Why should I get a credit card?
Discussion
Looking for some useful examples of how I can best utilise a credit card...
I'm 22, live at home, minimal expenses and earn just under £40k. I've never had a credit card as I've had no reason to. However, my credit score is 'Good', I'd like to get this as highly rated as possible before looking to get a mortgage in the next 2-4 years so a credit card seems the obvious option (credit rating companies say so themselves).
So, I've read up a little bit about the best cards out at the minute but I'm looking for some real world examples of how people utilise them. One idea I've had is to just use the credit card for petrol each month (~£200-£250) and any work expenses (~£50). Would I be best getting a card with 0% APR or one which has a high interest rate but get a lot of perks such as cashback/points because I won't need to worry about missing a payment? Am I missing something here?
I'm 22, live at home, minimal expenses and earn just under £40k. I've never had a credit card as I've had no reason to. However, my credit score is 'Good', I'd like to get this as highly rated as possible before looking to get a mortgage in the next 2-4 years so a credit card seems the obvious option (credit rating companies say so themselves).
So, I've read up a little bit about the best cards out at the minute but I'm looking for some real world examples of how people utilise them. One idea I've had is to just use the credit card for petrol each month (~£200-£250) and any work expenses (~£50). Would I be best getting a card with 0% APR or one which has a high interest rate but get a lot of perks such as cashback/points because I won't need to worry about missing a payment? Am I missing something here?
I have a credit card which I use to buy almost everything. It’s not the best one out there, but I get reward points. I pay it back every month.
I truly recommend this. Find a card with rewards or cashback. As long as you are not completely useless with money you should be fine. Nowadays, with internet banking on your phone, it’s easy to monitor your spending. Just set up a direct debit to pay it off in fall every month and male sure that the balance on the card never exceeds your current account balance.
DO NOT GET THE 0% APR UNLESS YOU NEED TO BORROW MONEY. You say you want to improve your credit score. Well you do this buy paying off your debts, not by accruing them.
I truly recommend this. Find a card with rewards or cashback. As long as you are not completely useless with money you should be fine. Nowadays, with internet banking on your phone, it’s easy to monitor your spending. Just set up a direct debit to pay it off in fall every month and male sure that the balance on the card never exceeds your current account balance.
DO NOT GET THE 0% APR UNLESS YOU NEED TO BORROW MONEY. You say you want to improve your credit score. Well you do this buy paying off your debts, not by accruing them.
Nampahc Niloc said:
I have a credit card which I use to buy almost everything. It’s not the best one out there, but I get reward points. I pay it back every month.
I truly recommend this. Find a card with rewards or cashback. As long as you are not completely useless with money you should be fine. Nowadays, with internet banking on your phone, it’s easy to monitor your spending. Just set up a direct debit to pay it off in fall every month and male sure that the balance on the card never exceeds your current account balance.
DO NOT GET THE 0% APR UNLESS YOU NEED TO BORROW MONEY. You say you want to improve your credit score. Well you do this buy paying off your debts, not by accruing them.
So basically the one with the best perks if you're not worried about missing payments? Just to be clear, there is no interest payments required if the balance is cleared each month?I truly recommend this. Find a card with rewards or cashback. As long as you are not completely useless with money you should be fine. Nowadays, with internet banking on your phone, it’s easy to monitor your spending. Just set up a direct debit to pay it off in fall every month and male sure that the balance on the card never exceeds your current account balance.
DO NOT GET THE 0% APR UNLESS YOU NEED TO BORROW MONEY. You say you want to improve your credit score. Well you do this buy paying off your debts, not by accruing them.
S9JTO said:
Just to be clear, there is no interest payments required if the balance is cleared each month?
Correct. When you set up the card it'll ask you about direct debits and whether you want to pay in full, minimum amount, fixed amount etc, just link this to your bank account and select the pay in full option. GR_TVR said:
Correct. When you set up the card it'll ask you about direct debits and whether you want to pay in full, minimum amount, fixed amount etc, just link this to your bank account and select the pay in full option.
Nice, that's ideal. I'll be on the look out for the best perks based card then!I only ever had a credit card for going on holiday for the perfect exchange rate.
The credit agencies will tell you that you need a credit card as they'll want to sell you one.
I'd speak to a bank about getting a mortgage first, theyll be more concerned about your outgoings and whether you can afford what you're looking to buy rather than a whether you have cards
The credit agencies will tell you that you need a credit card as they'll want to sell you one.
I'd speak to a bank about getting a mortgage first, theyll be more concerned about your outgoings and whether you can afford what you're looking to buy rather than a whether you have cards
WonkeyDonkey said:
I only ever had a credit card for going on holiday for the perfect exchange rate.
The credit agencies will tell you that you need a credit card as they'll want to sell you one.
