Car Insurance on First Credit Card - help?

RoverMini35

Hello!

My car insurance is due for renewal in an upcoming month and I was preparing myself by looking at the best way to pay for an insurance policy.

So far, I have my mind set on making an annual payment, as opposed to the monthly payments, for obvious reasons with regards to increased prices because of the interest rates with policies etc.

However, I do not wish to pay it out all in one lump and I'm currently considering paying the annual amount on a credit card, to then make payments on the credit card over several months.

I have never had a credit card and so don't know the normal proceedings for applying etc. and I am currently with Barclays Bank too, if this information helps.

Can somebody give some guidance as to acquiring the first credit card and can anybody give information in the payment of car insurance policies through a credit card?

Any help would be greatly appreciated!

InsideInsurance

Have you had any credit products at all?

If you havent, then you are basically sub prime due to the lack of history. Before running to the heavy sub primes like Vanquish it may be worth checking with your own bank assuming you have a reasonable relationship for a reasonable length of time.

If you have then look at the company with the best deal based on how your credit rating is. If its excellent then look at either one with 0% on purchases or cashback/ points.

Obviously if you are limited to sub prime cards you need to check that you arent going to pay more interest to the credit card company than you would the insurer

shiny76

Also worth noting, some insurance companies may apply an additional charge for paying by credit card rather than debit card.

RoverMini35

So check all interest rates first, gotcha!

I've never had any form of credit product, completely new to this.

Let me throw some numbers in here...

I'm somewhat of a young driver (uh oh - expensive insurance quotes, I know!) and as such haven't got any no claims, as I've been a named driver so far. Currently out of work (due to a recent resignation; a whole other story), should I be accepted into the kind of apprenticeship I've been applying for, my car insurance will be about £750 a year (in true moneysaving style, I have already found tips to lower the insurance ie adding trust-worthy drivers to the policy etc). I've found this annual price for a car insurance policy for someone of my age, in my situation to be a great price, in comparisson to others. Monthly payments on this policy are offered at 23.20% APR, meaning approximately £1100 a year, to pay one month deposit and in 9 monthly instalments of £110. Obviously, if I can get the cheaper option, I'd jump for it.

My thought was that if I got the appropriate 0% credit card, could I opt for the annual price, saving a bunch, and still pay month by month?

I understand that in my situation, there are so many things to consider for this too, but for the purpose of my initial question, assuming I have the apprenticeship, would this idea be possible? Would I be able to get a credit card as a first time applicant, to try and help with the insurance costs?

Thanks to those who have already replied, and in advance for those who can help out!

BugsyBrowne

People work very hard to build their credit history up and its then when they get 0% deals,its not an overnight task its a long term thing so lenders can trust you.

People with no credit history are very high risk due to an unproven track record.

InsideInsurance

RoverMini35 wrote: »

I've never had any form of credit product, completely new to this.

Let me throw some numbers in here...

I'm somewhat of a young driver (uh oh - expensive insurance quotes, I know!) and as such haven't got any no claims, as I've been a named driver so far. Currently out of work (due to a recent resignation; a whole other story), should I be accepted into the kind of apprenticeship I've been applying for, my car insurance will be about £750 a year (in true moneysaving style, I have already found tips to lower the insurance ie adding trust-worthy drivers to the policy etc). I've found this annual price for a car insurance policy for someone of my age, in my situation to be a great price, in comparisson to others. Monthly payments on this policy are offered at 23.20% APR, meaning approximately £1100 a year, to pay one month deposit and in 9 monthly instalments of £110. Obviously, if I can get the cheaper option, I'd jump for it.

My thought was that if I got the appropriate 0% credit card, could I opt for the annual price, saving a bunch, and still pay month by month?

For the reasons in bold, you will almost certainly not be offered a 0% card unless it is with Barclays and you've an exceptional relationship with them and even then it is unlikely. More likely if anything is the Initial card which at best is a 29.9% APR but can be higher.

Even if you started work you're not going to make sufficient enough of a difference in the timescales mentioned as you still have no job security for at least 6 months, normally a year and increasingly 2 years

RoverMini35

Long story short, no 0% credit card is handed out as easy as that!

So all things considered, the annual cost of the upcoming car insurance is currently my cheapest option? Otherwise, pay the monthly installments as recommended by the insurer, because unless I have a credit history, I'm unable to get a credit card? Okay, I think I understand now; thank you!

So to continue the credit card discussion, how do I get onto that particular pathway? Talk to Barclays about a first time credit card? I've been with them for as long as I can remember and never had any issues. I'm more than sensible when it comes to my personal finances, so I'm not going to do anything I know to be alarmingly obviously 'bad'.

As I said, I'm considered a young driver, but I have a good head on my shoulders, so anything I can learn now to set myself up for a potentially smooth financial path in the future would be of benefit to me.

So far I'm learning to just carry on as normal with my insurer to acquire the sufficient no claims to allow discount in the future (all sounding very obvious, but atleast it's clearer in my mind and others where I'm coming from!)

Get the first time credit card, and use it for maybe fuel or any ordinary expenses which I can normally pay for anyway, and pay it at the end of the month? Will this build a good credit history?

unimaginative_user_name

Either get a card from your bank or one of the credit-building cards listed on the main site (sorry I can't post a link) but don't apply for more than one or two as too many applications in a short period are bad for your credit rating. I would put your petrol on your card and see how you get on with paying this off before you put too much regular spending on it just as this is more likely to be roughly the same each month so budgeting is easier. You won't necessarily have to pay at the end of the month. You'll get a statement at more or less the same time each month with a repayment date about three weeks later. Make sure you never go above your limit and always pay (preferably) the whole bill on time.

If you do this for a year or two you might be able to get a 0% card.


It's probably a silly question but do you have any savings? If I have a major expense I use my savings then pay myself back over a period of time. I lose a bit of interest but a lot less than the interest I would pay on paying a bit off my credit card each month.

InsideInsurance

Underwriters (insurance, credit or anything else) hate risk. By you having no history you may be the best customer in the world and will spend frequently and always pay on time or you may be a terrible customer who maxes out the card day one and never pays a penny off, they just dont know.

Rather than give you the benefit of the doubt and risk losing money they will go to the side of caution and charge a higher APR. Once you've developed history they then have a better idea.

Your own bank has some history of you and so are generally the best for first cards. If they say no then you really are only looking at the ultra sub prime that can have APRs of around 50%

RoverMini35

Yeah, I have some savings to one side and I like your idea!

I totally understand, underwriters wouldn't get very far if they gave everyone the benefit of the doubt. I'll get to building myself a (hopefully) good credit history then!

Thanks for all the advice, it really helped.

Stuartzane

InsideInsurance wrote: »

For the reasons in bold, you will almost certainly not be offered a 0% card unless it is with Barclays and you've an exceptional relationship with them and even then it is unlikely. More likely if anything is the Initial card which at best is a 29.9% APR but can be

My first ever credit card was 0% card. I have only been banking with rbs for about 8 months and using the account as spare one ( my main account is with lloydstsb ). I was very surprised they offered me the card by email. So it's worth trying your own bank first.