Making the credit card work for me?

shayshay

Short story, limit on card approx £1500 and after months of being out of work now have an income. Various other outgoings and once they are all done have £200 to throw at getting it down to zero.

As cards don't acrue the interest for 56 days or so should I when I get paid throw 500 at the credit card, pay £300 off the other bills thus still reducing the amount by £200 still? Worked out that 7-8 months down the line I will have reduced down to zero but at the same time been using the card sensibly, paying way more than the minimum with the sole intention of being responsible and thus improving my credit score.

Sure reducing it by 200 each month would arrive me at the same place but would me working with the card mean those initial larger sums would reduce the interest over the 56 day period and end up being a worthwhile route for me to go down?

Probably an easier way to explain I am sure

bigadaj

Your post isn't very clear. It sounds like you have an outstanding balance of £1500 and presumably have been making minimum payments but can now pay more.

If you carry a balance on the card then you pay interest on everything including purchases, this continues until the statement after you have cleared the debt, as that last statement includes some trailing interest.

Ideally you would purchases on another card with no balance, pay this in full every month and pay whatever you can onto the card with the balance, this way you do t pay interest on purchases and get the cash flow boost of using a card.

shayshay

I don't have another card to do that. Of course any purchase attracts interest but was wondering if by using the card as a cash flow whilst reducing the amount if it slowly but surely improves my credit rating.

redpete

shayshay wrote: »

As cards don't acrue the interest for 56 days or so

Only true if you pay of the full amount each and every month, and then it is interest free for up to 56 days. You will be paying interest on the full balance including on new purchases as soon as you make the purchase

should I when I get paid throw 500 at the credit card, pay £300 off the other bills thus still reducing the amount by £200 still?

I think you are suggesting paying the £500 into the CC as soon as you get the money, then using the CC during the month to pay for £300 of stuff during the month. The alternative is paying off £200 into the CC and paying for the £300 of stuff from cash.

The first option (£500 into CC then use the CC) will save you more money overall by cutting the amount of interest you pay. The difference will be small, maybe a couple of pounds each month.

I would also suggest you pay the minimum amount by DD - otherwise there is a risk that the manual payment cycle could get out of step with statements and it could end up with looking like you don't make a payment in a month. An example: you get paid on 1st of the month and pay the amount into the CC on the same day. CC statement produced 3rd of the month with payment date 15th month - you don't make a payment until the 1st of the next month and therefore it looks like you missed the payment due on the 15th.

zerog

shayshay wrote: »

I don't have another card to do that. Of course any purchase attracts interest but was wondering if by using the card as a cash flow whilst reducing the amount if it slowly but surely improves my credit rating.

Get another card like aqua or vanquis (or a real bank if you can) and put all spending on it. Pay the balance in full by direct debit. If you think your credit rating is not good already, then it won't hurt to try getting another card.

Pay off the other card by however much you can.

shayshay

Thanks for the suggestions guys.

sunnyabraham

shayshay it is a nice idea i have already used it years before it really helps you to postpone your expenses and gives you optimum time to settle them..