Credit Card - Credit Building - Pay off instantly?

KeysMcK

Hi All,

I was looking for some advice on how to use my newly aquired credit card.

I'm looking to build my credit file, as a youngster I made some bad decisions and have ended up with a very shoddy credit file. I decided to get a credit card to try to build this up. I was offered a Capital One Platinum card at 28% APR, so I've just applied and been accepted with a £400 credit limit.

My plan was to use this card to pay my monthly car finance payment (£211) and maybe a couple more regular payments that come out via card (Netflix, Now TV etc), then pay it off in full every month.

My card should be here tomorrow or Thursday (24th/25th), but I've realised if I use my card to pay these bills this month, the card won't be due until the end of Feb. This will mean I'm a few hundred up this month, but in reality I'll always be one step behind as I'll be on borrowed money.

My question is, could I use my credit card on say the 26th of each month (my pay day), and then pay off the card in full on the same/next day with my debit card?

This way I'm pretty much just using the card as a middle man. Would this actually improve my credit, or would I have to leave the balance owing on the card for at least a little time beforehand?

I'm hoping to have enough of a credit limit increase on the card by August that I can hire a car, so it is important that my credit score improves! My intention is to increase this without actually paying any APR at all, if at all possible

Any advice would be appreciated

Thanks!

Ciaran

[Deleted User]

Wait for the statement then clear in full. A full pay DD is ideal for this.

KeysMcK wrote: »

I'm hoping to have enough of a credit limit increase on the card by August that I can hire a car, so it is important that my credit score improves!

No, it's not. It's important that you build a good credit history and the two are separate things.

KeysMcK

Deleted_User wrote: »

Wait for the statement then clear in full. A full pay DD is ideal for this.



No, it's not. It's important that you build a good credit history and the two are separate things.

Thanks for the speedy response!

I suppose I'm kind of asking for some help to understand how a credit card works! This is my first, and the information I can find on line seems spotty and contradictory.

If, for example, I were to make this months' car finance payment from my debit card as usual, but made next months payment early (say on the 10th of Feb), should this show up my my bill, and be paid off as part of my end of Feb DD, or would all payments made in Feb not be due until the March payment?

I don't want to be in a situation where I'm living on borrowed money, I ideally wanted to use the card for fixed costs I already incurr, and to pay the card off with the same money I'd usually use to pay said costs.

Sorry if I'm not making much sence, I sometimes confuse my self!

[Deleted User]

- You use the card to make transactions
- You get a statement, which lists all transactions up to that date
- You need to pay that amount off by the due date - which will be in 2 or three weeks time
- Subsequent transactions will appear on the next statement.
- Rinse, repeat and so on.

Ebe_Scrooge

As ZX81 says, wait until the statement arrives then pay it in full. If you pay the full balance off before the statement is generated then it'll appear ( to anyone checking your credit file ) that you're not using the card - hence you won't get the benefits of an improved credit history.


However, a couple of things in your original post need clarification. Firstly, will your car finance company accept payments by credit card ? If they do, how will the credit card company treat these payments - as a purchase, or as a cash advance ? If the latter, then you'll be hit with fees and interest ( even if you pay off the bill in full each month ). I'm not saying it WILL be treated as a cash advance, but it would be well worth checking beforehand.

KeysMcK

Ebe_Scrooge wrote: »

As ZX81 says, wait until the statement arrives then pay it in full. If you pay the full balance off before the statement is generated then it'll appear ( to anyone checking your credit file ) that you're not using the card - hence you won't get the benefits of an improved credit history.


However, a couple of things in your original post need clarification. Firstly, will your car finance company accept payments by credit card ? If they do, how will the credit card company treat these payments - as a purchase, or as a cash advance ? If the latter, then you'll be hit with fees and interest ( even if you pay off the bill in full each month ). I'm not saying it WILL be treated as a cash advance, but it would be well worth checking beforehand.

I currently pay using an online payment portal using a debit card, so credit card should be fine and should come up as a card payment.

