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First time Credit Card?
Comments
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Don't listen to this.
Pay off the balance in full. This will have absolutely NO detrimental effect on your credit, and will cost less than the above suggestion.
I have always paid off my credit card bills in full, and I started with a student credit card around 6 years ago, and have since not been declined a card I have applied for and I have a number of reward credit cards.
I didn't say paying off the full balance would have a detrimental effect. On the other hand paying off the full balance every month doesn't have a positive effect except that you won't have to pay interest, as I said. I have not seen a rule on any credit card which requires payment of the full balance every month except with reference to for example 56 days interest free credit. It's a credit card so we should expect that some people will use it as ... er ... a credit card.
But basically by paying off the full balance every month what you're saying to a prospective lender is that they are not going to make a profit from you except for the small amounts related to transaction fees.0 -
I didn't say paying off the full balance would have a detrimental effect. On the other hand paying off the full balance every month doesn't have a positive effect except that you won't have to pay interest, as I said. I have not seen a rule on any credit card which requires payment of the full balance every month except with reference to for example 56 days interest free credit. It's a credit card so we should expect that some people will use it as ... er ... a credit card.
But basically by paying off the full balance every month what you're saying to a prospective lender is that they are not going to make a profit from you except for the small amounts related to transaction fees.
Wow how wrong you are. Paying off in full every month shows to lenders that you are responsible and live within your means. If you're ever looking to apply for a mortgage, it's the best thing you can do. Mortgage lenders don't want to see you holding a balance all the time, it means you're spending more than you can afford.
Transaction fees can go as high as 3%+ with certain cards and types of payments. If a customer is spending £10,000 a year at 1% transaction fees, that £100 is still pretty much pure profit for them. They'd rather have 100 customers that do that, in order to offset the 1 bad customer who defaults.
Please please please don't listen to this guyWhat type of credit score would I require. What would aid in getting a CC now with good rewards?
I am a home owner (bought out right) if that helps...
No such thing as a credit score, each lender 'scores' you based on their own criteria. Nothing would aid you, you don't have any sort of lending history. You own your home outright, but that doesn't help a credit card lender.
There's no magical way to skip ahead and get it, you need to prove that you're responsible with lending before they'll be willing to lend to you. You could try and open up a BarclayCard Freedom Rewards since you bank with them, but I wouldn't be surprised if they come back and say no.Credit 'Score' - Don't buy the credit 'score' that Experian, Equifax and Noddle want to sell you. It's an arbitrary number that means nothing when it comes to applying for credit.
ALWAYS HAVE A DIRECT DEBIT SET UP FOR THE MINIMUM PAYMENT ON YOUR CREDIT CARDS, REGARDLESS OF WHETHER YOU PLAN TO LOGIN AND PAY EACH MONTH.0 -
thebritishbloke wrote: »Wow how wrong you are. Paying off in full every month shows to lenders that you are responsible and live within your means.
How does using a credit card as a charge card show that? It's a ridiculous argument based on a fallacy. If you are living within your means you don't need a credit card or at least don't need a limit increase. In any case your worth to a lender is your ability to make the payments and not your ability to clear the whole balance.0 -
thebritishbloke wrote: »Wow how wrong you are. Paying off in full every month shows to lenders that you are responsible and live within your means. If you're ever looking to apply for a mortgage, it's the best thing you can do. Mortgage lenders don't want to see you holding a balance all the time, it means you're spending more than you can afford.
Transaction fees can go as high as 3%+ with certain cards and types of payments. If a customer is spending £10,000 a year at 1% transaction fees, that £100 is still pretty much pure profit for them. They'd rather have 100 customers that do that, in order to offset the 1 bad customer who defaults.
Please please please don't listen to this guy
Thanks for agreeing - I sometimes think I'm going a bit mad when I see Anthorn post advocating not paying the full balance!
He seems to have missed the point that most people he recommends that too don't NEED credit, they just want to build up a bit of history, which of course is best done by paying in full.
