credit where credits due..

UrbanSurferKid

Hello,

This is my first post, so please excuse me if i have overlooked a thread that answers all of my questions already!

For some reason I have left it until this stage of my life to apply or even look at getting a credit card. Mostly due to the fact that I don't understand them and probably was just scared I wouldn't be able to pay it off every month!

However now more than ever I am starting to see the positives in getting one! Primarily because I wrongly thought that having always used my savings account and debit cards and never going into my overdraft I would have a good credit rating!

Now it seems due to my annual income and the fact that I am a tenant as opposed to a homeowner only certain types of cards are available to me? I doubt having never used one that I will use that often but to pay for mini-breaks, holidays or larger one off purchases etc.

My question really is in the current market what is a good credit card to start with in order to build my credit score? Should speak to my longstanding bank or look elsewhere?

Please excuse my financial naivety!
Cheers USK

Ebe_Scrooge

If you don't have much credit history, then your own bank is usually the best place to start - they can see how you've been managing your finances over the last few years.

Failing that, one of the "sub-prime" cards like Vanquis are worth looking at.

I'm sure I don't need to tell you this - but make sure you use it sensibly. It's not free cash, it's credit ! Credit cards can be incredibly useful if used wisely, but you should be aiming to pay no interest - especially on something like the Vanquis card, where rates will be very high.

If possible, you should really pay off the full amount every month. Sometimes if you want to make a large purchase and spread the cost over 2 or 3 months, a card can be cheaper than the shop's own finance package, but only if you really can pay it off in a couple of months.

At the very least, you absolutely MUST pay the minimum amount every month. Set up a direct debit to pay at least the minimum, and preferably the full amount. Missed payments are the last thing you want if you're trying to build a credit history :-)

Hope this helps.

Anthorn

UrbanSurferKid wrote: »

Hello,

This is my first post, so please excuse me if i have overlooked a thread that answers all of my questions already!

For some reason I have left it until this stage of my life to apply or even look at getting a credit card. Mostly due to the fact that I don't understand them and probably was just scared I wouldn't be able to pay it off every month!

However now more than ever I am starting to see the positives in getting one! Primarily because I wrongly thought that having always used my savings account and debit cards and never going into my overdraft I would have a good credit rating!

Now it seems due to my annual income and the fact that I am a tenant as opposed to a homeowner only certain types of cards are available to me? I doubt having never used one that I will use that often but to pay for mini-breaks, holidays or larger one off purchases etc.

My question really is in the current market what is a good credit card to start with in order to build my credit score? Should speak to my longstanding bank or look elsewhere?

Please excuse my financial naivety!
Cheers USK

The best credit card at any time is the one with the lowest APR you can get. As mentioned in the previous post the first stop is always your own bank and they may do a soft search on your credit file which won't impact it and then make you an offer. You don't necessarily have to accept that offer and you could start to shop around for a better card. You could find good offers in unexpected places: For example the Debenhams credit card which replaces their now defunct store card offers an APR of 14.9% and can be used at Debenhams and other places as you would any other credit card.

I'd say that if your own bank refuses to give you a credit card then you're stuck with the sub-prime market. You can try other applications but you are limited because every application results in a search on your credit file and if they start to get numerous, alarm bells start to ring at the lenders.

In the sub-prime market the Aqua Advance card is a serious contender because the APR reduces every year and at the end of 5 years your APR is close to that of prime cards.

Lastly, if you haven't yet got your credit reports from the CRAs you should get it and you might be surprised at what's on there. Any account which you pay at the end of period could be on there including energy bills, telephone, contract mobile phone, even your own bank account and you might be surprised at your credit worthiness.

eskbanker

Anthorn wrote: »

The best credit card at any time is the one with the lowest APR you can get.

Although I'd agree with the rest of that comprehensive post I wouldn't entirely go along with the above statement as it stands! There are many people who always pay off CCs in full every month, for whom APR is therefore effectively irrelevant, so for these people there are other criteria, such as cashback or other benefits, which outweigh APR.

