What are the essentials of using Credit Cards?

EltonJohnFan

Good evening all, hope you're safe and well wherever you might be

Now, as you may have seen I posted previously about having just been accepted for my very first Credit Card there. Due to my upbringing I've always tried to avoid credit, prefering to buy things outright and as a result of that I have absolutely no credit history whatsoever up to this point. I know that what I'm about to ask might seem a little silly to experienced users but please forgive me because my niavety about Credit Cards is down to as I say never dealing with them before. Could you possibly give me an outline of what they are and why I'd want to use one? I've always been quite thrifty and I'm struggling to break away from my habit of wanting to save up and buy things outright. I know that by using a Credit Card responsibly I can build my credit rating for the future in a positive way and this is something I very much want to do.

Would I be right in saying that a Credit Card is, in many ways just like my Debit Card? am I able to buy things with my Credit Card through chip and pen and then when the statement comes through at the end of the month just pay it off in full? may I also use my Credit Card at ATM machines or check the balance/limit of it there too? On a side note, my Credit Card is with Barclays and it's the "Barclaycard Initial" with a credit limit of £800, is this a lot or a standard amount to have on a credit card? please forgive me for all these questions but as you can see I'm an absolute beginner when it comes to Credit Cards and that is why I (badly) need your help with this matter, thank you very much everyone and have a good night.

PlutoinCapricorn

I am sure that the experts will be along soon, but in the meantime I can tell you that credit cards both save you from carrying a lot of cash - as do debit cards - and you can decide how much to pay back to the card issuer each month. The money doesn't come straight out of your bank account, you owe it to the card issuer. You are essentially buying something on credit. You may get a few weeks before a payment is due, and if you pay it off in full there are no charges, otherwise you pay interest. There is a minimum payment each month. You can draw out cash, but there is a fee for this.

You can use credit cards online, and you get some protection where fraud and damaged goods are concerned.

You may get a low credit limit to start with: £800 does seem a bit low. This is better than giving you a huge one, which encourages you to get into debt. Credit cards are good for using on PayPal/eBay.

lisyloo

Provided you pay off you card in full by the due date there will be no interest for purchases (make sure you allow for clearance and postal times although snail mail is best avoided for payments).

The advantages for you of using a credit card are
1) Section 75 protection. The cc company are jointly liable for transactions over £100 that means if the retailer goes out of business you have protection fron the retailer. Also true for non-deilvery and other disputes.
2) You migth get cashback or some sort of reward points.
3) You might get some warranties, insurances with your card.

Be aware there will be high interest and fees for cash (this includes buying foreign currency and funding better accounts) so it's best to keep your card for purchases.

You scheme of not paying for things until you can afford them is very good, but credit cards can help with your cash flow and you can get some valuable benefits.

If you have no credit history then your bank is the best place to start as they will have their internal account history as well as just your credit report.

BugsyBrowne

EltonJohnFan wrote: »

Good evening all, hope you're safe and well wherever you might be

Now, as you may have seen I posted previously about having just been accepted for my very first Credit Card there. Due to my upbringing I've always tried to avoid credit, prefering to buy things outright and as a result of that I have absolutely no credit history whatsoever up to this point. I know that what I'm about to ask might seem a little silly to experienced users but please forgive me because my niavety about Credit Cards is down to as I say never dealing with them before. Could you possibly give me an outline of what they are and why I'd want to use one? I've always been quite thrifty and I'm struggling to break away from my habit of wanting to save up and buy things outright. I know that by using a Credit Card responsibly I can build my credit rating for the future in a positive way and this is something I very much want to do.

Would I be right in saying that a Credit Card is, in many ways just like my Debit Card? am I able to buy things with my Credit Card through chip and pen and then when the statement comes through at the end of the month just pay it off in full? may I also use my Credit Card at ATM machines or check the balance/limit of it there too? On a side note, my Credit Card is with Barclays and it's the "Barclaycard Initial" with a credit limit of £800, is this a lot or a standard amount to have on a credit card? please forgive me for all these questions but as you can see I'm an absolute beginner when it comes to Credit Cards and that is why I (badly) need your help with this matter, thank you very much everyone and have a good night.

£800 sounds about right for a barclaycard initial,but that might me increased after review in 6 months to maybe 25k:cool:

Tixy

My tips would be

-Read the T&C and the statement carefully. Decide how you are going to pay each month and ensure your payment reaches your credit card account on time (that can often take 5days from that date you pay to the date it reaches your account).
-Keep track of your balance and ensure you never get close to the limit so that you run the risk of going over your credit limit.
-Open your statement every month (and read it).
-Sign up to online banking so you can keep track of your account between statements.

-Never use a credit card to withdraw cash from a machine
-Never use a credit card to move money into a gambling account or pay for gambling transactions (these usually count as cash transactions)
Never use a credit card to pay for a purchase of foreign currency (again a cash transaction).
Don't set up recurring transactions on your credit card (this is a personal one, others may disagree, but its easy to forget you have set up one if it only goes out annually and can come as a nasty shock).

In addition to these essentials then I would also add, if you are buying something costing more than £100 you may want to consider paying on a card to obtain section 75 protection (which means if anything goes wrong/the supplier goes bust you stand a better chance of getting your money back).

Ideally use cards to buy something and then pay for it in full the next month, this means you get up to 54days interest free credit and helps build up a credit history.
If you cannot pay in full the following month then pay as much as you can and accept that you will be charged interest.
If you are buying something and know you cannot afford to pay it within 1 month then work out how much interest you are likely to pay before you can pay off the balance and decide if its still a good deal/necessary purchase.
If your credit card balance is increasing every month or if it gets larger than 1months salary then consider if you are really in control of your spending. This would be a good trigger point to start getting some advice on how to reduce your spending and reduce your debts.

scottishblondie

EltonJohnFan wrote: »

I know that what I'm about to ask might seem a little silly to experienced users but please forgive me because my niavety about Credit Cards is down to as I say never dealing with them before. Could you possibly give me an outline of what they are and why I'd want to use one? I've always been quite thrifty and I'm struggling to break away from my habit of wanting to save up and buy things outright. I know that by using a Credit Card responsibly I can build my credit rating for the future in a positive way and this is something I very much want to do.

This is still absolutely the best thing to do - just because you have a card now doesn't mean you should change this habit, that's how people end up in deep debt. I always save up the cash before I make a big purchase, but I always pay by card for the protection etc.

Would I be right in saying that a Credit Card is, in many ways just like my Debit Card? am I able to buy things with my Credit Card through chip and pen and then when the statement comes through at the end of the month just pay it off in full?

Yes

may I also use my Credit Card at ATM machines or check the balance/limit of it there too?

You can use ATMs to check balances etc, but don't be tempted to withdraw cash on the CC. The interest rate is often higher and you will be charged interest from the day of the withdrawl until you pay it off.

I hope that this adds to what the other posters have said.

The main things to remember:

- Always pay off in full
- Never withdraw cash or do things that are counted as cash transactions, typically this includes things like gambling and buying foreign currency.

Just use the card for your normal spends, and this will help build a good history.