And it shows you are living beyond your means as you spend more than you have... Otherwise why would you be paying more than you have to. You won't be getting more return on savings then interest being charged, so you would be silly not to pay it off if you could.
But, this comes from a guy advertising his possession of two subprime credit cards with whacking interest rates in his signature, so you have to question his expertise.0 -
Okay, you're more than welcome to not pay your 39.9% card off in full, but how about you don't advocate that other people waste their money on interest, just because you do?
How does using a credit card as a charge card show that? It's a ridiculous argument based on a fallacy. If you are living within your means you don't need a credit card or at least don't need a limit increase. In any case your worth to a lender is your ability to make the payments and not your ability to clear the whole balance.thebritishbloke wrote: »Wow how wrong you are. Paying off in full every month shows to lenders that you are responsible and live within your means.
Oh I'm sorry, just because I want to inevitably get a mortgage in the future, I shouldn't start proving to the lenders that I know how to manage my finances now. Makes perfect sense.
I literally just noticed before that he has his two fabulous credit cards, I'm sure those lenders love him. Shame that it appears he's giving this advice, yet no prime lenders want to lend to him.Thanks for agreeing - I sometimes think I'm going a bit mad when I see Anthorn post advocating not paying the full balance!
He seems to have missed the point that most people he recommends that too don't NEED credit, they just want to build up a bit of history, which of course is best done by paying in full.
And it shows you are living beyond your means as you spend more than you have... Otherwise why would you be paying more than you have to. You won't be getting more return on savings then interest being charged, so you would be silly not to pay it off if you could.
But, this comes from a guy advertising his possession of two subprime credit cards with whacking interest rates in his signature, so you have to question his expertise.Credit 'Score' - Don't buy the credit 'score' that Experian, Equifax and Noddle want to sell you. It's an arbitrary number that means nothing when it comes to applying for credit.
ALWAYS HAVE A DIRECT DEBIT SET UP FOR THE MINIMUM PAYMENT ON YOUR CREDIT CARDS, REGARDLESS OF WHETHER YOU PLAN TO LOGIN AND PAY EACH MONTH.0 -
@ thebritishbloke
Wow you can read my mind or you have access to my financial details because you apparently know which card I use. You are of course totally wrong. But then you say that some people keep cards as a means of building a credit file. Don't you think I'm in that position too? In fact I've been doing that for the last 6 years. You also appear to fail to note that my Aqua card is an Aqua Advance and in 1 year and 5 months my APR will be 19.9% - provided I keep up the payments and don't pay late. In my estimation I cannot get an APR as low as that within that time scale which means that the Aqua Advance for me is a very good deal.
My main point is however that whether you pay off the full balance or keep a balance has exactly the same effect on a credit file. To say that paying off the full balance every month has a more positive effect on a credit file is not true and a fallacy.
I used to have that same opinion and you will no doubt find that if you search and read my previous posts. But then I saw the light, in fact I saw several of them.
Lastly credit card companies and banks are not charities. They are in it for the profit. So it should go without saying that in the eyes of the lender a customer who keeps a balance and pays interest however small is a better customer than someone who doesn't.
As I posted in a different thread, you're playing a game and the first rule of any game is knowing that you're playing it.0 -
My main point is however that whether you pay off the full balance or keep a balance has exactly the same effect on a credit file. To say that paying off the full balance every month has a more positive effect on a credit file is not true and a fallacy.
The point everyone else is trying to make is that your method will cost you unnecessary money. This is a money SAVING expert website, but you seem to advocate that there is a reason to throw away cash on interest, when there isn't. A rough and ready calculation based on your signature indicates you are wasting £400 pa on interest, to no benefit.
Although the CC co's may like you paying interest, they are also a little bit concerned that you will never pay the outstanding amount that is carried over from month to months.
If you know the game so well, then why don't you have prime credit cards with higher limits and that offer you benefits? That would indicate you're winning the game...
My credit card companies offer me cashback and points for my spend, and frequently offer 0% purchase periods or 0% BTs, so they must see some value in my relationship with them, even if I pay in full each month. Do you get similar offers?
