Is This How It Works?

supermanjo

welshone27 wrote: »

Could I also please ask a question? I have never had a credit card before, I've applied for a vanquis card and have been accepted. Just waiting for it to come through. I'll be spending on it each month and clearing it in full.

Say for example I owe £200 by 28th October. I pay this on the 20th October. Will I then have to wait until after the 28th before I can spend on it? As in if I spend on it before the 28th will it look like I've not made the payment.

Does that even make sense?lol.

I asked a similar question a while ago as I was fairly confused on how it worked. I just relied how simple it was.

If you buy a bunch of things in January... your statement for January will be sent out to you on the 1st of February which will then tell you you have 1 month to clear the balance. This has nothing to do with you're February purchases which will be sent to you on the 1st of march telling you to pay February off by the end of the month.

You need to understand that your understanding of it all is wrong, just like mine was till a while ago.

If you make payments in February, it will only pay off your January statement and it has no connection to any purchases you are making in February as your February statement will come to you in march.

Hope this helps.

unimaginative_user_name

welshone27 wrote: »

Could I also please ask a question? I have never had a credit card before, I've applied for a vanquis card and have been accepted. Just waiting for it to come through. I'll be spending on it each month and clearing it in full.

Say for example I owe £200 by 28th October. I pay this on the 20th October. Will I then have to wait until after the 28th before I can spend on it? As in if I spend on it before the 28th will it look like I've not made the payment.

Does that even make sense?lol.

You will only have to wait until after 20th October if you have reached your credit limit. Otherwise you can spend on your card even if you have not made a payment yet.

supermanjo

unimaginative_user_name wrote: »

You will only have to wait until after 28th October if you have reached your credit limit. Otherwise you can spend on your card even if you have not made a payment yet.

No he won't. If he makes payment on the 20th like he wants to, that means he has that much of credit to spend at least.

jojo57_2

welshone27 wrote: »

Could I also please ask a question? I have never had a credit card before, I've applied for a vanquis card and have been accepted. Just waiting for it to come through. I'll be spending on it each month and clearing it in full.

Say for example I owe £200 by 28th October. I pay this on the 20th October. Will I then have to wait until after the 28th before I can spend on it? As in if I spend on it before the 28th will it look like I've not made the payment.

Does that even make sense?lol.

If you make a payment before your payment date then use the card again it still counts as a payment. Just make sure that if you spend up to your maximum limit you pay it back before you spend again or you will go over your limit. A lot of people forget that payments can take a few days to clear and then end up going over their limit as they think they have funds to spend

mankarni

@welshone27
Best Thing to Do is Just Check Online in your Credit Card Statement. Mine Tells me the amount 'Available to Spend'. I hope every card tells the available Credit Limit. That is the maximum You can spend until any of your pending payments get cleared.

Example:
Say your Credit Limit is 500
You spend 300 on it on 1st of the Month, So you can still spend 200 more on it[This 200 is the value which I am refering to check in your credit card website, to be sure how much more you can spend]
On the 10th You spend 50 more
[so the balance is 350 and available to spend is 150]
Say on the 15th you Get a statement with a balance of 350 with a payment date of 5th of Next Month.
So even though a new statement month has started Your available to spend is still 150 until you pay the 350 you owe to the company.
Say you spend 100 more until the month end so your Balance is 450. [only 50 remaining as of now]

However you still only need to pay 350 to the company on 5th of the next month as per the statement they sent you earlier. If say you pay that amount on 1st of the month (5 days early) And once the payment clears it will show that your balance is 100 (the one you spent after the statement was sent) and Available to spend is 400 .. Thus the process continues.

Always ensure
1. You pay the Full Amount on your statement before the Payment Due Date. [Or at least the Minimum Amount]
2. Spend Less than what is there available to spend based on the credit limit.

3. Most important. If you are unsure you will earn enough amount next month to pay for what you spend today , even though the CC company says you have 400 to spend. Don't spend it :-)

supermanjo wrote: »

then tell you you have 1 month to clear the balance. This has nothing to do with you're February purchases which will be sent to you on the 1st of march telling you to pay February off by the end of the month.

supermanjo You need to ensure you do no go above the credit limit as per the above example.

zerog

supermanjo wrote: »

If you buy a bunch of things in January... your statement for January will be sent out to you on the 1st of February which will then tell you you have 1 month to clear the balance. This has nothing to do with you're February purchases which will be sent to you on the 1st of march telling you to pay February off by the end of the month.

I'm glad you understand how cards work now. Just a minor point of correction - statements are usually generated for one month from the date that you opened the card (rather than the 1st of each month).

The date you must make your payment for the spending in a particular statement period, is generally 56 days after the start of that period. So if your statement was actually from 1st Jan to 31st Jan, payment would usually be due on 26 Feb (or the next working day).

Johnmcl7

jojo57 wrote: »

If you make a payment before your payment date then use the card again it still counts as a payment. Just make sure that if you spend up to your maximum limit you pay it back before you spend again or you will go over your limit. A lot of people forget that payments can take a few days to clear and then end up going over their limit as they think they have funds to spend

So for example, say I want to make a big purchase on my credit card for the protection even though I have the funds, the best way to do that then is to buy the item, give it a couple of days to appear on the online statement, then pay the money manually onto the card and within the next few days my balance should be back to what it was before the purchase?

John

mankarni

@Johnmcl7
Yes If you Make a purchase and pay it off the balance would normally come to the same level. But it depends on what type of balances are on your previous statements. Normally Any payment you do would be applied to fees, highest rate balances first(e.g. cash withdrawals) and then regular balances.

You must ensure though that the purchase does not take you over the set credit limit.