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  • FIRST POST
    • Pa Ja
    • By Pa Ja 7th Feb 18, 10:25 AM
    • 82Posts
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    Pa Ja
    Understanding Credit Cards
    • #1
    • 7th Feb 18, 10:25 AM
    Understanding Credit Cards 7th Feb 18 at 10:25 AM
    I'm in my 30's and I still don't fully understand credit cards, charges, etc.. no matter what blog I read. My hesitation is probably leading to confusion.

    I need a card for backup (Like most people I presume), for emergency payments - VET excess fee, car repair, to see out the last few days until payday, etc...
    With the view of either clearing the cr-card balance on payday or if it is a larger sum, making monthly payments to reduce the balance overtime with either no interest charge or minimal.

    eg. Halifax ad says, "0% interest for 29 months from account opening on balance transfers made in the first 90 days."
    Minimum £100 balance transfer. Representative rate of 19.9% APR (variable).


    What does this actually mean?
    Is is that in the first 29 months of owning the card, I could make a purchase or borrow £550 and then make 29 installments (1 a month) of £18.99 before they charge me interest?

    Thanks for your time.
Page 1
    • zx81
    • By zx81 7th Feb 18, 10:27 AM
    • 15,446 Posts
    • 16,363 Thanks
    zx81
    • #2
    • 7th Feb 18, 10:27 AM
    • #2
    • 7th Feb 18, 10:27 AM
    It only apply to balance transfers - not purchases. As long as you make at least minimum payments, you would pay 0% interest on the outstanding balance.

    It sounds like you will need a card with 0% offer on purchases.
    • Candyapple
    • By Candyapple 7th Feb 18, 10:50 AM
    • 2,625 Posts
    • 1,968 Thanks
    Candyapple
    • #3
    • 7th Feb 18, 10:50 AM
    • #3
    • 7th Feb 18, 10:50 AM
    I need a card for backup (Like most people I presume), for emergency payments - VET excess fee, car repair, to see out the last few days until payday, etc...
    With the view of either clearing the cr-card balance on payday or if it is a larger sum, making monthly payments to reduce the balance overtime with either no interest charge or minimal.
    Originally posted by Pa Ja
    Balance transfer cards - you would use this if say you have 1 credit card (Card A) with £1000 on it and the APR is 20%. You don't want to pay interest on £1000 with that type of APR so you would need a balance transfer card with a 0% offer on it. With the new balance transfer card (Card B) you request that the balance from Card A be moved onto Card B. So Card A now has a 0 balance and Card B has £1000 balance, but instead of paying interest on it, your new rate is 0% for however many months your deal is for.

    Purchase cards - If you are buying your car insurance or any day-to-day spending for example you would get one of these. A 0% purchases card means that say your credit limit is £3000 and you spent £2000, and your offer is for 20 months at 0%, you would have 20 months to clear the £2000 without paying a penny in interest. If at the end of the 20 months you haven't cleared the balance then you start paying interest. You do however have to pay the monthly minimum repayment which is usually 1-2% of the balance owed.

    Money transfer cards - You would use this if you had an overdraft to clear or needed to pay a large cash sum where the company didn't accept credit cards (e.g paying a tradesman).