I jut don't see the evidence that you know the game that you're playing, because it doesn't look like you're winning...0 -
The point everyone else is trying to make is that your method will cost you unnecessary money. This is a money SAVING expert website, but you seem to advocate that there is a reason to throw away cash on interest, when there isn't. A rough and ready calculation based on your signature indicates you are wasting £400 pa on interest, to no benefit.
Although the CC co's may like you paying interest, they are also a little bit concerned that you will never pay the outstanding amount that is carried over from month to months.
If you know the game so well, then why don't you have prime credit cards with higher limits and that offer you benefits? That would indicate you're winning the game...
My credit card companies offer me cashback and points for my spend, and frequently offer 0% purchase periods or 0% BTs, so they must see some value in my relationship with them, even if I pay in full each month. Do you get similar offers?
I jut don't see the evidence that you know the game that you're playing, because it doesn't look like you're winning...
If it's throwing away money unnecessarily then a lot of people are also doing that. The point is not that you're paying interest but that you can afford to pay it. I think buying a sirloin steak when I can buy a pork chop is throwing money away too but not everyone shares that view.
You also don't consider the positive effect that credit can have on disposable income or indeed you don't know about in which case you should research it.
The rest of my posts is just plain, simple, common sense and if you don't see it then you don't have that common sense.0 -
If it's throwing away money unnecessarily then a lot of people are also doing that. The point is not that you're paying interest but that you can afford to pay it. I think buying a sirloin steak when I can buy a pork chop is throwing money away too but not everyone shares that view.
You also don't consider the positive effect that credit can have on disposable income or indeed you don't know about in which case you should research it.
The rest of my posts is just plain, simple, common sense and if you don't see it then you don't have that common sense.
What positive effect? Please explain? Long term, you are reducing it by spending your disposable income on interest.
No, throwing money away is paying more than the next guy for an identical sirloin steak, which you are doing next to say, myself.
I didn't say a lot of people weren't throwing money away. Gambling shops make a hell of a lot of money, and few people make a lot of money off them. You've convinced me to start betting on the horses either.
You keep saying how great not paying your credit card off in full can be, but are yet to give a concrete reason why. I do want to understand your philosophy,but I am struggling!0 -
What positive effect? Please explain? Long term, you are reducing it by spending your disposable income on interest.
If I bought something for £80 cash my funds would be down £80 in that month. But if I spread the payments over 4 months my income would only be down £20 in each of 4 months. Therefore income is extended. Pretty much obvious really.No, throwing money away is paying more than the next guy for an identical sirloin steak, which you are doing next to say, myself.
Depends on how you look at it. A pork chop is still cheaper than a sirloin steakI didn't say a lot of people weren't throwing money away. Gambling shops make a hell of a lot of money, and few people make a lot of money off them. You've convinced me to start betting on the horses either.
Not relevant to the discussionYou keep saying how great not paying your credit card off in full can be, but are yet to give a concrete reason why. I do want to understand your philosophy,but I am struggling!
I'm not saying that at all. I'm saying that keeping a balance is an option provided you can make the repayments. I've already given a reason in the first part of this post.
What you are doing is regarding a credit card balance as debt and it is but it is not bad debt. If you set up your finances as I have described over two threads to which you have posted it can never be bad debt: For example if I received a letter demanding immediate repayment of my credit card balance I can do that in a few minutes with a few presses in the banking app on my mobile phone. Move money from my smile cash ISA to my smile current account and then pay into my credit card account by transfer from my current account. Done and very simple to do.
I will anticipate your objection to the above and contest the action which pervades MSE - to use savings instead of spending with a credit card which I personally regard as yet another fallacy: If we did that there would be nothing to fall back on in an emergency.
Over say a year I am paying out more than I would do if I paid for everything in cash or indeed cleared my balance every month but I get paid monthly and not annually.
Credit is a fact of life and everyone uses it to a lesser or greater degree. If there was no credit there would be no debt but if that were the case the United Kingdom would have been sold to the highest bidder and we would possibly be speaking Chinese right now.0
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