Interest free cards

[MrJuice]

Hi folks

I applied for an interest free card for cashflow purposes. To my surprise, the application was approved and I got a 13k limit. Perfect

Maxed that out and am currently paying the minimum amount. The interest free period is (was) 22 months and at the end I'll have a 6k lump sum to pay. Great

I'd quite like another one. I'm good for the amounts but if they're offering, why not

Is a second application going to be detrimental to my credit rating?

Only issue is I have a mortgage renewal in May 2024. Likelihood is that I'll seek a new deal with same bank I'm with now so I assume that renewal will not be underwritten and they won't really care about my credit card borrowings

But I could be wrong?

Any thoughts most welcome

Thanks

[Jordie Barretts sock]

You don't understand credit scoring do you?

Of course the first card that you're only paying the minimum on will affect your score. And your current mortgage lender isn't going to offer you a new deal just because you are an existing customer. They'll check affordability at least and current liabilities.

Unless you need the money urgently, don't increase your debt with a slow down on the horizon. Credit will become much harder to obtain. And more expensive when you do.

[MrJuice]

Evidently not!

Fair enough

One thing I did notice when I took my mortgage out was that my credit score was in the 600s. There was a large payment due on a charge card which I'd clear every month. Paid that and the credit score went to 999 overnight.

[Jordie Barretts sock]

There you go then!

The fact you are borrowing £13k will affect things. Doesn't matter that it's for free. They look at how maxed out you are. So if you owe £10k on a £13k limit it's a lot worse looking than owing £2k on the same card. No matter it's free money and you've just had a great holiday in Antigua.

[richardxjr]

Also, if you were thinking about it, you won't be able to consolidate 0% debts to an interest bearing mortgage as that would be daft.

Every case is different of course but when I was last playing about with calculators the amount available to me to borrow at best rates (on low LTV) was reduced by roughly the outstanding loan/card balance.

Don't get sucked in by the banks! Pay it all off before remortgaging.

[Mark83]

I wouldn't want maxed out credit cards on a mortgage application even if they're 0%. I remember my first mortgage application and the bank said that for every £1 on my credit card, knocked £4 off my mortgage offer. That was quite a while ago though. It's not just your credit rating, it's your total amount of credit and servicing that debt. You're at greater risk at default if there's a sudden drop in your income.

I get using 0% card to your benefit for large purchases. I want a new road bike. I could buy with savings but will buy on a 0% credit card as it makes sense so spread the cost and keep my savings earning interest. However, our mortgage renewal is this year and there's no way would I have several thousand pounds on the credit card before my mortgage renewal. Afterwards, fair game.

[Mr Whippy]

Funny how debt is both bad and good.

Debt at 0% is bad.

Debt at 2.5-5% ish is good.

Debt on CC over 10% is bad.


But for the lenders, it’s the bad debt that’s the good debt.

[MrJuice]

I'll have about 6k to pay off in September 2024 if I only repay the minimum amounts each month. I can pay that off early in May if need be to get my mortgage over the line

But point taken. No further debt unless I clear it before the mortgage renewal. And that's only if I can get more credit card debt

[fourstardan]

And (even if you could get one) why do you want another one? Where does that habit stop?

I use mine solely as a way to avoid spending savings and manage it accordingly until the IFC runs out. I've always got some extra cash coming in April time from bonuses so can pay down most of the card and start again.

I have found that finding a decent card and rate with a company has got harder for me over the years though.

[Funny username]

It’s better to only use up day 50% of available credit, then pay back. I’d be taking out multiple cards and going to 50% on each one rather than one or two cards, and maxed out fully.