Really Basic Credit Card Questions

lipidicman

Hi there

I would consider myself a pretty good moneysaver....BUT I have never really used a credit card. Now I have a monthly salary I want to use a card and pay off the balance in full each month by direct debit. I can then save a months salary in my high-interest savings account by putting off paying for things by a month.

I have a couple of questions

1) Can I choose the date on which the bill must be settled each month. To be clear I want the DD to pay the amount at the last possible moment, and I am asking if I can choose this 'last possible moment' to be just after my salary comes in, and my other DDs go out

2) Can you check the amount have on your credit card halfway through the month, or do I have to write down everything I spend (I can be this disciplined but I find the mini-statement thing for my current account very reassuring)

Thanks for reading and any info you might have!
L

Rafter

I think it depends on the provider, but you should be able to negotiate on which day your bill is raised and therefore which day your direct debit needs to be taken.

The other thing you may want to consider is taking out two cards to maximise the interest free period. You can earn up to 60 days or so interest free but this is the maximum. If you make a purchase the day before your statement is produced you only get about 20 days interest free. If you make a purchase the day after the statement is raised you have almost 2 months before you have to pay it off.

You can check your statement and balance online with most major card providers.

If you are disciplined you can make a lot more than 1 months interest through use of cards with 0% on purchases over longer periods. You need to make sure you transfer sufficient into your savings each month though.

Good luck.

R.

lipidicman

Thanks, this is all good advice. With two cards you stagger the payment dates and benefit from the one which has billed the most recently I assume?

On the subject of getting more interest by using 0% BT cards, I know this. My aim is twofold though, I can dump another months salary in my contingency fund (I have regulars savers, ISAs too) and get the protection of a card. Also I hope to improve my credit score by repaying in full (this doesnt harm it does it? I did hear that if companies think you will repay in full they can reject you as they wont make any money, but it is better than not using a card at all isnt it?)

I have another question - I know not to use the card to withdraw cash - but does cashback count as a purchase?

Darryl

I've been able to change the monthly DD date on every credit card I've ever had, including the Amex Platinum credit card (which is the best one to have if you'll follow the 'pay off in full every month' strategy).

Also, cashback is not a purchase - it's something you get if you make a purchase.

Hope this helps

Darryl.

Darryl

Repaying in full has never harmed my credit score. If I'm right, I think it actually gives you a higher score (as you are a good credit risk), even though card companies make less money from you as you don't pay late fees, etc.

Darryl.

lipidicman

Also, cashback is not a purchase - it's something you get if you make a purchase.

So If I pay for a loaf of bread at £1.05 and get £30 cashback the effect on my statement is just a £31.05 purchase?

When you say you have changed the DD date, do you mean you have changed the date you made the payment or the day they want the payment by - this is the distinction I tried to make in my question?

Darryl

So If I pay for a loaf of bread at £1.05 and get £30 cashback the effect on my statement is just a £31.05 purchase?

No, your statement will show a £1.05 debit and a £30 credit, leaving your balance owing as -£28.95. Which means the card company owes you.

Not that I'm aware of any card that pays £30 cashback on a £1 purchase... if there are let me know which ones!

When you say you have changed the DD date, do you mean you have changed the date you made the payment or the day they want the payment by - this is the distinction I tried to make in my question?

I have specified the date I wish the DD payment to be taken from my account. This then amends the statement and payment due by dates.

Darryl.

dthyer

The word "cashback" is used for 2 different things.

With credit cards, some give you a very small percentage reward for spending, used to often be 1%, nowadays usually 0.5% or even 0.25%, that is usually paid back to you after a year. I think this is what Darryl is talking about.

With debit cards you can get cash out from your account at the same time as buying stuff. I think this is what lipdicman is talking about.

I don't think that you can do the getting cash kind of cashback with a credit card, but if you could it might well be charged as a cash withdrawal, so probably worth avoiding.

Cheers,

DT

dag_2

Can I choose the date on which the bill must be settled each month. To be clear I want the DD to pay the amount at the last possible moment, and I am asking if I can choose this 'last possible moment' to be just after my salary comes in, and my other DDs go out

Yes you can choose. By law, lenders and utility companies have to let you choose a preferred payment date - and you don't have to give the reason why you prefer a particular date either. Maybe you want your payment to be just after your salary, or half a month out of phase with your rent, or maybe you want to stagger the payments of different lenders, so that they're roughly evenly spread through the month. It's totally up to you.

However, if you want to change your payment date more than once in twelve months, they may charge you for it.

Also I hope to improve my credit score by repaying in full (this doesnt harm it does it? I did hear that if companies think you will repay in full they can reject you as they wont make any money, but it is better than not using a card at all isnt it?)

When credit card companies decide whether to give you a card or up your limit or not, they're trying to balance the potential sales revenue against the perceived risk. Obviously they want to limit their risks - but they can't make any money out of you if they don't give you a card in the first place.

You may well have an impeccable credit history, no CCJ's, stable high-paying employment, homeowner, stable marriage - but if they've clocked you as a "money saving expert", they're that much less likely to give you a credit card.

Your non-payment isn't the only risk. There's also a risk of third-party fraud on your account - and if you won't earn them any money, it's not worth their while taking that risk.

With credit cards, some give you a very small percentage reward for spending, used to often be 1%, nowadays usually 0.5% or even 0.25%, that is usually paid back to you after a year. I think this is what Darryl is talking about.

With debit cards you can get cash out from your account at the same time as buying stuff. I think this is what lipdicman is talking about.

Agreed.

I don't think that you can do the getting cash kind of cashback with a credit card

... at least, not at supermarkets. Supermarkets started offering cashback on debit cards, because it was cheaper and less risky for them to bank the debit card sales vouchers than cash. But credit card vouchers have always been more expensive to bank than cash.

So you probably won't be able to get cashback at a supermarket with a credit card. Some operators who haven't been trained properly might ask you if you want cashback, but the electronic point of sale probably won't process it - they're clever enough to know the difference between credit and debit cards.

Martinslovechild

I don't think that you can do the getting cash kind of cashback with a credit card, but if you could it might well be charged as a cash withdrawal, so probably worth avoiding.

That's correct - you cannot ask for cashback (in a supermarket, for instance) with a credit card - only a debit card.

However, if you have a Cashback Credit Card (e.g. Morgan Stanley, Egg, Halifax One, More Th>n), you will receive approximately 0.5% of all purchases as an annual credit onto your account. Somebody spending £20,000 per year on a More Th>n card would therefore receive £100 (0.5% * 20000).

lipidicman

Thanks everyone. I realised last night what a muppet I was being when my friend said 'you cant get cashback at the till on a credit card' and I realised that 'cashback' was being understood as a 'cashback credit card' like the Amex Blue. Sorry for all that, your answers make perfect sense now!

I am also glad of your answers the payment date issue which has reassured me. Very helpfull, cheers