Paying credit card?

robfosters

Depends how much you want to use the card. If you don't plan on using it much, £100 a month would be fine during a 0% interest period.

It's not good to get close to your limit. It's called credit utilization and if it's too high, it puts lenders off. That's why people love a big limit, as it allows you to spend more without damaging your rating. As you use your card over time and pay back responsibly, the limit will normally increase as long as your personal circumstances allow it. So you will naturally be able to spend more without any damage to your rating.

newuser78

That's great, thanks Rob!

If I increase my direct debit to £100/month then Santander (and any future lenders) would look at this favourably, right?

robfosters

newuser78 wrote: »

That's great, thanks Rob!

If I increase my direct debit to £100/month then Santander (and any future lenders) would look at this favourably, right?

Yep. As long as you're keeping your balance within a reasonable percentage and showing solid payments, it will reflect nicely on your credit report. Also, the length of opened financial accounts makes a difference too, so as your credit card account becomes older, it will raise your average account age, which in turn, increases rating, as it shows stability. Opening new credit accounts affects it negatively.

Sea_Shell

I've got one of these too, and i was hoping to make the most of the 0% on purchases, and only pay the minimum, whilst allowing the balance to get near to max (and then not use it). Keeping the money in my 123 account making 3% instead. Not really any point in using the 123 credit card otherwise, as we were getting 1% cashback (points) on ALL purchases with Tesco card.

Reading the above, it appears that this would be a no-no as far as credit rating is concerned as i would have a 100% of credit available used (tesco CC in OH's name). Would it really be that bad?

newuser78

robfosters wrote: »

Yep. As long as you're keeping your balance within a reasonable percentage and showing solid payments, it will reflect nicely on your credit report. Also, the length of opened financial accounts makes a difference too, so as your credit card account becomes older, it will raise your average account age, which in turn, increases rating, as it shows stability. Opening new credit accounts affects it negatively.

Just had a thought... with a direct debit of £100/month, I would be vastly overpaying, right?