Tips for a new credit card holder
Discussion
Hi.
My mate casually mentioned that he applied for Amex and got it with a poor and very limited credit history.
I have some history (good) from utilities and Bank accounts, but not much. Still very limited as I am 19.
I got a student account when i started at uni and opened up a HSBC account. I got given a student credit card with a £500 limit along with my debit card. I’m not one for spending beyond my means and there were no reasons really for me to use the card as it had no perks so I never touched it.
However my dad swears by credit cards for rewards, so he was encouraging me to get a better one. I tried applying for an M&S card to get even more Sparks points, but I got rejected.
I just casually applied for the Platinum Cashback card and I was surprised to be accepted. Even more surprised to find out my credit limit is £5900!
Now I am not a spender but I have never used credit so I have no idea how to. I just want some tips and tricks to make the most of the card.
I have no debt, no need to spend or make a sudden big purchase, my sole goal is to increase my credit history and make use of the rewards. My first idea was to direct debit every purchase I make to my debit cards (Chase, HSBC, and an inactive Santander account ). My HSBC account has 0% overdraft (soon to be £2000 limit).
The amex card was definitely better than the Capital one credit builder card as it is 25% apr and the capital one is 37% and has no rewards. The credit limit is obviously higher too.
Please can you guys give me some advice on how to make the most of this card and build up my credit history.
My mate casually mentioned that he applied for Amex and got it with a poor and very limited credit history.
I have some history (good) from utilities and Bank accounts, but not much. Still very limited as I am 19.
I got a student account when i started at uni and opened up a HSBC account. I got given a student credit card with a £500 limit along with my debit card. I’m not one for spending beyond my means and there were no reasons really for me to use the card as it had no perks so I never touched it.
However my dad swears by credit cards for rewards, so he was encouraging me to get a better one. I tried applying for an M&S card to get even more Sparks points, but I got rejected.
I just casually applied for the Platinum Cashback card and I was surprised to be accepted. Even more surprised to find out my credit limit is £5900!
Now I am not a spender but I have never used credit so I have no idea how to. I just want some tips and tricks to make the most of the card.
I have no debt, no need to spend or make a sudden big purchase, my sole goal is to increase my credit history and make use of the rewards. My first idea was to direct debit every purchase I make to my debit cards (Chase, HSBC, and an inactive Santander account ). My HSBC account has 0% overdraft (soon to be £2000 limit).
The amex card was definitely better than the Capital one credit builder card as it is 25% apr and the capital one is 37% and has no rewards. The credit limit is obviously higher too.
Please can you guys give me some advice on how to make the most of this card and build up my credit history.
Edited by VS02 on Wednesday 15th June 20:53
Use it for your petrol and pay it off every month. Forget about it for anything else. Or use it for little bit of any big purchases you have for cover. I put £100 on a £24000 garden building just to get the cover incase the company went under between upfront payment and completion of the build.
We put 100% of our spending on credit cards and get the benefit of airmiles / cash back.
Supermarket, petrol, you name it, work expenses, holidays etc
Have them set to pay off in full every month which keeps the current account nice and simple to track. - half a dozen bills plus the monthly credit card payment.
Because of work expenses (I used to buy flights etc), I could regularly get above 100k per year going through the credit card which airmiles wise is not to be sniffed at.
And as such, we can get super amounts of credit should we ever need it.
The best advice though is always pay it off in full and never ever find yourself paying the interest / apr as it is extortionate…
Supermarket, petrol, you name it, work expenses, holidays etc
Have them set to pay off in full every month which keeps the current account nice and simple to track. - half a dozen bills plus the monthly credit card payment.
Because of work expenses (I used to buy flights etc), I could regularly get above 100k per year going through the credit card which airmiles wise is not to be sniffed at.
And as such, we can get super amounts of credit should we ever need it.
The best advice though is always pay it off in full and never ever find yourself paying the interest / apr as it is extortionate…
vulture1 said:
Use it for your petrol and pay it off every month. Forget about it for anything else. Or use it for little bit of any big purchases you have for cover. I put £100 on a £24000 garden building just to get the cover incase the company went under between upfront payment and completion of the build.