I'd speak to a bank about getting a mortgage first, theyll be more concerned about your outgoings and whether you can afford what you're looking to buy rather than a whether you have cards
But there's no denying that using a credit card and paying all credit off on time regularly increases your credit rating. Banks will base your interest rate on your credit rating to some extent so there's good reason to utilise one in advance.The credit agencies will tell you that you need a credit card as they'll want to sell you one.
I'd speak to a bank about getting a mortgage first, theyll be more concerned about your outgoings and whether you can afford what you're looking to buy rather than a whether you have cards
As mentioned, my outgoings are very minimal. ~£450pm on all bills and expenses minus petrol which is over half of that as mentioned but that's only because of my heavy right foot and uneconomical car
As long as you pay it off in full every month, theres plenty of benefit.
I use a CC for everything, which gives me air miles. These have provided me with thousands of pounds worth of benefits in flights, business class upgrades, etc.
They also always refund the annual fee, in my experience.
In the U.K. (I’m not a U.K. resident), I keep one ticking along, too. I do this for the reason you describe: to keep my credit score where I want it. That one is a cashback card. I don’t see much benefit from it, as the outgoings on it are so low.
I use a CC for everything, which gives me air miles. These have provided me with thousands of pounds worth of benefits in flights, business class upgrades, etc.
They also always refund the annual fee, in my experience.
In the U.K. (I’m not a U.K. resident), I keep one ticking along, too. I do this for the reason you describe: to keep my credit score where I want it. That one is a cashback card. I don’t see much benefit from it, as the outgoings on it are so low.
I was much in the same position as you a year or so ago - mid 20's and never had the need for a CC, always lived within my means and responsible when it came to purchases.
Like you I'm looking to get a mortgage soon so to build credit score I went with an Amex which gives 0.5% back on purchases. I use it for petrol, big car expenses like tyres or servicing and (if they take it) big restaurant bills. Pay it off every month and think no more about it.
The great irony of it all is to prove that you are responsible with money to get the mortgage you have to jump through the credit score hoops of putting yourself in debt. Somehow living within your means without a CC doesn't count towards this
Like you I'm looking to get a mortgage soon so to build credit score I went with an Amex which gives 0.5% back on purchases. I use it for petrol, big car expenses like tyres or servicing and (if they take it) big restaurant bills. Pay it off every month and think no more about it.
The great irony of it all is to prove that you are responsible with money to get the mortgage you have to jump through the credit score hoops of putting yourself in debt. Somehow living within your means without a CC doesn't count towards this
Cald0 said:
I was much in the same position as you a year or so ago - mid 20's and never had the need for a CC, always lived within my means and responsible when it came to purchases.
Like you I'm looking to get a mortgage soon so to build credit score I went with an Amex which gives 0.5% back on purchases. I use it for petrol, big car expenses like tyres or servicing and (if they take it) big restaurant bills. Pay it off every month and think no more about it.
The great irony of it all is to prove that you are responsible with money to get the mortgage you have to jump through the credit score hoops of putting yourself in debt. Somehow living within your means without a CC doesn't count towards this
I applied for a Tesco Clubcard Credit Card this morning and they automatically declined me and told me to check my credit file... I've checked it and there's nothing out of the ordinary on there, it's just 'Good' as mentioned in the OP.Like you I'm looking to get a mortgage soon so to build credit score I went with an Amex which gives 0.5% back on purchases. I use it for petrol, big car expenses like tyres or servicing and (if they take it) big restaurant bills. Pay it off every month and think no more about it.
The great irony of it all is to prove that you are responsible with money to get the mortgage you have to jump through the credit score hoops of putting yourself in debt. Somehow living within your means without a CC doesn't count towards this
The only thing I can think of, which maybe I should've realised before applying is that I recently took out HP via BMW Finance last month. The sum is a meager £5k over 2.5 years and the monthly payment isn't even 8% of my take home pay though...
S9JTO said:
I applied for a Tesco Clubcard Credit Card this morning and they automatically declined me and told me to check my credit file... I've checked it and there's nothing out of the ordinary on there, it's just 'Good' as mentioned in the OP.
The only thing I can think of, which maybe I should've realised before applying is that I recently took out HP via BMW Finance last month. The sum is a meager £5k over 2.5 years and the monthly payment isn't even 8% of my take home pay though...
Have a look at moneysavingexpert, it does a soft credit search for you to give you an indication of likelihood of a successful application with the various credit cards on offer.The only thing I can think of, which maybe I should've realised before applying is that I recently took out HP via BMW Finance last month. The sum is a meager £5k over 2.5 years and the monthly payment isn't even 8% of my take home pay though...
Your Tesco decline will appear on your credit rating for a period of time as well, so be careful and read a bit more before applying for your next one (I would wait a month or two and then apply for one which moneysavingexpert say you have a high % chance of success for).
When I got my first credit card, I just applied for one with my current account provider as I figured the chances of success were higher (no idea if this is actually true or not though, now I think about it) and moved to a Tesco credit card after 6 months or so.
