I need an idiots guide to credit cards!

maclueless

Hello, I am so sorry if this is not allowed or if there is somewhere obvious I should go for this information. Just let me know if there is and I'll get rid of this post

I have a poor credit history and have really struggle to gain credit over the past few years despite my efforts to rebuild my credit rating. I've recently come out of a relationship and bought with me £1000 in debt that is currently sat in my ex's account. He has quite fairly asked me to take the debt in the next few weeks but I have only been accepted for a high interest credit card.

The interest rates are 2.53% monthly and 34.94% annually on purchases, cash withdrawals and balance transfers. Thankfully I have been given a £1000 credit limit. My question is how do I work out the charges? I will need to transfer the £1000 straight in to this account and can afford to pay off £200 a month. I know this sounds stupid but numbers REALLY aren't my thing and I am so easily confused by percentages etc.

If someone could help me I would be hugely appreciative!

Thanks
Mac

[Deleted User]

Do you mean he has a debt (of yours) sitting on one of his credit cards?

If so, and you BT it to your card, then you will pay a fee straight off (something like 3% of the £1k - so £30), then daily interest on the balance. For ease of understanding, call this 2.53% of the balance each month. So £25 odd interest for the first month, and reducing as you pay off the balance.

So it won't be cheap. Have you looked into a small loan, or even an overdraft?

grumbler

maclueless wrote: »

The interest rates are 2.53% monthly and 34.94% annually on purchases, cash withdrawals and balance transfers. Thankfully I have been given a £1000 credit limit. My question is how do I work out the charges? I will need to transfer the £1000 straight in to this account

Very few cards allow transfers to bank accounts. If it is a bank account overdraft, you'll have to withdraw cash that will cost you ~3% (see the summary box). Also, cash withdrawals limit can be smaller than the credit limit - check the T&C or phone and ask. If so, you can use the card for your essential spending and use the 'saved' cash to pay the debt off.

and can afford to pay off £200 a month. I know this sounds stupid but numbers REALLY aren't my thing and I am so easily confused by percentages etc.

If someone could help me I would be hugely appreciative!

Repayment Calc

maclueless

Deleted_User wrote: »

Do you mean he has a debt (of yours) sitting on one of his credit cards?

If so, and you BT it to your card, then you will pay a fee straight off (something like 3% of the £1k - so £30), then daily interest on the balance. For ease of understanding, call this 2.53% of the balance each month. So £25 odd interest for the first month, and reducing as you pay off the balance.

So it won't be cheap. Have you looked into a small loan, or even an overdraft?

Yep that's exactly it... I have looked in to loans and overdrafts but really am starting my credit score from scratch again and am having no luck with banks. Even though this credit card isn't the best it should kill two birds with one stone (improve my credit rating as I pay off way over the monthly minimum and get rid of my very last debt!)

maclueless

Thanks for that repayment calculator link... feeling more organised now!

Fruit_and_Nut_Case

Welcome to MSE :wave:

maclueless wrote: »

I need an idiots guide to credit cards!

Is that for your ex? He must be an idiot to let you go.
Boom-boom!

Good luck sorting things out.

TBagpuss

What is the interest rate on your ex's card? If it is lower than the rate on the card you can get, could you propose to him that you pay him £200 per month. You can use the calculator to work out the interest.

taking out the card and using it for things such as groceries, and paying it back in full each month may help start to rebuild a credit history for yourself.

HazMat_3

TBagpuss wrote: »

What is the interest rate on your ex's card? If it is lower than the rate on the card you can get, could you propose to him that you pay him £200 per month. You can use the calculator to work out the interest.

taking out the card and using it for things such as groceries, and paying it back in full each month may help start to rebuild a credit history for yourself.

That can sometimes not work out very well, even if it is cheaper!

Do you pay the ex or directly onto the credit card? What if a payment is missed, this can cause a lot of bad blood.

I think the OP is right to take the debt on themselves and at £200 a month I would expect to have it cleared in 6 months and to move on!

grumbler

TBagpuss wrote: »

taking out the card and using it for things such as groceries, and paying it back in full each month may help start to rebuild a credit history for yourself.

You don't need to pay in full to build a credit history, although this would be cheaper.

TBagpuss

No, but you do need to pay off in full each month to avoid building up more debt