This, absolutely. The credit trap is horrendous - if you're not very disciplined it's all too easy to find yourself servicing huge amounts of debt.No harm if you control it, rather than the other way around. I have 1 credit card with something like a £10k limit. I put a couple of tanks of fuel on it every couple of months and clear it in full each time just to show some usage. It has no perks or cashback, it's there in case of emergency really.
If you want cashback perks etc, open a Chase current account which gives 1% cashback on spending (there's a few caveats but those would apply to any cashback scheme). They also offer 1.5% interest on instant access savings.
Unless you really need the card I'd even consider reducing the limit so you're not tempted to use it. I f
ked up hugely in my 20s with credit and debt, took me years to pay it off and get free.Funk said:
This, absolutely. The credit trap is horrendous - if you're not very disciplined it's all too easy to find yourself servicing huge amounts of debt.
No harm if you control it, rather than the other way around. I have 1 credit card with something like a £10k limit. I put a couple of tanks of fuel on it every couple of months and clear it in full each time just to show some usage. It has no perks or cashback, it's there in case of emergency really.
If you want cashback perks etc, open a Chase current account which gives 1% cashback on spending (there's a few caveats but those would apply to any cashback scheme). They also offer 1.5% interest on instant access savings.
Unless you really need the card I'd even consider reducing the limit so you're not tempted to use it. I fked up hugely in my 20s with credit and debt, took me years to pay it off and get free.
I have a Chase current account , I also have the roundup feature on there.No harm if you control it, rather than the other way around. I have 1 credit card with something like a £10k limit. I put a couple of tanks of fuel on it every couple of months and clear it in full each time just to show some usage. It has no perks or cashback, it's there in case of emergency really.
If you want cashback perks etc, open a Chase current account which gives 1% cashback on spending (there's a few caveats but those would apply to any cashback scheme). They also offer 1.5% interest on instant access savings.
Unless you really need the card I'd even consider reducing the limit so you're not tempted to use it. I f
ked up hugely in my 20s with credit and debt, took me years to pay it off and get free.I have 2x savings account with Chase with 1 that holds an inheritance (that I use to top up my Lifetime ISA every year, and a HL stocks and shares ISA) and one that contains my own personal savings. I want to open a fixed term high yield account for both temptation as you say, security reasons so i am looking in to that too.
My biggest fear is getting lost in a world of debt, i have no one to bail me out. So i will restrict my use of the card to just petrol I think.
Be aware that if you don’t pay it all off in full, you’ll see significant interest charges.
Interest aside, the other big trap is that it’s easy to forget about card spending when you look at your bank balance. You wouldn’t be the first person to find themselves sending a good chunk of their pay packet to the card company when your bill falls due and then having no option but to live the month on credit (then do the same the following month).
Interest aside, the other big trap is that it’s easy to forget about card spending when you look at your bank balance. You wouldn’t be the first person to find themselves sending a good chunk of their pay packet to the card company when your bill falls due and then having no option but to live the month on credit (then do the same the following month).
Like Funk said, I reckon you will be fine too.
Listen to what the others have said, clear it in full every month via direct debit.
You can also ask for your credit limit to be reduced. It might help with your peace of mind knowing that you can't spend more than say £1000 on it.
Good luck
FV
Listen to what the others have said, clear it in full every month via direct debit.
You can also ask for your credit limit to be reduced. It might help with your peace of mind knowing that you can't spend more than say £1000 on it.
Good luck
FV
VS02 said:
I have a Chase current account , I also have the roundup feature on there.
I have 2x savings account with Chase with 1 that holds an inheritance (that I use to top up my Lifetime ISA every year, and a HL stocks and shares ISA) and one that contains my own personal savings. I want to open a fixed term high yield account for both temptation as you say, security reasons so i am looking in to that too.
My biggest fear is getting lost in a world of debt, i have no one to bail me out. So i will restrict my use of the card to just petrol I think.