I think before I put a relatively large payment on the card I need to get my head around my billing cycle. Like I said, if I time this badly I'll have £250 extra in my pocket one month but be perpetually in debt looking forward! (I live pretty much month to month, so I'm not going to lie to myself and say I have the self control to just leave the £250 constantly sat in my bank!)

Thanks for your help and advice! Hopefully I can start building up my credit file again slowly :-)

redux

It sounds a bit like you're trying to over think this a bit. Dont be trying to make payments early just to get them on there. I'd probably leave the car finance as it is, and use the credit card for fuel. You might be able to have the statement date altered slightly so the due date comes not long after pay day, though that isn't important if you're careful, and other than that just take it steady as already suggested.

KeysMcK

redux wrote: »

It sounds a bit like you're trying to over think this a bit. Dont be trying to make payments early just to get them on there. I'd probably leave the car finance as it is, and use the credit card for fuel. You might be able to have the statement date altered slightly so the due date comes not long after pay day, though that isn't important if you're careful, and other than that just take it steady as already suggested.

I'm told I overthink pretty much everything I try to do.

I'll start small and see how I go. My idea has always been to use it to pay my car finance mainly because I like the idea of improving my credit two-fold by making the same payment, but perhaps just using it for petrol is the best bet!

Thanks all!

redux

Using it for the car finance could be tricky.

Don't forget that a credit card can allow up to 51 or 56 days credit, so for some of the time it can hold more than a month's flow of transactions.

If a regular item comes not long after the statement date, then it appears on the next statement and the due date to pay that is about three weeks later. So depending on the exact timing the item could be added again before the previous instalment is paid off.

In other words, for some of the time the card balance consists of more than one month's spending. Think of the card as gradually working up to 7 weeks regular spending on it, then making a payment drops this back to 3 weeks.

So plan not to spend up to the whole credit limit worth every month, but only no more than half the credit limit per month. In your case I think you said £400 limit to start with, so reckon to spend £30 to £50 per week.

If you do put the car finance £211 on there, you'll be cramping things and perpetually winding yourself up about exact timing of due dates, what days you can fit in other spending, and setting diary reminders to make sure to check the balance and possibly make an extra payment before the next £211 is due to come out.

Leave that separate for now, and have a more relaxing time.

KeysMcK

redux wrote: »

Using it for the car finance could be tricky.

Don't forget that a credit card can allow up to 51 or 56 days credit, so for some of the time it can hold more than a month's flow of transactions.

If a regular item comes not long after the statement date, then it appears on the next statement and the due date to pay that is about three weeks later. So depending on the exact timing the item could be added again before the previous instalment is paid off.

In other words, for some of the time the card balance consists of more than one month's spending. Think of the card as gradually working up to 7 weeks regular spending on it, then making a payment drops this back to 3 weeks.

So plan not to spend up to the whole credit limit worth every month, but only no more than half the credit limit per month. In your case I think you said £400 limit to start with, so reckon to spend £30 to £50 per week.

If you do put the car finance £211 on there, you'll be cramping things and perpetually winding yourself up about exact timing of due dates, what days you can fit in other spending, and setting diary reminders to make sure to check the balance and possibly make an extra payment before the next £211 is due to come out.

Leave that separate for now, and have a more relaxing time.

I hadn't considered this!

I think for now I'll just use it for petrol, I probably put in £75 - £100 in per month, if I just use it for that until I work out what I'm doing I'll probably be safe!

I think when I first thought about credit cards I just assumed you'd pay off on the 31st of the month what you'd spend between the 1st - 30th, I've only recently realised that you're billed for the previous month. Not as clean cut as I thought.

What a novice hey!

Thanks for all the advice. Will be taken on board

MallyGirl

sounds sensible to take small steps till you get the hang of the timings. As long as you wait till you get the statement and then pay in full - or even better set up a DD to pay in full so you can't forget to do it - then it will contribute positively to your credit history.