Help working out what to do with my credit cards

edited 30 November -1 at 1:00AM in Credit Cards
11 replies 1.2K views
pleasehelpme27pleasehelpme27 Forumite
9 Posts
edited 30 November -1 at 1:00AM in Credit Cards
Hello!

I hope you are well.

I'm really hoping you might be able to help, and I hope this is the right place to post! I wasn't very good with money until about 10 months ago, and now I am fully in control and aware of my spending.

I currently have 3 credit cards & I would like to know what is best to do for my credit score as within the next few years I will be looking to buy a house. In the past I have not been great with money, there was a period of time where unfortunately I didn't have a job and had no choice but to utilise my credit cards, however, within the last 10 or so months, I have taken control & save a substantial amount each month & do not ever use my credit cards or enter my overdraft.

Currently, the total on them is approximately £3000, however I massively overpay every month & they will be clear by August next year (well before the 0% offer ends). I also have over £3000 in savings but as the 2 cards I use are 0% for another few years, I would prefer not to use it to clear the cards at the moment.

I would like to apply for a Virgin Atlantic credit card in order to gain some miles but I think it may be a stupid idea? Purely would use it & then pay it off immediately. I know it sounds like I would be unable to do this, but actually I haven't used my credit cards at all for about 10 months so I am used to not needing them at all.

Card 1: with Lloyds. This card is fully paid off as I recently did a balance transfer in order to get 0%. However I have had this credit card for approximately 6 years & therefore it is my longest standing credit card. I have previously been informed that it's good to have an older line of credit when applying for a mortgage? Not sure if that is truly the case.

Card 2: With Santander. Have had this for approximately 11 months now. Will be fully paid off by August next year.

Card 3: With Halifax. Recently got this card in order to do 0% balance transfer from Lloyds card. Will be paid off by May next year.

Would I be okay to cancel the Lloyds credit card even though it is a long standing line of credit? Or would that be a bad move as it means that the next oldest line of credit has only been there for 11 months. Therefore by the time I try to get a mortgage it's likely to only be 2-3 years old.

And would I be entirely stupid to apply for a Virgin credit card & therefore technically have 4 credit cards in my name, though only 2 of them would be in the minus.

Thanks in advance for your advice I really do appreciate it :).
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Replies

  • Terry_TowellingTerry_Towelling Forumite
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    Keep all of your cards and remember your credit score is seen only by you - no lender will ever see it or use it to assess whether they should lend to you.

    No point massively overpaying on the 0% cards. Pay the minimum payments on them and massively over-save in an easy-access saver (or easy-access regular saver or high-interest current account). Just before the 0% offers end, use your savings to pay off each card as appropriate.

    You will then be debt free and probably still have some savings to go towards your house deposit.

    I have no idea why you are contemplating a Virgin Card. You will have to spend a lot on the card to get any mileage of note (I expect) but if you really want one, fill your boots - just make sure you do clear it in full each month and make sure you still save enough to clear the 0% cards when their promotional periods end.

    Do you have any idea what size deposit you will need for your intended property purchase and just how much do you think your monthly mortgage repayments might be? Those are the key questions for the future.
  • Thank you!

    That does make sense I suppose but in my head I would really like for the debt to be cleared asap! Will definitely look into doing that though thank you very much!

    So to confirm, having 4 credit cards would not be an issue? It just seems like it would!

    I would do my monthly spending on the Virgin card & then pay it off before the end of the month definitely!

    Yes I've looked into it. I was originally aiming for 35-40,000 for a deposit. Unfortunately though in this area (where I want to stay) it's looking like shared ownership may be my only option to get onto the ladder. Definitely something in the future as need to do significant amounts of saving however in 2-3 years I hopefully will be there!

    Thank you again for your help!
  • MovingForwardsMovingForwards Forumite
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    Why would four cards be an issue if they are managed correctly?

    Pay your bill off, in full, AFTER the statement has been produced else you are not building a credit history.

    Ignore your credit score it means nothing. Lenders base their decision on your credit history and whether you have late payments, missed payments, defaults, CCJ, IVA, bankruptcy, DRO etc.
  • Why would four cards be an issue if they are managed correctly?

    Pay your bill off, in full, AFTER the statement has been produced else you are not building a credit history.

    Ignore your credit score it means nothing. Lenders base their decision on your credit history and whether you have late payments, missed payments, defaults, CCJ, IVA, bankruptcy, DRO etc.

    Honestly I don't know! I'm not sure how it all works as I said I only fairly recently started looking after my finances & looking into it all further.

