Credit Card 101

bartok77

Dear all,
I am a newbie on this site and a newbie with regards to credit cards. I have always tried and managed living without any form of credit and have planned my finances carefully. However, after reading a couple of threads on here, I have decided to boost my credit rating further by applying for a credit card with a small limit. I have never missed a payment in my life and my CR shows it. However some people have mentioned not having maybe a credit card or store card to your name could work against you (which personally I find stupid coz it should show the lender I have always lived within my means). Anyway, that aside, i need to undersatdn the facts about credit cards as I have never used / had one before.
When they say 0% on purchases for 9 months for instance, does that mean if I took out a card today, bought something worth say £100, I wouldn't pay any interest on that until the 9 months had passed? Does it also mean I can wait till the end of the 9 months to pay back the £100 without being charged any interest?

speedbird1973

Hi

You won't pay any interest on the balance for 9 months, however you WILL have to make a minimum repayment.

Anything from £5 to 3% usually, with a minimum of £5 or maybe even £10. So you'll have a to pay a bit off each month.

Worth pointing out that you don't start accruing interest from day 1 like an interest free loan. You start accruing interest after 9 months, so if you have £5 balance left after 9 months, you'd pay interest on that

CannyJock

With a 0% credit card (or any credit card!) make sure that you set up a DIRECT DEBIT to repay either the minimum or the balance in full. That way you can be sure (so long as you have the funds in your bank account to make the payment) that you'll never miss a payment.

It's missing payments that put black marks on your credit report.

I'd urge anybody to learn to use credit cards to your advantage, benefits including:
1. Section 75 protection on any purchase over £ 100
2. Convenience
3. Potential rewards (read up on Reward Cards and Cashback cards for more details)

Once you're comfortable with that, you could even look at make money out of credit cards and read up on Stoozing.

As a novice, I'd recommend you go for a Reward or Cashback card where you set up a direct debit to repay the balance in full and think twice about getting into 0% purchase cards until you've built up a credit history that'll make it worthwhile.

bartok77

Many thanks folks for all your advice. At least now I have a clearer picture of what I should do and what it all means.