I'm new to credit cards and need help?

rk8479

CKhalvashi wrote: »

It's done once a month.

I have a card with a £20,000 limit on there, and I spend roughly £4000 on it each month, so 20% of the available credit.

I pay this off in full by Direct Debit from my bank account once a month, which means I'm not paying interest, and I'm effectively keeping £4000 that would disappear throughout the month in my account, earning interest.

In the case of a £250/500 limit, if you spend no more than 30% of the available credit (£75/150 in the example I gave you), then you'll build a credit history and it won't cost you anything.

I hope I've explained this well enough for you.

CK

Thankyou

CKhalvashi

rk8479 wrote: »

Thankyou

It's no problem.

Just to add, if you're using it for more than 30%-ish each month, you can manually make more than one payment, either by debit card or by bank transfer.

To help with your budgeting in the first few months, put 50% of the limit into a savings account, use this to pay the card (transfer just before the DD date) then when you're paid, put 50% into a savings account again. I'd rather advise this, than have you back in a few months time stating that you've got into a pickle (I'm not saying you will, I'm saying it's happened before)

Barclaycard, Capital One, Aqua and Vanquis are the best companies for first timers, according to the boards here. I've had a Cap1 card since I was your age, and have worked from the basic card, to one of their best.

If you need anything else, please come back, as we're a nice bunch

CK

rk8479

CKhalvashi wrote: »

It's no problem.

Just to add, if you're using it for more than 30%-ish each month, you can manually make more than one payment, either by debit card or by bank transfer.

To help with your budgeting in the first few months, put 50% of the limit into a savings account, use this to pay the card (transfer just before the DD date) then when you're paid, put 50% into a savings account again. I'd rather advise this, than have you back in a few months time stating that you've got into a pickle (I'm not saying you will, I'm saying it's happened before)

Barclaycard, Capital One, Aqua and Vanquis are the best companies for first timers, according to the boards here. I've had a Cap1 card since I was your age, and have worked from the basic card, to one of their best.

If you need anything else, please come back, as we're a nice bunch

CK

thanks, also when you say put 50% into a savings account is this from the current account, credit card or both?

CKhalvashi

rk8479 wrote: »

thanks, also when you say put 50% into a savings account is this from the current account, credit card or both?

Current account, to savings, to pay the card. Efficient budgeting will go a long way in the end.

CK

rk8479

Thanks, also i heard somewhere that putting the credit card into credit is a negative thing, what does it mean and why?

regency_man

rk8479 wrote: »

Thanks, also i heard somewhere that putting the credit card into credit is a negative thing, what does it mean and why?

Putting a credit card into credit means you have given the CC company more money than you owe them. So if you spend £100 on your credit card, then pay them £150 at the end of the month - your credit card account might be £50 in credit.

It's not the end of the world but remember that credit cards are credit products, they are designed to lend you money and that is ultimately how the banks and CC companies make money out of them. There are a number of reasons credit balances on credit cards are 'negative'.
Firstly any money you put into your credit card that puts it into credit is not earning you any interest, which it could be earning in other places. So always put it into savings first, or just leave it in your current account (even the paltry 0.01% you might get there is better than nothing).
Secondly, some card providers see keeping a credit balance as a negative customer trend, ultimately because they will get no profit from it and they are handling your money for no fees, this might result in lower credit limits or even them closing and cancelling your account.

So just be sure that the best closing balance on a credit card is ZERO - nothing more, nothing less. Pay off your total borrowing each month to the penny and everyone is happy.

rk8479

regency_man wrote: »

Putting a credit card into credit means you have given the CC company more money than you owe them. So if you spend £100 on your credit card, then pay them £150 at the end of the month - your credit card account might be £50 in credit.

It's not the end of the world but remember that credit cards are credit products, they are designed to lend you money and that is ultimately how the banks and CC companies make money out of them. There are a number of reasons credit balances on credit cards are 'negative'.
Firstly any money you put into your credit card that puts it into credit is not earning you any interest, which it could be earning in other places. So always put it into savings first, or just leave it in your current account (even the paltry 0.01% you might get there is better than nothing).
Secondly, some card providers see keeping a credit balance as a negative customer trend, ultimately because they will get no profit from it and they are handling your money for no fees, this might result in lower credit limits or even them closing and cancelling your account.

So just be sure that the best closing balance on a credit card is ZERO - nothing more, nothing less. Pay off your total borrowing each month to the penny and everyone is happy.

Thankyou for helping,

i got my credit card through today and have activated it and made a small purchase of £10 ish on my card, to pay this off do i send the money from my debit card to the CC or do i choose "Pay my card bill" from the Barclaycard menu?