Credit card virgin


I have been trawling through this site for a few days now and despite my best efforts I find my concentration wandering after a couple of sentences on anything financial. All I have managed to retain in my head is that credit cards are better than overdrafts so, trusting the fabulous Mr Lewis, I have ordered my brand spanking new Egg card. I once had an HSBC credit card as I couldn't afford my car insurance then noticed other things slipping onto it so promptly cut it up, believing that they are somehow inherently evil, and got a loan to cover it, along with my overdraft. Well, years later I find myself with my overdraft up the hilt again. This has been the situation for some years now. Whilst other people my age save money for deposits, I constantly have bank debts over my head. Granted, not a massive amount but enough to make my life a general misery. Anyway, I digress....

In brief my debts are thus: I have a £1600 overdraft facility that I live off (I can't remember the last time I was in credit). I usually whack this up over the limit to about £1900 every month and incur hefty charges as a result. I also have a personal loan of £2689.75, of which I pay back £107.59 per month. I have never defaulted on loan payments - I had a previous one which was almost paid off but had to get another one. I have no savings. The rent of £700 a month comes out of my account on payday and my partner pays me half of that as and when and sometimes in cash (he gets paid weekly) which obviously impacts on my balance. We are considering opening a joint basic bank account for the rent and c/tax so that the whole lot doesn't have to come out of my one - is that a good idea? I still have outstanding bills I am paying for electricity and water for my previous place and we are simply awful at paying bills on time and usually wait until the important looking letter comes (not the bailiff one, we're not that bad).

The question I have really is how do I progress with the credit card so that I can start clearing these debts? I'm very scared of it. It states that it has 0% interest until 01/01/12 on balance transfers (3% fee) and 0% on new purchases until 01/02/11. I don't really know what this means. Does this mean, say I put £2000 on it and ONLY have to pay back £2000 until February next year when I move it over to another 0% card? I'm sure it doesn't mean this. I'm confused - help! I'm not even sure it's a good idea but am determined to be disciplined.

Any advice appreciated. Sorry about the long message...


  • redpete
    redpete Posts: 4,695 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    Getting a credit card is not a way to deal with debt. You have to address the root cause by either spending less or earning more.

    The 0% on purchases offer means that you can spend using the credit card and only pay the monthly minimum amount until next Feb and you will not be charged any interest. To avoid paying large amounts of interest from Feb you will either have to pay off the complete amount or get another CC with 0% balance transfer offer (for which you will get charged 3-4% fee). There is no guarantee that you will be able to get another 0% card in Feb, so what would you do if you can't?

    The 0% CC might be useful to get over a short-term problem (e.g. one unexpected car bill that you can afford to pay over a few months) but it sounds like you have a long-term problem. You can't keep to your agreed overdraft and you couldn't clear the loan you are relying on. Fiddling about transferring the debt from one place to another will just prolong the problem unless you address the problem at source.
    loose does not rhyme with choose but lose does and is the word you meant to write.
  • msgnomey
    msgnomey Posts: 1,613 Forumite
    Why not post an soa on the debt free wanna be board there are lots of people on there who will help you see where you could save money
    Go hopefully into each new day, enjoy something from every day no matter how small, you never know when it will be your last
  • redpete
    redpete Posts: 4,695 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    ...and regarding the rent.

    You need to get your partner to set up a weekly standing order for approx £87.50 so that you know his part of the rent is paid on time. You could set up a joint account and both set up standing orders into this, but do you really want to have a financial association between you that could result in both being affected by the bad credit rating of the other?
    loose does not rhyme with choose but lose does and is the word you meant to write.
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