I have 2x savings account with Chase with 1 that holds an inheritance (that I use to top up my Lifetime ISA every year, and a HL stocks and shares ISA) and one that contains my own personal savings. I want to open a fixed term high yield account for both temptation as you say, security reasons so i am looking in to that too.
My biggest fear is getting lost in a world of debt, i have no one to bail me out. So i will restrict my use of the card to just petrol I think.
I was going to suggest that you always have savings available, which exceeds your monthly credit card bill.
It sounds as though that is sorted. Ideally, the only debt to use throughout life, should just be a home mortgage. Worked for me.
You never want to be late or miss, making the monthly credit card payment.
Once a year your 'cashback' will be credited to your account.
Some smaller businesses will not accept AMEX (someone has to pay for the cashback money), so I have a secondary credit card in case that occurs.
I recently stopped using debit cards, following a mysterious fraud. Only a few Pounds, but the bank refused to answer their secondary fraud line phone.
As a result of that, I learnt debit card dodgy transactions become our problem, even though banks are obliged to reimburse.
With a credit card, it becomes their problem. They reimburse disputed transactions to the account, before it is even due for payment.
Glad to hear that you are taking an interest in finance. Majority don't and consequently they lose out 'big', during a lifetime.
Another tip - save 10% of your earnings each month. Most people would probably accept their job anyway, if the starting pay happened to be 90%. If so, they would not miss their disciplined savings.
Good luck to you.
P.S. You can ask AMEX to reduce that credit limit to a different figure, if you might be anxious about it.
Edited by Jon39 on Wednesday 15th June 22:20
1) Set up a DD to pay off the balance in full every month. That way you can never accidentally get caught for interest.
2) Assuming you can afford it, you can use it for any payment you like where accepted. BUT most importantly use it for 'high risk' purchases like holidays, or where the supplier might cease trading, or when a project is complex and might go wrong leading to dispute. For example I paid a specialist garage £1K+ to fix what they said was a misfire. Except they didn't fix it, not least because the problem was actually in the gearbox, not the engine. They were too incompetent to diagnose it so I was able to get my money back via Section 75.
2) Assuming you can afford it, you can use it for any payment you like where accepted. BUT most importantly use it for 'high risk' purchases like holidays, or where the supplier might cease trading, or when a project is complex and might go wrong leading to dispute. For example I paid a specialist garage £1K+ to fix what they said was a misfire. Except they didn't fix it, not least because the problem was actually in the gearbox, not the engine. They were too incompetent to diagnose it so I was able to get my money back via Section 75.
When younger my now ex and I got into quite a bit of difficulty with credit cards. To give you feel for how bad it had become I ended up having to put the cards in a block of ice in the freezer and this was the second set after her friends had already staged an intervention.
In my experience
- Only pay what you can afford and pay it off as soon as you can.
- The rewards don't seem to be worth it unless you get very obsessive about it. I had a colleague who swore by Airmiles for BA via spending everything on Amex, but again you need to be very disciplined in terms of not spending more than you can pay. In my view there is no such thing as a free lunch.
- They are VERY useful for consumer protection and I would make large purchases with at least part on a credit card to be able to lean on this protection.
- 0% balance transfers are also helpful if you need them, but look a the whole cost.
In my experience
- Only pay what you can afford and pay it off as soon as you can.
- The rewards don't seem to be worth it unless you get very obsessive about it. I had a colleague who swore by Airmiles for BA via spending everything on Amex, but again you need to be very disciplined in terms of not spending more than you can pay. In my view there is no such thing as a free lunch.
- They are VERY useful for consumer protection and I would make large purchases with at least part on a credit card to be able to lean on this protection.
- 0% balance transfers are also helpful if you need them, but look a the whole cost.
Personally i have for many years used my tesco clubcard credit card for all of my main spending apart from the odd place here and there that are cash only.
The direct debit is set up to pay it off in full every month automatically so no worry about not paying it off but i'm sensible enough to not be spending above my pay grade.
