'Reusing' credit limit?

greenkey

Hi,

I've got a cash back credit card with a £500 credit limit (I'm young). I tend to spend a few hundred pounds a month and pay it off in full each month but I'm looking at making a larger purchase that would put me over my credit limit.

I'm wandering is it possible to pay off my card early in order to allow me to make this purchase - and get the cash back?

-Mark

HappyMJ

It is against the terms and conditions of the card to preload it with credit. You can try it but they may not allow the extra credit to be made to the card and send it back to the account it came from. You could ask for a credit limit review to be able to make your purchase.

udydudy

greenkey wrote: »

Hi,

.........with a £500 credit limit ......possible to pay off my card early in order to allow me to make this purchase - and get the cash back?

-Mark

Mark the key point here is as HappyMJ has mentioned it is against t's & C's of the credit card to preload it.
But from what I understand isif you have spent on your card say £300 aqlready and need to spend another £400 in the same month before your statement date, then yes it is possible to repay the first £300 that you spent and wait to make sure you see it online on your account or you can telephone and check the automated system to see whether your paymennt has been applied to your account. Then you can go and spend the next £400...
We do this all the time to avail of cashback. i.e pay bills and then in 3 days time pay off that amount and then pay other bills and so on... you can that way get cashback say on £2000 by repeatng the same thing 4 times a month(on your £500 limit).:T:T:T:T:T

But be wary of (1) always spend first then repay that amount (2) ensure that the amount you repaid the card company has been applied to the account. as if this has not happened then you will be going over your limit with future purchases.

greenkey

I'll phone my bank up in the morning and ask them but I've just found this in the T&Cs:

You can at any time repay all or any sums owing under this agreement, subject to you making the minimum monthly payment, by making payment to us by cheque or other appropriate method.

Source: co-operativebank.co.uk/members ->Terms & Conditions - there doesn't appear to be any other restrictions.

(Sorry, I can't post links yet)

chattychappy

Yes it is.

Given your spending pattern, if you've had the card for a while, you could ask them to increase the limit.

Gromitt

I regularly bought something during the week and then paid off the balance at the weekend as I just hate oweing people money.

Kinda getting used to it now though after being offer 10 months interest free on purchases. I still put the money aside, but I have a date in the calendar to transfer the funds. I doubt the interest will be that much, but its better in my pocket than theirs!

greenkey

As an alternative --

My statement for this month is due to arrive in a few days with a repayment date of about 28 days later. Can I pay it off immediately and get the credit back to spend - or would I likely be forced to allow my Direct Debit to pay it off?

udydudy

greenkey wrote: »

As an alternative --

My statement for this month is due to arrive in a few days with a repayment date of about 28 days later. Can I pay it off immediately and get the credit back to spend - or would I likely be forced to allow my Direct Debit to pay it off?

If you are going to be paying your spending reguarily so that you can earn cashback I would suggest asking your crad company to setup a direct debit for the minimum amount.

The reason for this is that if in any month you go on holiday and your statement and payment due date occurs when you are on holiday then atleast the minimum payment will get paid and you do not have to worry(except for the interest cost).

I have a DD setup on my halifax and though they always take the minimum payment irrespective of me paying the whole balance off before teh payment due date( some banks do that) I do not mind as there is always some spending by then. but the consequences of missing a minimum payment can be horrendous in terms of charges, interest and loss of credit rating.

But with most cards, if you have setup a minimum payment and then keep paying before the payment due date then they will not takke the direct debit. This is something you will have to ask your card company. if it is co-op I am not sure as I have never had a card with them.
BUt with Barclays for example, you can setup a DD for full payment and then any payments you make reduce the DD amount by that so it is beneficial with Barclays but not with Halifax.

Ben8282

You can pay anything you like to the card whenever you like although you must not put the account into credit

Making a payment may or not cancel the direct debit; credit card companies have different policies here. With some companies early payments will cancel or reduce the direct debit while with other companies the direct debit will still be taken regardless of any other payments that you make. This is just the way their accounting systems are set up. That does not prevent you from making early payments; it simply means you will have to pay more that month.

So imagine your statement is for £490. You pay £490 immediately. As soon as this is credited to your account your available credit will increase by £490 to (assuming there has been no new spending) £500. You can now spend up to £500. You spend £200, reducing your available credit to £300. You pay £100. You have £400 to spend. And so on ...

As I said, the direct debit may or may not be taken. Is the direct debit for the full amount or the minimum payment?

If it is for the full amount which your credit card company takes regardless of any other payments and you intend to regularly pay early, then cancel the full amount direct debit or, as a safety measure, change it to a minimumm payment direct debit.

If it is a minimum payment direct debit then just leave it. With a £500 credit limit the minimum payment will be small, will do no harm as an extra little payment and will gurantee that at least the minimum payment is made.

I don't know how long you have had this card but if you have been spending a few hundred a month and paying in full for say at least 6 months then call them and ask them to consider raising your credit limit as the current limit is insufficient to cover your normal monthly spending pattern.

w211

Depending on what you're purchasing, I'd imagine most places can take more than one card/form of payment for a single transaction.

Clear your card, so you have the £500 limit available. Buy your item with the card for £500, then pay the balance using another card or cash.

hermante

udydudy - why would you suggest a DD for min payment when the OP said he pays it off in full?

If you are going to pay your bill early, then try to do it a few days before the DD is due to come out, otherwise you may find that the account is put into credit inadvertently (because the early payment hasn't updated yet and the DD is taken for the wrong amount)