First time credit card

chriz1

Hi, Im looking to get a tesco credit card mainly to extra earn club card points paying shopping bills and utility bills,
I'm good with my money and have never needed one before but I also like the idea of earning club card points for nothing really, the balance will be paid on in full every month without fail.
My question is will having a credit card paid off in full every month be bad for my credit ratings than opposed to it having a card at all ?
If it won't make a difference I'd rather not have a card.

[Deleted User]

It will demonstrate good credit behaviour, which is what you're aiming for.

No credit history suggests to lenders you'll be higher risk.

grumbler

chriz1 wrote: »

My question is will having a credit card paid off in full every month be bad for my credit ratings than opposed to it having a card at all ?

This depends on what other credit history you have. If you you do have a good history consisting of other credits settled and running then a new card will hardly make any difference.
If you have very little, then a card will have a positive effect.

However, Tesco's "extra points", unless you use them for points boost offers, are pretty pathetic and are just 0.25% in monetary terms. Also, without a good existing history the first credit card is typically either with the current account provider or one of Credit Cards for Bad Credit.

chriz1

I've never had any type of credit card before

grumbler

Well, it's a credit history, not credit cards history.
If your history is zero or slim, then a credit card is possibly the best way to improve it as it costs you nothing, unlike, e.g. a loan.

toffifee

grumbler wrote: »

However, Tesco's "extra points", unless you use them for points boost offers, are pretty pathetic and are just 0.25% in monetary terms.

We put all of our spending through Tesco credit cards (paying off in full by DD every month) and let the points add up. Last Christmas we bought 2 Hudls for the kids with mostly points (including doubling up of £10 of points I think) and a bit of cash, and we go to Pizza Express at least twice per year and pay only for the drinks. :beer:

I suggest you have a look at the places where you can get 4 x the value on the points (like Pizza Express) and see if you will want to use the points there. If not, another card might give you better value.

20aday

Tesco do offer the Foundation Credit Card for those with a limited/zero credit history such as yourself.

If you do your food shopping/purchase fuel from Tesco then you'll earn more points that way as out of store spending only attracts 1 point per £8 spent now.

I save my Clubcard points back using the Christmas Saver scheme; I could "boost" the points and earn more that way but I use the vouchers towards my Mum's food shopping bill.

chriz1

One thing that confuses me it, you have to set up a direct debit for the minimum amount per month correct?
But I plan on buying something on it and then later that day paying off the full amount I just bought.
So how does the DD work then ?

[Deleted User]

Depending on the timing, with Tesco, the payment will reduce the DD.

chriz1

So this is where you could get caught out?
Would it be a good idea then to use a separate bank account, purchase something and transfer that amount into the account that the direct debit is totalling upto that way I can be sure the amount need pend to pay the CC bill is in the account without fail?

King_Of_Fools

chriz1 wrote: »

One thing that confuses me it, you have to set up a direct debit for the minimum amount per month correct?
But I plan on buying something on it and then later that day paying off the full amount I just bought.
So how does the DD work then ?

You do not have to set up a direct debit. If you do you can set it up to pay the minimum or full statement amount.

Also, you should avoid paying off straight away for a number of reasons. The first (most relevant to your original post) is that if you do so it will look like you never have a balance on your credit card so it will have limited if any benefit to your credit rating. To make an impact you need to show that you can sensibly manage a debt (i.e. there is a balance most months but it is not growing month on month).

The way credit cards work is that every month you get a statement listing all the transactions made over the last month, the total balance, a minimum payment and a due date. You must pay at least the minimum payment by the due date or you will be charged plus it will be marked on your credit report. However, as long as you pay the statement balance by the due date then you will pay no interest and there is no benefit to paying it off earlier.