CLAPTON

UrbanSurferKid wrote: »

Hello,

This is my first post, so please excuse me if i have overlooked a thread that answers all of my questions already!

For some reason I have left it until this stage of my life to apply or even look at getting a credit card. Mostly due to the fact that I don't understand them and probably was just scared I wouldn't be able to pay it off every month!

However now more than ever I am starting to see the positives in getting one! Primarily because I wrongly thought that having always used my savings account and debit cards and never going into my overdraft I would have a good credit rating!

Now it seems due to my annual income and the fact that I am a tenant as opposed to a homeowner only certain types of cards are available to me? I doubt having never used one that I will use that often but to pay for mini-breaks, holidays or larger one off purchases etc.

My question really is in the current market what is a good credit card to start with in order to build my credit score? Should speak to my longstanding bank or look elsewhere?

Please excuse my financial naivety!
Cheers USK

these are mainly bad reasons for getting a credit card.
saving for things you want is the best policy

good reasons for having and using CCs
-builds up credit rating for say mortgage application
-gives useful section 85 protection is the supplier of goods goes bankrupt
-often hotels or car hire want a CC
-some CCs have useful benefits e.g. cashback on spending or supermarket points (that give discounts)


but always plan to pay the balance in FULL each and every month so you don't get in debt and you don't waste money on interest

Atidi

http://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards

Anthorn

eskbanker wrote: »

Although I'd agree with the rest of that comprehensive post I wouldn't entirely go along with the above statement as it stands! There are many people who always pay off CCs in full every month, for whom APR is therefore effectively irrelevant, so for these people there are other criteria, such as cashback or other benefits, which outweigh APR.

But those who pay off the full balance every month do so out of necessity but not necessarily by choice, i.e. to avoid high interest charges and that's really only relevant with high interest sub-prime cards. Of course if everyone paid off the full balance every month then everyone would have a sub-prime card and 0% purchase cards would be irrelevant. APR matters.

CLAPTON

Anthorn wrote: »

But those who pay off the full balance every month do so out of necessity but not necessarily by choice, i.e. to avoid high interest charges and that's really only relevant with high interest sub-prime cards. Of course if everyone paid off the full balance every month then everyone would have a sub-prime card and 0% purchase cards would be irrelevant. APR matters.

bizarre..............

SuperHan

Anthorn wrote: »

But those who pay off the full balance every month do so out of necessity but not necessarily by choice, i.e. to avoid high interest charges and that's really only relevant with high interest sub-prime cards. Of course if everyone paid off the full balance every month then everyone would have a sub-prime card and 0% purchase cards would be irrelevant. APR matters.

Not true. I put work expenses on my credit card as it takes a month for me to claim them and get the cash back.

I pay off my CC entirely each month with these expenses. Using a 0% purchases for a longer period would make my finances more confusing, so I pay it off each month. I don't even know what my APR is, I couldn't even estimate a ball park figure.

In fact, I frequently get offer letters for 0% purchase periods and have never taken the offer up... I don't use my credit card for that purpose.

The best credit card for me is one that gives cash back or rewards, so I can move all my spending on to it and get something back. I look for that over APR any day.

And I don't have subprime as I want a higher credit limit than they will offer, so it's not true that we would all have subprime...

eskbanker

Anthorn wrote: »

But those who pay off the full balance every month do so out of necessity

Not true.

Anthorn wrote: »

Of course if everyone paid off the full balance every month then everyone would have a sub-prime card and 0% purchase cards would be irrelevant.

Not true.

Anthorn wrote: »

APR matters.

To some, yes, but not all, that's the point I was making. I have several credit cards, each of which is always paid off in full every month and I honestly couldn't tell you what the APR is as it isn't relevant to me, unlike some of the benefits.

penguingirl

The other thing not mentioned is make sure you are on the electoral role before applying for a credit card.