Credit card newbie, PLEASE HELP!!

Stebo

Hi everyone. I am 22 and have recently graduated and started a new job, pays well enough but I have only been there a month and so have very little savings built up. I got my first pay check and then blew it almost all on car insurance (£1226). This means I'm now broke and looking a bit of money to get me through the month. I rang my bank and was offered a loan of £1000 but the quickest I could repay it is 1 year and it would end up costing me £1200.

I have never had a credit card and don't know alot about them but I believe that this might be a better way of obtaining a bit of money to keep me going.

I was planning on paying my insurance monthly but they were ripping the !!!! and it was going to be another £600 (yes £600) if I did it through the insurance company!

Can anybody point me in the right direction. Is a credit card the right option. Which is the best for my circumstances. I also am draining my overdraft and while a could get a lend of my girlfriend / parents I really don't want to so the sooner I can get a bit of credit the better.

Please help as i am at a loss when it come to credit cards and what the different terms mean.

I will not need any more than £1000 and will have it paid back at the most within three months. Also the ability to get cash or pay off my £350 overdraft with it would help alot.

Thank you all in advance for any help or advice.

JayZed

Stebo, a credit card is definitely the best option for you. There are various cards on the market that offer 0% interest on purchases for a limited period (up to 10-15 months). Have a look at Martin's article. You might not have built up a good enought credit rating for the 15-month Capital One card, but you should be able to get the 10-month Halifax and Barclaycard deals.

Just remember three things: (1) make sure you pay the card off before the 0% deal expires, otherwise you'll start paying a lot of interest; (2) DO NOT use the cash advance facility - i.e. withdraw cash with the credit card - as you will definitely be paying a LOT of interest; (3) Don't use the cc as "free money" to buy luxuries that you can't afford - that's the way to get yourself into expensive debt.

In general, having and using a credit card is a good thing - it allows you to build up a credit rating and can be cheaper than dipping into your overdraft - as long as you use it sensibly and don't end up paying interest.

JayZed

I've just re-read your originaly article and note that you're also digging into your overdraft. DON'T use a 0% purchase card (as above) to pay off the overdraft - this would be the same as withdrawing cash on it, i.e. very expensive.

If you can pay off your overdraft with your salary over the next couple of months, I would just do that. You could look into cards that offer a "super balance transfer" facility that allows you to pay off your overdraft as if it were a balance transfer, but to be honest unless you have an extortionate interest rate on your overdraft and/or it will take you more than a couple of months to pay it off, it's probably not worth the hassle of doing this.

Stebo

Thanks for your advice. The overdraft is not alot and the interest in minimal.

I will check out the credit cards you have mensioned. Thanks alot.

Stebo

JayZed wrote: »

I've just re-read your originaly article and note that you're also digging into your overdraft. DON'T use a 0% purchase card (as above) to pay off the overdraft - this would be the same as withdrawing cash on it, i.e. very expensive.

If I was to make a payment to my paypal account would that count as a purchase. Could I then withdraw funds from my paypal account to my current account to clear my overdraft??

Stebo

Does anybody know if ill get charged for this???

NickX

Stebo wrote: »

Does anybody know if ill get charged for this???

I've never done this myself, but I believe that payments to Paypal could be deemed as Cash Advances and will incurr a charge plus interest charged from the Transaction Date at an extortionate rate.

Not adviseable unless you have money to burn.