Student with first credit card - how much of my credit limit should I spend?

kelloggsnutty

Hi MSE

I'm a student that got my first credit card with HSBC, they gave it to me along with my student bank account. The credit limit is £500. I've been using this credit card to gain a credit history. Every month I've been spending on my credit card, and paying it off in full.

How much of my credit limit should I be spending each month?

Does it do damage to my credit rating if each month I'm spending close to my limit, e.g. if I spend 450 or 470 or 480?

I've read things online about how you should only spend 10-20% of your credit limit to demonstrate that you never go near utilising all of your credit. But I'm not sure if this applies to me because, 1) I'm a student with virtually no credit rating, 2) this is my first credit card, 3) I'm paying it off in full each month, 4) my credit limit is only £500.

PeacefulWaters

I'd carry on as you are doing clearing the balance in full and getting nowhere near your credit limit.

kelloggsnutty

PeacefulWaters wrote: »

I'd carry on as you are doing clearing the balance in full and getting nowhere near your credit limit.

Thank you for your reply.

Can I ask, how long roughly do you think is a good amount of time to have built up my credit history using just this £500 credit card?

In the future I'd like to open a current account and/or get a credit card that gives me some benefits such as cashback, but I don't want to prematurely apply and be turned down.

I was searching the MSE forums and found only one person kind of mention this topic, they recommended waiting about 6 months. I have no gauge on whether that sounds about right, or is horrendously too short a time to have built up an adequate credit history.

PeacefulWaters

The longer the better.

Six months would be a minimum in my opinion.

There's no fixed rule though. Different lenders have different criteria at different times.

CLAPTON

kelloggsnutty wrote: »

Thank you for your reply.

Can I ask, how long roughly do you think is a good amount of time to have built up my credit history using just this £500 credit card?

In the future I'd like to open a current account and/or get a credit card that gives me some benefits such as cashback, but I don't want to prematurely apply and be turned down.

I was searching the MSE forums and found only one person kind of mention this topic, they recommended waiting about 6 months. I have no gauge on whether that sounds about right, or is horrendously too short a time to have built up an adequate credit history.

the absence of a job and income will be a bigger problem that how long you have had a credit card if you want a 'reward' CC

rehanmalik3030

Get rid of the card!!! Now!!!

You are already in debt to them which is obvious by your high utilisation rate.

The smart thing to do is save £500 and let this be your lending pot. If you need money you can dip into it and when you have spare cash you can top it back up again!! Your priority being to maintain at least £500 in the pot. Just think; No interest charges, No late payment charges, No bills, you spend less because you are using real money over plastic "it hurts when you have to use real money", No CCJ's, No bailiffs coming to your door etc etc

No one in this forum will give you this advice they will say things like if you pay it off in full you will not be charged interest BUT life is not like that most people end up spending money they dont have and cannot pay back in full hence the slippery slope of life long debt to the credit card companies.

Others here will say you need to use a credit card to help you with your credit score. Its no secret financial institutions incl. banks and credit card companies are in cahoots with credit reference agencies. Making you think your new "god" is your "credit score"

Back in the old days you had to be very well off to get an American Express Gold Card now all you need is an income of £20,000. Why because credit card companies know they can make money out of you by getting you into debt and then using your credit score against you.

If you do not have credit you do not have a credit score. This does not mean you have a bad credit score!!! So if you want to buy a house you simply have to save a larger deposit before a lender will give you a mortgage. The bigger the deposit the less you will have to borrow.

Others here will say you can get cash back with credit cards. Normal people with normal jobs and normal incomes will not make enough cash back to counter the risk of going into credit card debt which is nearly always emotional. Normal people cannot help themselves if they have access to credit they will spend it on useless things and get into debt.

Credit card market is very lucrative and debt is the most aggressively marketed product out there. They start with you when your young say a student, you perceive it as a normal way of life, the more credit you have the more successful you feel, aiming for that perfect credit score etc etc Its all about financial enslavement.

Get rid of the card before its too late.

