Credit Card help

victoriafox96

Hi all,

I applied for my first 0% credit card a few years ago however the promotion is about to expire. I do not have anything outstanding on the card - would you advise to cancel the card and take out a new 0% card with a different company or buy something with my credit card and transfer the money over to a new 0% card. I only use the credit card for large purchases e.g. holidays.

Thanks!

Willing2Learn

Hi victoriafox96 and welcome to the forum

I would suggest keeping the current card as the stability of a long-term well-managed credit account on your credit files is a positive thing.

I would apply for a second card so that you always have a back-up option if the first card fails to work for any reason. (It is good to have more than one card)

Terry_Towelling

Sounds like you are quite cautious about using your card - which is no bad thing but you are missing out on its utility. I always put everything on my card and pay it all by direct debit every month.

Perhaps imagine your credit card spending as a list of pending transactions like you get when you use your debit card. However, unlike your debit card pending transactions which clear within a day or two, credit card spending stays 'pending' until you get your statement and pay it all by direct debit on the due date.

An additional trick is to create a ring-fence of cash equivalent in value to your credit card spending. Every time you use your credit card you move an identical amount of money from your current account into a savings account. That creates the illusion that you have used your debit card for the spending and moves the cash out of harm's way.

When your credit card statement arrives transfer the cash back from your savings 'ring-fence' to your current account in time for the full payment to go out by direct debit.

The effect of all this is that you clear your pseudo-pending transactions list in one lump as much as 56 days after you made the purchase, you make a bit of interest from the savings pot 'ring-fence' and, if you spot anything wrong on your credit card statement, you get to dispute it before the money gets taken from you.

You will also notice that deferring your spending for between 1 and 2 months has the effect of creating a financial cushion in your current account - or in your savings account if you choose the 'ring-fence' strategy. The cushion may be a bit illusory because the money is going to go out at some point but it can help with cashflow.

This sort of approach to credit card use is not for everyone and requires discipline and, if you are going to create a savings 'ring-fence' as you go along you need make sure that you don't leave your current account short for any other direct debits that may be due, but it's done me well for the past 35 years

Ben8282

victoriafox96 wrote: »

Hi all,

I applied for my first 0% credit card a few years ago however the promotion is about to expire. I do not have anything outstanding on the card - would you advise to cancel the card and take out a new 0% card with a different company or buy something with my credit card and transfer the money over to a new 0% card. I only use the credit card for large purchases e.g. holidays.

Thanks!

Nice long promotion if it has lasted for a few years! What sort of promotion was it? How did you make use of it?
The question which needs to be addressed is how do you intend to use the new 0% card? What exactly do you wish to achieve?
If you have no existing balance then a balance transfer card would be of little use to you.

Terry_Towelling wrote: »

I always put everything on my card and pay it all by direct debit every month.

So do I