Is it best to pay in full or minimum on 0% credit card?

KJON
KJON Posts: 3 Newbie
in Credit cards
Hi,

So I'm looking at getting a credit card, having never had one before and coming from a family who thought credit cards were the devil (so I've been doing my research). I'm hoping to get a mortgage in the next 2 years and know credit cards can build your credit score.

I'm looking at one of the 0% for 20+ months cards. Automatically I thought paying in full every month would show the best control of my finances but a lot of people have said its better if you pay less to show you can borrow responsibly. Any advice which is best or if there's a definite no no?

Thanks in advance

Comments

  • shortcrust
    shortcrust Posts: 2,697 Forumite
    Combo Breaker First Post First Anniversary Newshound!
    If your main aim is to look good to lenders then I would pay it in full but that sort of defeats the point of having a 0% card! You could pay the minimum (some would say plus a pound to avoid a minimum payment marker on your file) for 18 months or so and then pay in full as you approach mortgage time. I had loads of 0% cards which I made minimum payments on. A few months before going for a mortgage I paid them all off and closed most of them.

    Bare in mind that f you've never had a credit card before you probably won't get a 0% card anyway. You might have to get a credit building card like Barclaycard Initial or Aqua (I think - I'm a bit out of touch...).
  • bengal-stripe
    bengal-stripe Posts: 3,349 Forumite
    Name Dropper Combo Breaker First Post First Anniversary
    KJON wrote: »
    I'm looking at one of the 0% for 20+ months cards.

    Be aware, that a 0% 'balance transfer' is no good for you, as you do not have a balance on another card to transfer. You would need a card that offers 0% on 'purchases', but, as has been pointed out previously, they are pretty hard to come-by, particular for someone who has no track records with Credit Cards.
  • 20aday
    20aday Posts: 2,610 Forumite
    First Anniversary Combo Breaker First Post PPI Party Pooper
    OP you could also try your own bank too especially if you've been with them a long time.

    MSE has a "soft search" tool here for 'Bad Credit' cards i.e. Capital One, Luma, Aqua, Barclaycard Initial etc:

    https://www.moneysavingexpert.com/eligibility/credit-cards/
    It's not your credit score that counts, it's your credit history. Any replies are my own personal opinion and not a representation of my employer.
  • Voyager2002
    Voyager2002 Posts: 15,277 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    Why not get a cash-back card? You would need to pay it off in full each month, but would be paid a portion of what you spend. So long as you use it only for things that you would buy anyway, it can work out very well.
  • chattychappy
    chattychappy Posts: 7,302 Forumite
    Since credit building is the purpose, I would first apply for a "subprime" card to maximise the chances of at least getting one card onto the books. Then apply for a cashback/airmile type card.

    The risk is that applications for the harder-to-get 0% type cards could be declined and after two or three searches you might find it difficult to get anything at all.

    You could try the MSE eligibility checker which could help wasting searches on cards you're unlikely to get.
  • SHill
    SHill Posts: 146 Forumite
    Use the eligibility checker.
    It cuts out some guess but not all. As someone has said before go to your bank that you have a current account with and see if they may offer you a deal you could consider.
    However in all cases you won't know the credit limit until you have applied plus the promotion they give you. No matter where you go.
    Look you need to spend wisely and pay your debt off too. Mortgage is a debt that you will have for a lot longer. Plus you need to know that you can pay your mortgage off as interest rate go up or down. So have a 3 month cushion in case of an emergency.
    So if you do get a cc pay for fuel, main shopping etc set a minimum pay direct debit and then pay off the remaining balance. This will help your credit history.
    All the best and be wise on your future spending on any cc you get.
  • book12
    book12 Posts: 2,557 Forumite
    Kjon,

    Going to your bank for a credit card is the best method compared to the subprime route. I would try your bank first as they will have history about you.

    My first credit card is with my bank and didn't go through the subprime route. Got accepted by mynbamk woth a good credit limit. Interest rate on my first card was 15%apr with 6 months 0% purchases.

    I would go for a Barclaycard as your first card, but not necessary the Initial one. Try the eligibility checker on credit cards to see what you can have.
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