
While GIRO payments can be convenient and make our lives simpler, there are some things we need to take note of.
1: Fill Up Form Accurately
First, we need to make sure that we fill up the GIRO application form accurately.
This will ensure that our GIRO payments can be set up smoothly and quickly.
If there are errors in the application, it will delay the process of setting up the GIRO payment, which is already slow enough in itself.
We’ll also need to waste time going through the hassle of rectifying any errors, which no one wants.
2: Ensure Sufficient Funds In Debiting Account
Next, it’s important to ensure that the debiting account has sufficient funds to make payment on the date of debiting.
This is to ensure that payment can be made smoothly.
If the debiting account has insufficient funds to make payment, there will be additional fees incurred, and your payment will fail.
We will then be required to make payment on our own before the payment due date – the GIRO payment will usually not be triggered again.
The debit date is typically 1 – 3 days before the payment due date.
3: Diligently Check Credit Card Statement
Since GIRO payments don’t require any action from us, there isn’t a need to check our credit card statement to find out how much we need to pay.
Thus, it’s easy to forget to check our statement to see what transactions we’ve been billed for and let the automated GIRO payment do its job.
But here’s the thing – credit card fraud is extremely prevalent, so it’s always best to remain prudent and continue checking our credit card statements diligently to make sure we’re only billed for the transactions we make.
Recently, I was victim to yet another instance of credit card fraud.
Thankfully, my credit card company’s fraud team identified the suspicious behaviour and blocked the card, but there were still successful transactions posted on my credit card.
If we don’t check our statements and blindly let GIRO payments be made, it becomes harder for us to challenge any fraudulent transactions because we’ve already made payments and lost money.
So continue keeping it a habit to check credit card statements as soon as they are issued as that will give us time to take the necessary actions if there are suspicious transactions.
There are many benefits to setting up an automatic GIRO payment for our credit card bills.
It removes the unnecessary stress about forgetting to make payment and incurring additional fees and even allows us to earn bonus 1% cashback with the HSBC EGA.
While the process of setting up a GIRO payment can be a bit of a hassle, it’s worth it in the long run – it’s only been 2 months for me and I already appreciate the convenience of it.
How do you pay your credit card bills? Let me know in the comments below!