Noob Credit Card Questions

Sblogz

Hey everyone, I've been receiving MSE's emails for awhile now and with some looming debts and the like I've decided to do something about it all.

But first I need some rather nooby Credit Card questions answered, as I have never owned one before and sure as hell don't want to fall into some pitfalls

So:

1. Spending cards.
Do you pay extra interest/charges on cashback?
Are there any cards that offer incentives for using cashback?
How do you repay them? - is it a fixed standing order per month from a bank account, or a variable one, like a mobile phone bill for instance.

2. Balance transfer cards.
What counts as a balance transfer?
Is it only other credit cards, or can I transfer my debts from overdrafts aswell?
Currently I'm un-employed, but I have a job starting next month for which I'm currently making a budget for to incorporate (don't worry, I'll incorporate Credit Card repayments etc) - I havn't had any debt problems and have had a long history of paying mobile phone by direct debit. I do however have large overdrafts (within limits) and a large student loan - do these lower my chances of getting a credit card with the CC companies such as Ulster Bank etc etc?

Many thanks for your help

littlejimmy

1. By cashback do you mean withdrawing cash from a machine? ... If that's what you mean then there is normally a higher interest rate for cash withdrawals, and a charge on top of that! You will get a statement through each month that shows how much you have used the credit card, if you pay the balance off in full each month then you pay no interest on normal purchases (but you would on cash withdrawals!)

2. Balance transfer is transfer of money from your credit card to some other account, that could be another credit card where you owe money, or another bank account that you owe money i.e. overdraft ... although not all credit cards will let you transfer to a bank account (ABBEY, A&L, MBNA and Virgin cards do, plus some others but I'm not sure which)

Hope this helps?

Sblogz

Thanks for your reply - in response:

1. By cashbank I meant both cash withdrawels and getting cashback over the counter - you've answered former, so what about latter?

In terms of paying it back, I meant purely what is the mechanism of paying back your credit card each month?

2. Presumerably I can find in the terms and conditions whether or not a credit card allows balance transfers to current/bank/student accounts or not then?

Many thanks for your and and other replies

CLAPTON

nobody in their right mind uses CCs to get cash from a m/c as it typically cost 2.5% charge (minimum £2.50) plus interest from the moment of withdrawal to when paid off....so dont even think about this.

however, cashback CC mean something quite different..it means that the CC gives YOU back say 1% for all your spending see e.g. the EGG Money card...a very good deal as long as you pay the full amount each month.

you pay the credit card it the same way you pay most bills...except that the bill will tell you the minimum you must pay and the total outstanding, if you pay less than the full amount you typically pay interest so dont do that. So you can pay:
- at a bank by cheque or debit card
- on the internet by BACS transfer
-by DD either the minimum amount(don't do this ) or the full total amount
etc.

-balance transfers are usually bad news except for the special introductory offers...and yes you need to read the T&Cs ...why not read

http://www.moneysavingexpert.com/creditcards

Sblogz

- Nobody in their right mind does that if they have the relavent information, so thankyou for that.

I understand what cashback credit cards are, thats why I was enquiring about getting cash using a credit card because I have found my best way of budgeting is to have a set amount of cash I can spend on the consumerables (food/drink/newspaper etc) each week - once the cash runs out I can't spend. I'll have to re-think the idea of using a credit card for this with the information you have given me. Or use in a different way

Just to clarify explicetly then, as now I have more of an idea -

**I can set up a Variable DD to pay off whatever is outstanding on my credit card aslong as the fund are available in my bank account to pay it off? **

I'm thinking of using a balance transfer precisely for the introductory offers and of course I will read the terms of conditions, my question was whether or not the terms and conditions will explicetly (I'm sure I'm spelling that wrong btw) say whether they do balance transfers to those type of accounts mention or how else I would find out.

Before anyone suggests, I would be considering 2 types of card, a spending and balance transfer one

Read article and number of others, but remember I know -nothing- about Credit Cards other than what I've learnt from on this website, hence why I don't even know how you can pay them off.

Also hence why I'm gleaning information from the wealth that is MSE - all help appreciated.