question about credit cards

shayshay95

Hi,
I have just got my first credit card to build up my credit rating with a limit of £50. My question is is this 50 monthly, or can I keep using it? E.g
Monday I use 50,
Thursday I pay that 50 back
Can I borrow it again or can I only borrow it once per month as long as I pay it back?

molerat

It is rolling credit, as soon as you pay it off and it is cleared into your card account you can spend it again. £50 limit ! As this is a credit building exercise you really need to spend on it and have a full amount DD set up to pay it off monthly. Don't bother paying off and spending again several times in the month as it [STRIKE]will[/STRIKE] may not be seen on your credit file as using the card

earlywormgetsthebird

Hi shayshay95. Apologies if it's a little late to respond, but perhaps this is a better late than never response. I stand corrected if wrong, but here is this stranger on a forum's two cents:

Even if you have only a £50 limit, it's most probably best, particularly if you're building a credit rating, only to use no more than 33% of that limit (i.e., £16/£17)- and just leave it at that each month! No matter how ridiculous doing so might seem to you now, when they set a limit, no matter how low it is, they still expect it to be respected - which means that you are not expected to use it all, at any point - without consequences. They have their reasons why the limit is £50, and so your putting £50 on the card, and then paying it off next day likely won't help your credit rating as much as using no more than a third of your limit, and waiting for your bill before paying. IMO, it would, in other words, be a 'questionable' idea to use up all your limit and then simply pay it off even a few days later.

Instead, it would be far better (for building a good credit record) simply to use it a little, then just wait it out. Many of us have started with very low limits and had to play the waiting game too. So you're not alone, and alas sorry if this isn't what you were hoping to hear, but the good news is that eventually they will increase your limit to something far more reasonable. When it comes to credit, the game is always one of trying to prove you don't need it, while still being respectful and patient. HTH

Anthorn

Just to note that several payments over the statement period will be aggregated (totalled) into one in your credit report. I really don't know how a lender would view for example, a credit limit of £50 and a payment of £150.

When I started rebuilding my credit I was advised to use my limit without going over-limit and to wait for the monthly statement before making the payment on time. That worked for me.

Superscrooge

shayshay95 wrote: »

Hi,
I have just got my first credit card to build up my credit rating with a limit of £50. My question is is this 50 monthly, or can I keep using it? E.g
Monday I use 50,
Thursday I pay that 50 back
Can I borrow it again or can I only borrow it once per month as long as I pay it back?

Whilst technically you could spend Monday, pay back Thursday, spend Monday, pay back Thursday etc. There is nothing to be gained by that and it is less advantageous to you.

ie. If you spend £50 and then only pay it off when you get your statement you have an extra £50 in your bank account all month earning interest. If you are constantly spending, paying back, spending, paying back etc. you probably only have the £50 debt on your credit card half the time and are not gaining from the extra interest.

The credit card company won't look on you any more favourably than someone who spends up to £50 each month and pays it off in full by the due date. They may even look on it less favourably because it is an unusual spending pattern and not how most people use their credit cards. You want to convince the credit card company that you are a normal responsible user of credit

I would set up a direct debit so that you always pay your credit card bill in full. Usually after 3 months as long as you have always made the monthly payments and not exceeded your credit limit, you will be offered, or you can ask, for a higher credit limit.

A4445

Who issuesd the credit card? £50 seems super low even if it is a credit builder card??

tomxlisa

I have £200 on my capital one card and am always topping it up when i get low, i know people on here say not to use much of the limit but i've always read that the most important things to remember is not going over your limit or missing a payment, i always make sure there is a balance before the statement is produced though otherwise like people have stated it will look like i am not using my card as nothing would be due if i paid it all back before the statement was produced, this seems to be working for me and my credit seems to be getting better but very slowly, not sure about what the other person said though as some months i probably pay back £600 or so to my card that only has a £200 limit, not sure if this would affect me negatively or not.

A4445

tomxlisa wrote: »

I have £200 on my capital one card and am always topping it up when i get low, i know people on here say not to use much of the limit but i've always read that the most important things to remember is not going over your limit or missing a payment, i always make sure there is a balance before the statement is produced though otherwise like people have stated it will look like i am not using my card as nothing would be due if i paid it all back before the statement was produced, this seems to be working for me and my credit seems to be getting better but very slowly, not sure about what the other person said though as some months i probably pay back £600 or so to my card that only has a £200 limit, not sure if this would affect me negatively or not.

I expect they they will increase your limit soon, you've had the account nearly 6 months?

tomxlisa

Yeah 6 months in january, i have spoken to them and they said it isn't a guarantee so could have this rubbish limit for much longer, thankfully i am just sticking to the rebuilding plan and paying everything on time and hopefully this patience will pay off with a fantastic credit file where i can get mainstream cards with great APRs and the best credit deals.

A4445

Have you applied for an Aqua or vanquis card? They seem more generous with emir credit limits.

tomxlisa

Yeah I applied for a vanquis card about 5 months ago and got rejected, same with the aqua card, was confused why I did as I thought they was credit builder cards, only one to touch me was capital one, not sure if it would be worth trying again or not, I am trying to clear all the credit searches I've made so might wait until that's done I may have a better chance then.