Should I...get a credit card?

Adam_4966

Hi,

Bit of a silly question so I apologise if it’s staring me in the face somewhere and I can’t find it anywhere!

I’m 21, have a decent(ish) job and the following financial commitments:

* Student loan (embarrassingly, I don’t know how much of this I’m paying back each month but I can find out)

* Personal loan of £5,000 for the car over 3 years so around £140 a month

* Insurance for the car at around £90 a month

* Mobile phone contract @ £35 a month


That’s it. Now, I want a credit card. BUT, not for the reason you might think. I just want to build up a credit history but not use it to buy plasma tellies and stuff like that! So I had a thought, (always dangerous!). What about if I get a credit card, and use it to buy petrol (and petrol only!) and pay it off each month. I’d get into the habit fairly quickly and hopefully that would help me build up a history. I usually put around £100 of petrol in every week (or thereabouts) so, is my reasoning flawed?

If it wasn’t obvious already, I don’t know too much about these things. I was looking on the site and got it whittled down to a HSBC card or the lowest Amex card. Is this a good idea or not? I just want to stress, I don’t want a credit card to buy things and stall payments or to go out buying extravagant things – I just want a decent looking credit history.

Yes/No?

Many Thanks

Adam

pcwilkins

To my mind a credit card is always a good idea --- providing you have a brain, which it seems you do.

The reason for this is that credit cards have an interest free period, typically 30 days or so. Providing you repay the full amount on time, you will not pay any interest --- plus you get 30 days extra interest as the money stays in your bank account for longer.

Also many credit cards give automatic cashback --- my smile card gives 0.5% which doesn't seem much but comes out to around £30 a year. Other cards give more.

So, I say yes --- as long as you're not tempted to use it as a loan! (Stoozing is another topic altogether, look it up on this forum if your interested).

Peter

CLAPTON

Certainly getting a credit card and using it regularly and paying on time will build up a credit record and give you a improved credit record.

I would suggest you set up Diret Debt for the full amount so you always pay the full amount on time and never pay any interest.
The best card for you would be a cash back card i.e. one that gives you a discount on everything you spend i.e. egg money card gives 1% back (note the egg money card and NOT the confusingly named egg card).

However, you may find that the 'best' cards will reject you because you haven't a good credit record yet.
So probably best to try your bank for your first card and take whatever they give you. Then build up a good payment history and then try for a better card in six month/year's time.

sicker

If you can stick to your plan I would try for a card such as Egg Money or any one which gives cash back. In your scenario it will be a bonus.(but only use it for money you have to spend anyway).

John

Nytehawk

I have a daughter who hads been in a similar position to you. My short answer is to leave the credit cards alone.
The current debt you have needs to be reduced and by adding another CC you will no doubt be tempted to use any new credit card which will put you further into debt IMO. You need to do a budget plan and trim down some of your debt, otherwise you will end up as a credit risk and in the future you will not be able to get sufficient credit to meet todays' financial needs

marksandsparksgal

As long as you use it within your means, and only that, i.e. only put on there what you can pay off, I think it's a good idea.

I'm 22, studying as well, and now have 5 cards, having never paid any interest on them. Without blowing my own trumpet, this means I've just managed to get the Amex platinum card, so as long as you're careful, get a 'crap' card now, (in my case it was a Barclaycard) and keep plodding along, it can only do good things for your credit history in the future when you come to get a mortgage etc.

*edit*
I forgot to put as well, if you're worried you'll spend outside your means and the DD won't cover it, get the money out everytime you use the card and leave in an envelope somewhere safe, or use the online banking most cards have to pay a chunk off halfway through the month.