How do you use your card? Advice please!

BodieGirl

Hey guys
I know this is going to sound a bit daft, but I am determined to pay off a credit card debt of 1900 this year, and also to learn how to live within my means at the same time.

I have a new credit card with a limit of £500. I want to use this card sensibly each month to build up a better credit history.

Each month my partner gives me money for household bills inc food. My plan is to use the new card for food shopping, and pay the balance in full each month.

I have the card now, and the food money. Do I put the money into a savings account and wait for the bill in approx 4 weeks time. Or do I just use the card and then use next months food money to pay it off?

Just wondering how everyone else manages their credit cards?

Thanks, BodieGirl

Plxply

I got a Capital One secured card about a month after I turned eighteen, although most people would assume it would turn into a disaster everything is fine. I was using my Debit Card for all purchases previously and now I have basically replaced it with the credit card where I pay it off every month in full.

You could open another current account and use it as a credit card fund, as in you pay £200 at the start of the month into the new account and you can only use £200 of your limit and the money from that account will be used to pay off the credit card each month. It will help to keep everything separate and you can track your credit card spending on the issuers website.

BodieGirl

Thanks for the reply, I was thinking along the same lines I have a savings account that I dont use which has a cashcard, I could save the money in there?

There is no way I want to mess things up, I want to build up a good credit history and learn to manage my money effectively so that one day I can have some savings instead of debts!

Ben8282

BodieGirl wrote: »

I have the card now, and the food money. Do I put the money into a savings account and wait for the bill in approx 4 weeks time. Or do I just use the card and then use next months food money to pay it off?

Just wondering how everyone else manages their credit cards?

Thanks, BodieGirl

The first.

Make a rough estimate of how much you spending you can transfer to the card and how much spending you will continue to have to pay cash for.

Put the money destined for the card away in a bank account and do not withdraw it.

Spend up to this amount on the card.

When the statement comes pay it in full using the money you have put away.

The second idea is the trap. You see you have a card and some money. You know you will have next month's money before you have to pay the card so you spend more. Eventually you reach the point where you need all of this month's money to pay for last month's purchases. Then you start going overdrawn for a few days each month because you havn't got quite enough to pay the card in full but you don't want to loose your interest free period on purchases so you go overdrawn to pay the credit card in full. And things build up from there and one day you find yourself with an interest incurring balance.

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I wrote this without taking into account that you have £1900 on another card or cards which I guess you are paying interest on. In these circumstances it may actually be better for you to use the money put away for the first month to make a substantial payment to the other card(s) in order to reduce high interest.

eschaton

The best advice is to get a card with 0% for as long as possible

Max the card as soon as you can

Make the payments on time

Pay it all back at the end

BodieGirl

Thanks guys!

Ben - you scared me with the 2nd scenario which is what Im desperately trying to avoid. Having been bad with money in the past I need to get a firm grip.

I have set up a DD from my "bills" bank account for the full amount so that when the statement comes, I have 10 days to have all the money to pay it.

During the month I will transfer money to the seperate savings account. The first statement is on 10th next month so I will actually have a surplus as wont have spent a full months worth on it by then (iukwim) but im planning to keep any extra in the savings account.

If i screw this up i've only got myself to blame

Regarding the 1900, its my only debt and im gonna try and tackle it with as much spare cash as i can (in the meantime I pay 500 off each month rent money and then pay the rent by card - doesnt lower balance but means that 500 is paid off the account each month at the very least and the minimum is always covered).

Plxply

lippy1923 wrote: »

Not sure if this will help but when I first got a credit card, I would use it, then go online the next day or so and manually transfer the money from a current account and pay it off. I didnt make many transactions really, 3-4 a month, but as soon as I had spent on it, I paid the same amount off- sometimes even the same day, when I got home from shopping

I'm not sure if this is true but I've heard that your issuer will then report each month that you haven't used your credit card as it will show as £0 on the statement owed and you need to statement to be generated for it to be counted. Although correct me if I'm wrong.

BodieGirl

Hey guys

I have heard that too - I have been told it's better to wait for the statement to come in?

So far i have just used the card for food purchases, and putting the cash into the bank account. Will transfer it to bills account when the direct debit is due out.

In the meantime Im throwing spare cash at the Halifax - only £3.29 today (rounded down current acc balance) but its been a busy weekend lol and every little helps!

Really want Halifax cleared by summer but dont know if that will happen now