1st Ever Credit Card Help!

j1990

Hi everyone. I've just graduated Uni and just starting a masters. I'm thinking of getting a credit card just so I can get the thing if I need them in the month and pay the card off at the end of the month. As getting paid monthly always seems to be a pain as something usually happens which means I need money in the month. E.G I need to book eurostar tickets but cant untill I get paid, yet there are only 3 seats left on the train I want, so would be handy if I could do it now. Also just for things like Xmas as my payday is 23rd Dec which is annoying! ....... I wouldnt spend much on the card at all, and wouldnt use it every month, but would pay the full amount off each month. I have been looking at 0% interest cards as I plan to cancel it after the promo period is up. I just have a few questions as I am clueless about this!

Are you tied in for a set perioid of time like a phone contract so have to pay a cancelation fee?

The M & S card gives a 0% interest for 15 months, but the leaflet mentions a 55 day interest free period if if the full amount is paid off each month. Does this mean if say I pay 50% off one month I loose the 15 months interest free?

This is for just the off chance I spread the cost.

Please help!

unimaginative_user_name

Hi j1990

I don't know of any credit cards which tie you in for a minimum length contract except that you wouldn't be able to close an account that had an unpaid balance on it.

The point of a 0% interest period is that you don't have to pay interest even if you don't repay your card in full for that period. I think there is usually a minimum amount you still have to pay each month or you can lose the 0% deal.

I imagine the interest free for 55 day interest free bit is for after the 0% is over. This is the bit that can catch people out. Once your 0% deal is finished you can only avoid interest if you repay your bill each month in full by the statement due date. Otherwise you are charged interest on the full amount borrowed the previous month even the bit you paid off. If you are worried about forgetting to pay on time you can set up a direct debit from your current account to pay the bill in full.

I don't know what others think but you might find it difficult to get a 0% deal if this is your first credit card unless you've had a history of managing credit well eg catalogue debt, mobile phone contract...You would probably find it easier to get a card from the bank you have your graduate bank account with as they know how you manage your account. There are also cards that are easier to get which are intended as credit rating building cards. They usually give you a low credit limit and have high interest rates though if you are going to pay your bill in full each month the interest rate isn't important.

I hope this is helpful but do ask if you need any clarification. By the way I like your example of Eurostar. It's frustrating if you can't get your ticket until you've been paid as you can miss out on good prices which are no longer available on pay day! In my opinion that's a good MSE use of a credit card provided you budget for the repayment after pay day!

BugsyBrowne

Try your own bank as no lender will give someone with no past credit history a 0% credit card.

Start at the bottom like capital 1 classic or vanquis and build your credit history up with these for about 12-18 months then apply for a 0% card.

StuC75

If your plan is to always pay the card in full each month (from the statement) then interest rates are irrelevent in that you wouldnt be charged interest (for purchases , cash advances not so).

The upto 55 days is what you get (at best) if your statement is prepared on the 1st of the month, you spend on the 2nd.. so wouldnt be statemented till the 1st of the next month, with payment then due in say 2/3 weeks after that date (many cards vary in that period offered). This is the initial interest free; but this only applies if previous balances have been paid in full.

The 15 months interest free; relate to the ability to transfer balances or make further purchases; whereby the commitment is to pay ATLEAST (aim is to pay more) the minimum payment for that 15 months - without any interest being charged. Stoozing is where the interest free period is used to offset money sat in savings to give an interest gain on your part..

Check with your bank re what they may offer, better deals tend to be for better credit history (what you may be lacking).. But dont necessarily feel that you have to go for the bottom of the barrel capital \ vanquis..

j1990

Thanks for the advice, I'm still on a student account as I'm going straight into full time Post Grad after my undergraduate degree. The main aim of the card would be for situations like the eurostar one, as the seats ATM are the perfect time and only £69 but I know if I wait till the end of the month it will be a lot different. I would spend very very little on it, so little that I know I would have no issue paying it back at the end of each month.

Also I'd quite like to build a credit rating, I work for a major phone company so have contracts through them which I pay and always have done on time.

So if I pay the balance off each month in full, I won't be charged any interest at all?

Also say I spend £150 and decide to pay it over 2 months, say the interest rate is 19% (HSBC's student CC rate) would I just pay 19% extra of £75 each month? so £14.21 interest for each month?



And finally, can anyone recommend any good cards that I have a good shot at being accepted for?

unimaginative_user_name

I would say the best place to ask for a credit card is your bank as they know you. Otherwise you could look at the credit building cards Martin lists on the main sight.

It really is best if you pay off your card in full by the due date on the statement. However if you really need to spread the payment over two months you wouldn't pay 19% every month as that is the annual rate so the monthly rate would work out at just over 1.5%. This is calculated from the date of the transaction on the full amount until it's repaid in full. You wouldn't pay interest during the first month as your bank wouldn't know you weren't going to repay in full but you would pay the second month and there would be a bit the month after you had repaid the full amount to cover the interest incurred between the date of the second statement and the date when the debt was paid in full. That sounds confusing. Martin has a great cc calculator where you can type in the debt, the interest rate and the amount you intend paying off and it gives you the date when the debt would be repaid and how much it would cost you in interest. It's still best to clear the whole debt if you can.

By the way some cc companies let you change your statement date so you can work it so that the payment due date is a day or two after payday so you know you would have the funds to cover you repayments. You would need to check the terms and conditions to make sure the company doesn't charge to change your statement date.

bengal-stripe

j1990 wrote: »

Also say I spend £150 and decide to pay it over 2 months, say the interest rate is 19% (HSBC's student CC rate) would I just pay 19% extra of £75 each month? so £14.21 interest for each month?

!9% (or whatever percentage) interest is per annum.

Interest is calculated on the daily balance, compiled and charged monthly. Interest is due from day of purchase to the day the borrowed money is repaid. If you have £ 150 outstanding, at 19% it will be about 8 pence per day. If you pay three weeks later £75, the outstanding money will be £75, incurring an interest of about 4 pence per day.

If you pay the outstanding balance regularly in full, then the CC scraps the interest due and the account is interest-free.