Yes no fee if repaid on time.
over time they expect you to be
1) Forgetful
2) To get weak and use the balance
3) For your circumstances to change to force you to use it
etc
Worth having though for the credit scoring and as a backup to a debit card, also better to use it for online payments, paypal, amazon etc.
over time they expect you to be
1) Forgetful
2) To get weak and use the balance
3) For your circumstances to change to force you to use it
etc
Worth having though for the credit scoring and as a backup to a debit card, also better to use it for online payments, paypal, amazon etc.
I used to use the Tesco credit card, but the rewards have been diminished over time. I now have an amazon credit card. I pay in full every month. I put nearly all my spending on the card to maximise my rewards.
Be careful applying for more and more credit cards as this will also harm your rating. If you are struggling, getting a credit card from your bank might be the first step. Then a little while later apply for a rewards card, once your credit score has built up.
Mike
Be careful applying for more and more credit cards as this will also harm your rating. If you are struggling, getting a credit card from your bank might be the first step. Then a little while later apply for a rewards card, once your credit score has built up.
Mike
One good reason for using my credit card was for the 1% cashback I got. The EU killed that. I guess the only advantage to me now is the 'jointly and severally liable' part. Not much use for groceries, though it was useful when a supplier for my boat screwed up and after a brief one-sided skirmish I got £1100 back.
Worth getting a card for the extra protection you get from buying on it (especially online)
I have a Nationwide one with the cashback, it also has no commission on purchases abroad which works out well with their debit card allowing no commision withdrawls.
Set the direct debit to pay the balance every month.
I have a Nationwide one with the cashback, it also has no commission on purchases abroad which works out well with their debit card allowing no commision withdrawls.
Set the direct debit to pay the balance every month.
Having just used S.75 (or what ever its called) for the first time I agree the protection is nice when you really need it.
If you get a CC just make 100% sure its paid off every month by DD. Any missed payments will have a big impact on your credit score and they stay on your file for years.
If you get a CC just make 100% sure its paid off every month by DD. Any missed payments will have a big impact on your credit score and they stay on your file for years.
RizzoTheRat said:
Santander 123 might be worth a look then, there's a monthly charge for it but you get 3% cashback on fuel.
It says 'What’s your monthly spend at *major* petrol stations/major dupermarkets'... does it work for the cheap end eg Asda/Tesco petrol and CoOp/Morrisons groceries? https://www.santander.co.uk/info/credit-cards/123-...
And do you have to have their current account with £x paid in every month, 3 DDs yada?
I have a Tesco credit card and have been given enough cashback to pay for my annual RAC cover every year.
I've used their boost booklet to get lots of free stuff using cashback.
Always pay in full by direct debit. Remember that it is only free money if you pay in full by the due date.
Using next month's wages to pay for this month's fun
There are lots of credit cards out there that offer different stuff - get a card that suits your current lifestyle. I used to have an AsdaCard that cost £3 per month, but gave me £9 per month back if I bought £300 worth of fuel. I used to buy £300 fuel (not a penny more, if I could help it) at Asda on the AsdaCard and everything else on the Tesco card (including fuel bought at Asda).
They stopped the benefits of that AsdaCard, so I stopped using it.
We had a holiday last year that cost £7500, so I am using a "0% 32 month interest free" credit card to pay that off. The initial fee was 1.5%, so the total cost was £7612.50, but I set up a DD from a savings account for £240 and it will be paid off on the last month (about 0.6% interest rate). I DO NOT SPEND ON THIS CREDIT CARD.
The savings account pays 3% interest, so by the end of the "debt", I'll have made £200 more from the savings account that the credit card cost
.
USE DIFFERENT CREDIT CARDS FOR DIFFERENT PURPOSES
I've used their boost booklet to get lots of free stuff using cashback.
Always pay in full by direct debit. Remember that it is only free money if you pay in full by the due date.
Using next month's wages to pay for this month's fun
There are lots of credit cards out there that offer different stuff - get a card that suits your current lifestyle. I used to have an AsdaCard that cost £3 per month, but gave me £9 per month back if I bought £300 worth of fuel. I used to buy £300 fuel (not a penny more, if I could help it) at Asda on the AsdaCard and everything else on the Tesco card (including fuel bought at Asda).
They stopped the benefits of that AsdaCard, so I stopped using it.
We had a holiday last year that cost £7500, so I am using a "0% 32 month interest free" credit card to pay that off. The initial fee was 1.5%, so the total cost was £7612.50, but I set up a DD from a savings account for £240 and it will be paid off on the last month (about 0.6% interest rate). I DO NOT SPEND ON THIS CREDIT CARD.
The savings account pays 3% interest, so by the end of the "debt", I'll have made £200 more from the savings account that the credit card cost
.USE DIFFERENT CREDIT CARDS FOR DIFFERENT PURPOSES
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