Need a little advice

DarrenW80

I have some credit cards that I am trying to build and would like some answers to a few questions.

I have a limit of £1,950 on my card and the balance is £0, If I go and buy something for £50 and then pay the minimum payment each month until that £50 is paid and keep repeating the process, will they reduce my limit because I only put £50 on my card each time? I want to keep the limit for if there is ever an emergency but i'm worried that if I'm not using it they will decrease it. I understand that the best way to build a card is to pay it off in full each month but i'm just wondering if I can build it by just paying the minimum on £50 also? I am not worried about the interest on £50. What do you guys think?

Also do I have to have a direct debit setup because I'm finding it a pain. What I like doing is as soon as I get my statement is to pay on the statement day by bank transfer via my online banking. The problem is when I pay on my statement day my CC provider also takes my direct debit so I end up making them a payment twice each month.

YorkshireBoy

DarrenW80 wrote: »

I am not worried about the interest on £50. What do you guys think?

I think you should be worried about the impact on your credit rating (as determined/assessed both by other lenders searching your file and also the current card provider) of not being able to pay a £50 credit card bill in full each and every month. I also think you're daft!

Also do I have to have a direct debit setup because I'm finding it a pain. What I like doing is as soon as I get my statement is to pay on the statement day by bank transfer via my online banking. The problem is when I pay on my statement day my CC provider also takes my direct debit so I end up making them a payment twice each month.

If you're always going to always spend only what you can afford to repay in full next month, just pay by full balance DD.

If that won't always be the case, then cancel the DD and pay the way you have been doing manually once you've got the statement.

DarrenW80

Thanks for the reply, it was just an idea as I can afford to pay it off in full, maybe that's not such a good idea then? Also say I only put £50 on the card a month and then pay it off in full every month, would they decrease my limit as i'm not using the other £100's on the card? Do I need to put more than £50 on it a month in order to build a good credit history?

YorkshireBoy

You'll build the best history by carrying a large statement balance IMHO, but only if you clear it in full.


I'd be putting all my monthly planned spend on the card (fuel, groceries, etc), not just a token £50.

tykesi

They're more likely to increase the limit if you do what you plan. Showing you can use the card responsibly will have them throwing money at you in my experience.

YorkshireBoy

tykesi wrote: »

They're more likely to increase the limit if you do what you plan. Showing you can use the card responsibly will have them throwing money at you in my experience.

If OP spends only £50 per month (max balance at any time is £100), there's £1,500 or so of limit that could be taken off the OP and allocated far more profitably elsewhere.

At £50 per month, OP is almost certainly losing the credit card company money! After all, their share of the merchant fees might only be 1%...so they're making only 50p a month (£6 a year) out of the OP...and that's gross!

DarrenW80

Thanks, I don't mind doing what you have suggested, I just want to know what the best way is to build a good history without loosing any available credit that I already have. I have a total of 3 credit cards now all showing a £0 balance, it's just knowing what I can do to help my credit file I am open to all suggestions, the cards I have are Capital One, Vanquis and Marbles.

I also have another question, I have a Likely Loan and I am about 3 months into it out of 12, is this classed as a Payday loan?

YorkshireBoy

DarrenW80 wrote: »

I also have another question, I have a Likely Loan and I am about 3 months into it out of 12, is this classed as a Payday loan?

Doesn't look like it, from reading the T&Cs on their website...but it's up there in terms of interest rates!

But to be sure you should check your credit reports with all 3 CRAs, as I believe they put PDLs in a different section.

Dobbibill

DarrenW80 wrote: »

I am open to all suggestions, the cards I have are Capital One, Vanquis and Marbles.

I also have another question, I have a Likely Loan and I am about 3 months into it out of 12, is this classed as a Payday loan?

I would follow YBs advice and put groceries, fuel, travel, coffees aka daily spends through the CC. Let the DD take payment in full each month. Of all the CCs you've listed, I would probably go with the Cap One assuming this is the one with the limit you are referring to. It's really a case of the best of a bad bunch IMHO.

If you are paying the CC off as soon as the transactions hit the account as you don't think you'll leave the money in your account by the time the DD gets called for then maybe look at setting up a different account for spending. This means you can transfer the spending you do on the CC into a bills account ready for collection.

If you pay off as soon as transactions hit the CC then when it's reported to the CRAs each month, it will always show a zero balance. This may lead other lenders to believe you aren't using it at all.

Check your CR, Noddle definitely have a section of it's own for PDLs, as YB said. I did look on Clearscore but couldn't find similar section on there. If there is one, hopefully someone will come along shortly and correct me.

DarrenW80

Dobbibill wrote: »

I would follow YBs advice and put groceries, fuel, travel, coffees aka daily spends through the CC. Let the DD take payment in full each month. Of all the CCs you've listed, I would probably go with the Cap One assuming this is the one with the limit you are referring to. It's really a case of the best of a bad bunch IMHO.

Yes the Capital One card has the highest limit of £1,950, Vanquis is £500 and I am not sure about the Marbles one as I only applied for it last week and they won't say what the limit is until I get the card. Out of all 3 cards I have had the Capital One card the longest, 18 months and the other 2 cards are quite new. I have found that Marbles have offered me the best APR at 29%, Capital One is 36 I believe and Vanquis is 39.

YorkshireBoy

DarrenW80 wrote: »

Yes the Capital One card has the highest limit of £1,950, Vanquis is £500 and I am not sure about the Marbles one as I only applied for it last week and they won't say what the limit is until I get the card. Out of all 3 cards I have had the Capital One card the longest, 18 months and the other 2 cards are quite new. I have found that Marbles have offered me the best APR at 29%, Capital One is 36 I believe and Vanquis is 39.

In your shoes I'd cancel both Vanquis and Marbles (unless Marbles comes with a limit anywhere near Capital One). You don't want £500 limit cards showing on your credit report...it tells other lenders searching your file that these companies don't trust you!