The big perk is that it usually pays enough clubcard points each year for a couple of ferry trips over to france.
The direct debit is set up to pay it off in full every month automatically so no worry about not paying it off but i'm sensible enough to not be spending above my pay grade.
The big perk is that it usually pays enough clubcard points each year for a couple of ferry trips over to france.
If it gives decent rewards one option would be to do all your spending monthly on the card, leave your current account alone and then on statement date pay off the C/Card with the money unused in your current account, obviously you have to balance the two every month to avoid interest.
Collectingbrass said:
- The rewards don't seem to be worth it unless you get very obsessive about it. ... In my view there is no such thing as a free lunch.
Sorry to read about your bad experience. Hope that is past now.
I suppose it depends what you mean by, worth it.
I have used an AMEX cashback card for decades.
Have never paid them any fees or interest (the 'merchants' do the paying).
Once every year, they automatically add about £100 to the account.
Using the AMEX to pay, is of course exactly the same sequence of actions, as with any other card.
If instead, I had used a non-rewards credit or debit card, every 20 years I would have lost out on £2,000.
Could probably have quite a few free lunches with that! -
Just needs a disciplined approach, the same as with every other financial matter.
Jon39 said:
I have used an AMEX cashback card for decades.
What's the %age cashback? But I thought many places don't take Amex because it costs them more.I used to do quite well with Capital One when they had 1% cashback, but that was killed off years ago
. EU or Gordon Mugface Brown I think.Simpo Two said:
What's the %age cashback? But I thought many places don't take Amex because it costs them more.
I used to do quite well with Capital One when they had 1% cashback, but that was killed off years ago . EU or Gordon Mugface Brown I think.
On my new Platinum Cashback card,I used to do quite well with Capital One when they had 1% cashback, but that was killed off years ago
. EU or Gordon Mugface Brown I think.5% for the first 3 months, 0.5% on purchases under 10k, 1% over 10K.
I plan on buying a car in the future; is it wise to use the Amex to pay for it and then pay it off in full at the end of the month (assuming I already had the full balance in my current account)?
What about buying a car on HP finance? Theoretically?
VS02 said:
On my new Platinum Cashback card,
5% for the first 3 months, 0.5% on purchases under 10k, 1% over 10K.
I plan on buying a car in the future; is it wise to use the Amex to pay for it and then pay it off in full at the end of the month (assuming I already had the full balance in my current account)?
What about buying a car on HP finance? Theoretically?
You won't find many dealers that take credit cards for the full balance let alone take amex for it.5% for the first 3 months, 0.5% on purchases under 10k, 1% over 10K.
I plan on buying a car in the future; is it wise to use the Amex to pay for it and then pay it off in full at the end of the month (assuming I already had the full balance in my current account)?
What about buying a car on HP finance? Theoretically?
Simpo Two said:
Jon39 said:
I have used an AMEX cashback card for decades.
What's the %age cashback? But I thought many places don't take Amex because it costs them more.I used to do quite well with Capital One when they had 1% cashback, but that was killed off years ago
. EU or Gordon Mugface Brown I think.It used to be 1% for all spending, but lower now.
OP has stated figures in the post after yours.
As you say, some small businesses don't like AMEX, because of the higher fees they have to pay. More seemed to have joined in recently though.
For our bigger regular purchases, eg food, petrol, no problem. Even the DVLA online now accept AMEX (at least we get a token gesture back, when our AMs emerge from hibernation).
I recommend that you try it. Need to choose the right version of their cards.
Have an alternative ready for the small shops.
The complaint that Amex was not accepted everywhere used to be justifiable but much less so now in my experience. Had my card since 1980 and in the last couple of years or so the number of places not accepting it has really declined. I reckon that about 95% of my cc card spend each month is now via Amex.
Always have another card just on case.
And ALWAYS pay off the total balance each month...cc interest rates are evil.
R.
Always have another card just on case.
And ALWAYS pay off the total balance each month...cc interest rates are evil.
R.
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