Credit card mistake

Fireflyaway

About 1 year ago I got a capital 1 card to try and increase my credit score. All was going well till 6 months in when I accidentally went over my limit by £2.13! I was annoyed but told myself to get organised and stick with it. Now today I get an email to say I paid late. Yep 1 day late. I'm going to incur charges.
I'm starting to think it better to close the account as its probably doing more harm than good. I only have myself to blame but its so frustrating. The site says 12 months of good behaviour could see a limit increase but now Im back to square one. Would closing the account be better? If its closed will it show for just 1 year afterwards? I want to apply for a mortgage in a couple of years.

Dobbibill

Give them a ring and ask about the charges, some companies will refund the charge for a first offence. Be polite and hold your hands up to the error. (they haven't got to refund them but some do)

Set up a DD for all future statements (the onus is then on the CC company to take the money on time, this will prevent the same thing happening in the future)

If you close it, it will stay on your CR for 6yrs not 1yr.

glentoran99

Dobbibill wrote: »

Give them a ring and ask about the charges, some companies will refund the charge for a first offence. Be polite and hold your hands up to the error. (they haven't got to refund them but some do)

Set up a DD for all future statements (the onus is then on the CC company to take the money on time, this will prevent the same thing happening in the future)

If you close it, it will stay on your CR for 6yrs not 1yr.

How will that prevent him going over limit?

Anthorn

Fireflyaway wrote: »

About 1 year ago I got a capital 1 card to try and increase my credit score. All was going well till 6 months in when I accidentally went over my limit by £2.13! I was annoyed but told myself to get organised and stick with it. Now today I get an email to say I paid late. Yep 1 day late. I'm going to incur charges.
I'm starting to think it better to close the account as its probably doing more harm than good. I only have myself to blame but its so frustrating. The site says 12 months of good behaviour could see a limit increase but now Im back to square one. Would closing the account be better? If its closed will it show for just 1 year afterwards? I want to apply for a mortgage in a couple of years.

You paid late and they are going to charge you a fee which is most likely £12 for paying late. Fair enough.

What you will likely be worried about is the effect on your credit history. The late payment would be noted in the history of the account but unlikely to happen for a one-off event. Usually at least two or more consecutive late payments would be noted on your credit history. Get your credit reports and have a look.

If you close the account its status will change to "Settled" and will stay on the credit history for 6 years after the settlement date. No need to worry about that: The "Settled" status on an account is actually desirable. But even if "Settled" the account history remains.

Fireflyaway

Yes I guess a direct debit would prevent late fees thanks. In both cases I had not spent over the limit, it was the adding of interest that took me over and it wouldn't have happened if I paid on time.
6 years?! Argh it gets worse! In that case I may as well keep it but get more organised. Its the amount that's frustrating. All that for £2. I'd hate to lose a mortgage over £2!
Maybe I need to be squeaky clean for 12 months then close it. Settled is much better than risking more late fees and I guess the closer to the mortgage application the worse it looks if I mess up again.

Dobbibill

glentoran99 wrote: »

How will that prevent him going over limit?

It won't but will stop them paying 1 day late

Dobbibill

Fireflyaway wrote: »

Yes I guess a direct debit would prevent late fees thanks. In both cases I had not spent over the limit, it was the adding of interest that took me over and it wouldn't have happened if I paid on time.
6 years?! Argh it gets worse! In that case I may as well keep it but get more organised. Its the amount that's frustrating. All that for £2. I'd hate to lose a mortgage over £2!
Maybe I need to be squeaky clean for 12 months then close it. Settled is much better than risking more late fees and I guess the closer to the mortgage application the worse it looks if I mess up again.

If you are running a balance and incurring interest then pay it off ASAP.

If you pay off in full every month then only spend between 30 - 40% of your credit limit. This will mean by the time the DD kicks in (approx. 3 weeks after the statement) for the full amount, your balance will be between 60-80% of your credit limit, so keeping you away from the total limit.

Fireflyaway

I agree I do need to stop going right up to the limit. Maybe I need a plan -direct debit for x day of the month and only spend x amount on x day of every month. I just feel so annoyed with my stupid mistake and worry the consequences could be disproportionate.

YorkshireBoy

So you breached the T&Cs twice?...once 6 months ago by going over limit, and again last month by missing a payment?

In your shoes I'd keep the account open, run it well, and hope the passage of time reduces the impact on your credit file. I'd also check your CRA reports in February next year to see if both breaches have been recorded on there.

By the way, you said you got the card to improve your credit rating (you said score, but you meant rating really ). Why then were you incurring interest? Seems you were either living beyond your means 6 months ago, or operating in the misguided belief that it was somehow necessary to incur interest to improve your credit rating?

YorkshireBoy

Fireflyaway wrote: »

I agree I do need to stop going right up to the limit. Maybe I need a plan -direct debit for x day of the month and only spend x amount on x day of every month.

If you only spend what you KNOW you can afford to repay the following month you won't ever incur interest.

If you do hit hard times, and have to spend more one month, then the statement tells you the "estimated interest next statement". This is based on two assumptions:

1. You make the minimum payment on the payment due date, and
2. You make no further transactions on the card.

Obviously if you can't/don't comply with these assumptions, then the interest next statement will be higher than that estimated. That means you'll need to pay more BEFORE the statement date.

On how much to spend, simply stay well away from even 30-40% of the limit. On a £500 limit card the credit history will be just as good if you simply put £50 a month on the card and spend the rest on your debit card.

Fireflyaway

The silly thing is I can afford the payments and I don't live beyond my means ( I did in the past but not now). I was paying it in full, just didnt get it done on time. It was just to try and improve my score but seems I went about it the wrong way! Clearly I should be spending less on it, thanks guys for the 30% advice, I will try to do that.