CLAPTON

rehanmalik3030 wrote: »

Get rid of the card!!! Now!!!

You are already in debt to them which is obvious by your high utilisation rate.

The smart thing to do is save £500 and let this be your lending pot. If you need money you can dip into it and when you have spare cash you can top it back up again!! Your priority being to maintain at least £500 in the pot. Just think; No interest charges, No late payment charges, No bills, you spend less because you are using real money over plastic "it hurts when you have to use real money", No CCJ's, No bailiffs coming to your door etc etc

No one in this forum will give you this advice they will say things like if you pay it off in full you will not be charged interest BUT life is not like that most people end up spending money they dont have and cannot pay back in full hence the slippery slope of life long debt to the credit card companies.

Others here will say you need to use a credit card to help you with your credit score. Its no secret financial institutions incl. banks and credit card companies are in cahoots with credit reference agencies. Making you think your new "god" is your "credit score"

Back in the old days you had to be very well off to get an American Express Gold Card now all you need is an income of £20,000. Why because credit card companies know they can make money out of you by getting you into debt and then using your credit score against you.

If you do not have credit you do not have a credit score. This does not mean you have a bad credit score!!! So if you want to buy a house you simply have to save a larger deposit before a lender will give you a mortgage. The bigger the deposit the less you will have to borrow.

Others here will say you can get cash back with credit cards. Normal people with normal jobs and normal incomes will not make enough cash back to counter the risk of going into credit card debt which is nearly always emotional. Normal people cannot help themselves if they have access to credit they will spend it on useless things and get into debt.

Credit card market is very lucrative and debt is the most aggressively marketed product out there. They start with you when your young say a student, you perceive it as a normal way of life, the more credit you have the more successful you feel, aiming for that perfect credit score etc etc Its all about financial enslavement.

Get rid of the card before its too late.

nonsense .........

rehanmalik3030

Dear CLAPTON I suspect must work in the financial industry!!!

Stay away from credit cards and teach yourself to live on a budget, it keeps a lot of stress and money struggles from entering your life. With a credit card you will always be tempted to buy those small things £10 here £20 there. These small things are 99% of the time non essential and will get you into debt. You do not need a credit card and you do not need to build a credit history. All you need to know and practice is that you need an emergency savings fund and to live on less than you make.

You cannot argue against this logic.

PeacefulWaters

rehanmalik3030 wrote: »

Dear CLAPTON I suspect must work in the financial industry!!!

Stay away from credit cards and teach yourself to live on a budget, it keeps a lot of stress and money struggles from entering your life. With a credit card you will always be tempted to buy those small things £10 here £20 there. These small things are 99% of the time non essential and will get you into debt. You do not need a credit card and you do not need to build a credit history. All you need to know and practice is that you need an emergency savings fund and to live on less than you make.

You cannot argue against this logic.

Be intelligent and don't be tempted.

Then you can utilise a credit card, enhance your credit rating, perhaps benefit from any incentives the card may issue and be generally better placed.

You cannot argue against this logic.

rehanmalik3030

PeacefulWaters wrote: »

Be intelligent and don't be tempted.

Then you can utilise a credit card, enhance your credit rating, perhaps benefit from any incentives the card may issue and be generally better placed.

You cannot argue against this logic.

We are all human at the end of the day, temptation is always around the corner, it does not matter how strong willed you are. Credit cards will keep you in financial shackles for the whole of your life. Its time to break free when you still have time.

grumbler

rehanmalik3030 wrote: »

We are all human at the end of the day, temptation is always around the corner, it does not matter how strong willed you are. Credit cards will keep you in financial shackles for the whole of your life. Its time to break free when you still have time.

Stop making generalisations, please.
I have several CCs and have never been 'tempted'.
Made a lot by stoozing when savings rates were higher, loads from cashback and saved commission on currency transactions.

@OP: there is no point in getting close to the limit unless you find this convenient. And generally, reporting cycle isn't the same as the billing one, so it's not necessarily the statement balance that is reported.