Thinking of going for my 1st credit card...

HannahIOW

Hi everyone.

As the title says, thinking of going for my first credit card. I've never wanted one before as I've always been put off by them (borrowing what you haven't got etc and paying for the privilege). But I'm thinking (and OH is strongly suggesting it) that it would help me to build my credit rating by having one.

I have had a Halifax current account for over 10 years now, logged into online banking tonight and they are offering me the Clarity card - it says I am guaranteed to get it, with interest rate between 12.9% and 21.9% dependant on personal circumstances. I would intend to pay the balance off in full, EVERY time I've used it (and only buy things that I have the money for in my current account already).

Should I go for it? Is there anything else I should know about it or credit cards in general first? I really know nothing about them except that if not used wisely they will get you in a lot of bother.

If I'm understanding these blessed/cursed pieces of plastic properly, as long as I pay off the entire amount I spent each month, I won't be paying any interest and I will be building my credit rating?

Any advice appreciated, go easy on me! Thanks

Consumerist

HannahIOW wrote: »

. . . as long as I pay off the entire amount I spent each month, I won't be paying any interest and I will be building my credit rating?

That's the most important thing to remember. If you've not had credit cards before then it's possible you will be given a fairly low credit limit and/or a high APR to start with. If you are guaranteed acceptance this is a very good way to start building your credit record if you manage it well.

Spend only what you can repay immediately.

Good luck.

sar050680

I'm about 3-4 months into my first Credit Card and absolutely intended to use my card as you want to do, so far so good here, but you have to be strong, its soooo easy to spend money isn't it.

I don't know if it's relevant but I'll tell you anyway, I use mine for all my online purchases and as I didn't really think about it, I used it to put £5 on a Ladbroke's account that I have and got charged £2.50 for a "cash advance fee". So just be careful where and what you use it for and if you're unsure check the t&c, good luck.

lucystardust

You sound like you've got a sensible approach and have thought carefully about this. Like you've said its good to pay off the full amount every month, set up a direct debit to do this and you won't run the risk of accidentally forgetting if you're extra busy one month.

Also maybe don't use it to spend on essentials like food shopping etc, keep it for stuff like clothes purchases, furniture etc rather than getting into that habit of using it for everyday items. That'll help you keep the mindset of 'anything I put on this card will have to be paid off' rather than it becoming an everyday occurrence for little spends which are quickly forgotten.

scottishblondie

I use my CC to pay for everything, but I have a definite mindset of not spending money I don't have. Actually being able to see everything that I've spent laid out on the statement each month helps me to keep a closer eye on what I'm doing. So to me using it for paying for the shopping, petrol etc is no different that using my debit card or cash to pay, except that I get to earn interest on the money for a little longer! The added protection when buying larger items (over £100) is also nice. I have a DD set up for the full amount each month to ensure there are no slip ups.

OP - I'd say go for it. The Clarity is a good card, especially if you ever go on holiday abroad as it has none of the fees you would usually be landed with. Also, if you have a Reward account with the Halifax then apply for the Clarity Reward, as if you spend more than £300 on the card during a statement period you will get £5 cashback.

chattychappy

HannahIOW wrote: »

If I'm understanding these blessed/cursed pieces of plastic properly, as long as I pay off the entire amount I spent each month, I won't be paying any interest and I will be building my credit rating?

Yes, correct on both counts!

sharpy2010

Dont forget though that if you withdraw cash from an ATM, or make a "cash purchase" such as buying foreign currency, or staking money at a gambling site, then you will be charged interest from the day that you withdraw the cash/make the purchase.

We're probably not talking enough interest to bankrupt you, or anything like that, but its worth being aware that it happens.

londoner1998

Hi OP

I was in the same situation as you- Always avoided CC's because I was a bit scared of them and I'm of the same philosophy as you... but I wanted to build up a credit history so I decided to apply for one after doing a lot of reseach- I got rejected twice but then I applied with my bank and got a very decent credit limit straight away... I have 6 months interest free, and I have been spending on it and paying the minimum every month ... now I am reaching the end of the 0% period and will paying it in full. The money is earmarked in my current account, and I make sure I diarise the spending as well as the re-payments (but if you set up a DD to pay in full, you don't need to, just make sure you have enough money to pay for it).
As another poster said, be very strict with yourself- it is VERY easy to start spending and build up a big balance very quickly. Also, make sure you understand when you need to pay yourbalance- some people incur fees because they paid a balance, but may be not the most recent one and it builds up interest on the full amount
But I would say, go for it, espeically if you bank is pre-approving you- it can be a good way of spending and you get added protection over 100 pounds...

HannahIOW

Thanks for the replies everyone. Just applied and got approved, with an estimated limit of £700