    No problem, that's great thank you!

    I've never had any of the above thankfully so should be all good!
  • Terry_TowellingTerry_Towelling Forumite
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    Well, if you can save as much as £40K in as little as 2 years (i.e. £1666 per month), your financial future should be a walk in the park! As long as your employment is secure, you might as well clear your £3K card debts with your savings right now, regardless of their promotional interest rates, and then move on to saving when your next wage packet comes in. Maybe consider a LISA for some of it.
  • Well, if you can save as much as £40K in as little as 2 years (i.e. £1666 per month), your financial future should be a walk in the park! As long as your employment is secure, you might as well clear your £3K card debts with your savings right now, regardless of their promotional interest rates, and then move on to saving when your next wage packet comes in. Maybe consider a LISA for some of it.

    It wouldn't be that much per month as I already have further savings which I have taken into account with that number but I am able to save significant amounts. I'm lucky to live with my parents at the moment in order to save & therefore have very minimal necessary outgoings which I appreciate is a very privileged position to be in.

    I will look into paying it off further but at the moment I'm happy to have a higher amount of savings. Good tip about the LISA thank you, have been looking into this recently too!

    Thank you for your help.
  • Terry_TowellingTerry_Towelling Forumite
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    All very confusing. You originally had over £3K in savings and £3K in card debts (at 0%). You intend to save between £35K and £40K in 2 - 3 years AND now you have other savings too!

    I don't know how you've managed it in only the last 10 months (since becoming responsible with money and after a period with no job either). What's your secret?
  • All very confusing. You originally had over £3K in savings and £3K in card debts (at 0%). You intend to save between £35K and £40K in 2 - 3 years AND now you have other savings too!

    I don't know how you've managed it in only the last 10 months (since becoming responsible with money and after a period with no job either). What's your secret?

    You will see in my original post I stated:

    " I also have over £3000 in savings but as the 2 cards I use are 0% for another few years, I would prefer not to use it to clear the cards at the moment. ".

    Nobody needed to know specifically how much I have in savings as it is not relevant to my question. I said over £3000 in order to put across that I had more in savings than I have debt, as that is what was relevant to the situation.

    I have significantly more than £3000 saved. Also not that it matters, but I have had savings for longer than 10 months. But 10 months is the period of time I have been focussed on money & spending in order to be more sensible & save higher amounts each month. The period with no job was several years ago but is the reason I have any credit card debt at all hence why it was mentioned. Previously to that I had not had that issue.

    Not sure for the need of the hostility. I was only here to ask for some advice. Learned my lesson, won't bother next time.

    My secret is to have great family support and very minimal outgoings which means that you can save the majority of your income each month, building up savings quickly.

    Have a great evening.
  • gionnettogionnetto Forumite
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    First off, congratulations on straightening up your finances. It's no small feat! You sound like you are doing great.

    Secondly, don't bother with negative comments and people trying to convert you to their ways. Please, stay in the forum and use it for your benefit ignoring the rest.

    Finally, when it comes to your questions:
    1) pay the minimum payments on your 0% cards and put the rest in your savings account(s). Then pay the balances in full before your 0% offer ends. That way, you would accrue interest on the money you don't use to pay off more than the minimum of the cards each month.
    2) getting another credit card: it might be better if you get a rewards card instead, put all your expenses on it, and pay it off in full each month. That should earn you some cash.
    3) keep the card with Lloyds open, and never forget to use it once a month for something minimal and then pay it off in full as soon as your balance becomes available. You don't want to close it down because it's your oldest credit agreement.
    Your cholesterol levels are not seen, or used, by your heart and arteries, so ignore it.
    :eek:.
  • NgoziNgozi Forumite
    174 Posts
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    I would like to apply for a Virgin Atlantic credit card in order to gain some miles but I think it may be a stupid idea? Purely would use it & then pay it off immediately. I know it sounds like I would be unable to do this, but actually I haven't used my credit cards at all for about 10 months so I am used to not needing them at all.

    Apart from a flight, what are you wanting the miles for.
    Closing date is today for that offer but I might be able to give you better advice or scheme for a particular flight. Virgin don't exactly have a lot of routes, unless you get the premium card (£160 fee) only earning 0.75 miles o the £.
    Avios/BA would be easier to rack up points.

    If flying outside of Europe, generally miles are only really worth for the upgrades. If you used miles for a flight to NY, you'd pay more in tax as opposed to just booking an economy flight with money.
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