Please can someone how a credit card work for a complete layman?

mgmgrand1

I may be a little naive, as I have zero debt(excluding mortgage), I've never had a credit card before and I haven't the foggiest of how they work. However, this year I am setting up a business and need a investment of 10k. I have 20k saved but as I am setting up a business I wouldn't mind saving that for a rainy day and I should imagine thefirst year shall be rocky. As, I have never had a credit card I got one from Barclaycard 0% purchases with a limit of 1k. I was thinking that this will cover car insurance, which will cost 1k approx. Now can I just leave this 1k on the card for a whole year or will I be charged interest each month?

Thanks for all replies. I am grateful that I am not in debt but need some help now to build a business.

Thanks
M

Fruit_and_Nut_Case

mgmgrand1 wrote: »

I may be a little naive, as I have zero debt(excluding mortgage), I've never had a credit card before and I haven't the foggiest of how they work. However, this year I am setting up a business and need a investment of 10k. I have 20k saved but as I am setting up a business I wouldn't mind saving that for a rainy day and I should imagine thefirst year shall be rocky. As, I have never had a credit card I got one from Barclaycard 0% purchases with a limit of 1k. I was thinking that this will cover car insurance, which will cost 1k approx. Now can I just leave this 1k on the card for a whole year or will I be charged interest each month?

Thanks for all replies. I am grateful that I am not in debt but need some help now to build a business.

Thanks
M

There will be no interest added for the length of time of the 0% offer. Your OP doesn't explicitly state that this is one year although it implies it. The year probably started from when your application was approved, not when you make the purchase. You will still have to make at least the minimum payment each month. This will be specified on your statement.

*Scarlett

You still make to make the minimum payment each month.

You will not be charged interest if you have 0% for purchases.

Perhaps set up a direct debit for the mimimum and pay off any thing else that you wish to on your debit card.

Or divide the £1k by the numbers of months that you have the 0% for and pay this so that you will have the balance paid before you are charged any interest.

Beware that if you miss the monthly minimum payment, the card provider may withdraw the 0% offer and you will be charged interest (and fees) on the full amount.

As this is your first card and you are setting up a business, you don't want anything adverse on your credit rating so make sure that you make the minimum payments on time - often it's only £25 per month but check your statement.

mgmgrand1

Thanks for the replies. That helps alot. The card was approved last week and is 0% for 15months. That is a good idea to divide it into monthly payments. That is what I intend to do. My insurance isn't due until June though. Do you recommend I apply for another credit card? Will having 2 credit cards be adverse to my credit rating or help it?

Thanks
M

*Scarlett

Having 2 credit cards will not adversely affect your credit rating unless the available amount of credit exceeds your income.

As the Barclay card is your 1st card, I might wait for a few of months before applying for another card in order to allow other lenders to see that you are paying it.

If you apply now and are declined it will show on your credit record.

mgmgrand1

Too late....Halifax refused me. Despite having 10k in accounts there. Is there anyway to stop this showing?

M

scottishblondie

No, the credit search will show and as it is a true reflection of what happened you can't change that. If you only need the CC to pay for insurance, and the limit will cover it, why do you need another card anyway?

mgmgrand1

I wanted a second card to improve my credit rating. It is very poor and made even worse now by being refused from Halifax. I didn't think it would be a problem. I have accounts with Barclays and Halifax. Barclays offer me loans, CC's on a regular basis. I only opened my Halifax Account 3 weeks ago in branch and that was only to enter into their prize draw. They did a credit search when I opened it and was immediately offered a CC. Therefore when I applied online earlier I was surprised and a little distressed to see the decision. Especially considering it was only 3 weeks ago I was offered the CC. Anyway, I am going to write and appeal the decision. I've explain all of the what I have stated earlier but I fear that I will have a bad mark against my name. I'll continue to hassle them to take the refusal of my record. I have one credit card that I haven't even activated yet and not used and yet have a even worse credit score. It seems very unfair.

Miss_Spendalot_2

mgmgrand1 wrote: »

I wanted a second card to improve my credit rating. It is very poor and made even worse now by being refused from Halifax.

If you have a 15month on Purchases platinum Barclaycard Your credit rating can't be that bad as you need a very good bordering excellent credit rating to be accepted for that even if you are a Barclays Customer.. surprised they gave you such a low credit limit though.

mgmgrand1

Maybe the limit is so low as I have never had a CC? Surely they wouldn't give me a £5k limit. (Yes, it is definitely a Platinum Card. I've just double checked.) The best thing is to start using for fuel etc immediately and making payments asap.

If Halifax refuse to take the mark off I'll go to the financial Ombudsman.

Joe_Bloggs

Take note of what business expenses can be claimed here.
Keep good records of what you spend. Budget like hell, do not trash your credit rating. Take a course /read up on the topic.

Good luck. J_B.