    You need a purchases card. Here is the eligibility checker:
    https://creditcards.moneysavingexpert.com/?purchases&_ga=2.40151650.1326189476.1517825568-1969417388.1516998791
    I'm a Board Guide on the Credit Cards, Loans, Credit Files & Ratings boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com
    • Pa Ja
    • By Pa Ja 7th Feb 18, 12:20 PM
    • 82 Posts
    • 52 Thanks
    Pa Ja
    • #4
    • 7th Feb 18, 12:20 PM
    • #4
    • 7th Feb 18, 12:20 PM
    Thanks, this helped.
    With regards to the 29 months. Does this refer to the period of where the card was taken out or when a purchase was made. So if I purchased something on the 11th month of owning the card, would I have 29 months to pay back that debt or 18 months?
    • zx81
    • By zx81 7th Feb 18, 12:22 PM
    • 15,446 Posts
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    zx81
    • #5
    • 7th Feb 18, 12:22 PM
    • #5
    • 7th Feb 18, 12:22 PM
    18 months.
    • Dobbibill
    • By Dobbibill 7th Feb 18, 12:23 PM
    • 2,719 Posts
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    Dobbibill
    • #6
    • 7th Feb 18, 12:23 PM
    • #6
    • 7th Feb 18, 12:23 PM
    it's from account opening.
    I'm a Board Guide on the Energy, Student Money Saving, UK Armed Forces and
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    • Pa Ja
    • By Pa Ja 7th Feb 18, 12:31 PM
    • 82 Posts
    • 52 Thanks
    Pa Ja
    • #7
    • 7th Feb 18, 12:31 PM
    • #7
    • 7th Feb 18, 12:31 PM
    I take it then that people end up owning several cards to maximize the length of time to repay a debt?
    • Candyapple
    • By Candyapple 7th Feb 18, 12:37 PM
    • 2,625 Posts
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    Candyapple
    • #8
    • 7th Feb 18, 12:37 PM
    • #8
    • 7th Feb 18, 12:37 PM
    I take it then that people end up owning several cards to maximize the length of time to repay a debt?
    Originally posted by Pa Ja
    It depends. Some people would only take out a credit card if they knew they had a large purchase coming up (e.g. a holiday) and wanted to spread the cost out over x-amount of months, or some use their 0% purchase cards for day-to-day spending and keep the money they would have spent in a high interest savings account so that way when their 0% deal ends, they can just transfer the funds over from the savings account, keep the interest they made and their debt is cleared. Or some people at the end of a 0% deal might not have enough to clear the debt, so they'll transfer the balance onto a new 0% balance transfer card so they can continue the cycle.

    You can either close your old card down at the end of a deal, or keep it open and hope for a good retention offer from the card provider.
    I'm a Board Guide on the Credit Cards, Loans, Credit Files & Ratings boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com
    • zx81
    • By zx81 7th Feb 18, 12:38 PM
    • 15,446 Posts
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    zx81
    • #9
    • 7th Feb 18, 12:38 PM
    • #9
    • 7th Feb 18, 12:38 PM
    Some will BT a debt if they cannot or choose not to pay it off.

    Some sink deeper into debt until they are left paying interest on a bunch of cards they can no longer afford.
    • Ebe Scrooge
    • By Ebe Scrooge 7th Feb 18, 12:41 PM
    • 4,078 Posts
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    Ebe Scrooge
    I take it then that people end up owning several cards to maximize the length of time to repay a debt?
    Originally posted by Pa Ja


    It depends on what they're trying to achieve. Some do, yes.


    However, please don't look upon a credit card as a way of getting out of debt - more often than not, the reverse is true, and it leads to further debt.


    The "correct" way to use a standard credit card ( i.e. not one that has a promotional offer ) is to use it for purchases, and pay the balance off in full every month. That way, you pay zero interest, you get the advantage of up to 56 days of interest-free credit, and you benefit from S75 protection on larger purchases.


    Really, if you're looking at getting a credit card because you're struggling to manage on your income, I'd advise heading over to the DFW board in preference to potentially saddling yourself with more ( expensive ) debt.


    It's also worth mentioning - the 0% promotions are generally only available to those with a relatively good and established credit history. I'm not saying you definitely won't be able to get one - but don't go banking on it.
    I may not know much about art, but I know what I like.
    • Pa Ja
    • By Pa Ja 7th Feb 18, 12:50 PM
    • 82 Posts
    • 52 Thanks
    Pa Ja
    Thanks for your help.
    We're good at managing within our budget. However there was recently a scenario whereby we had two unforeseen outcomes at the end of an already costly month and it made us realize we could do with that extra security of putting something on a credit card with a view of repaying that amount ASAP.

    As I said earlier, hesitation was leading to confusion. All the comments helped clear that up.

    Thank you.
    • dresdendave
    • By dresdendave 7th Feb 18, 4:51 PM
    • 706 Posts
    • 844 Thanks
    dresdendave
    .

    I need a card for backup (Like most people I presume), for emergency payments - VET excess fee, car repair, to see out the last few days until payday, etc...

    .
    Originally posted by Pa Ja
    Seeing out the last few days until payday is not an emergency, it is a sign of poor budgeting and not living within your means.

    There are many good reasons to have a CC, but you still need to address the above issue regardless of whether or not you get one.
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