Paying off your credit card early?

sleepyjones

Terry_Towelling wrote: »

Sleepyjones, why don't you ask your card company for a limit increase?

I've only had the card for about 5 weeks.
Never really had any credit before, except 3 years ago I got car Finance, this will be paid off next year, but was talking to a work friend and he said I was paying a lot of interest (Don't remember the specifics or have it to hand but £7000 loan, £10000 ish to be repaid).

So, I got a credit card to increase my credit history so if I do choose to get another car I'll get a better rate. At the moment I'm just trying to do stuff to get the history / score up (I'm ignoring the number).

[Deleted User]

If you’re ignoring the number then don’t even take it into account or mention it

Car finance is easier to get as it’s secured against an asset so easier for repossession etc.

Terry_Towelling

I'm not entirely convinced that car finance deals give better APRs just because you appear to have a better credit history. What I've noticed is that they either vary depending on how desperate the dealer/brand is to sell particular vehicles, or they vary depending on the type of financing arrangement - e.g. are you buying outright on HP or are you paying a smallish deposit, a monthly instalment for a few years and then a balloon payment at the end.

PixelPound

Maybe when you come to get a new car you look at other forms of finance? Finance at a car dealership isn't variable depending on your credit history or the most competitive rate, but their to facilitate sales and earn commission. So by it's nature rates won't be brilliant because they want to get as many sales so need a lower threshold. Often rates will be disguised to make it seem more appealing such as focusing on the monthly amount you pay. Plus there are lots of different finance options, PCP etc, where you effectively lease the car and after 3 years need to pay a large lump sum if you want to keep it.

So utilising credit, such as spending on a credit card is good when you want to look at other finance options. Just spending on it and paying it off in full should suffice, no real need to clear early to allow it to be spent on again. As it's a new card just use and pay off in full each time for six months then ask your provider about your limit - some might not consider until you have had it for 12 months. You may find in 12 months you can get a card from somewhere else with a much larger limit.

sleepyjones

I'd arranged the finance before I bought the car, via Zuto with Barclays partner Finance ... it was a "Conditional Sale Agreement", so I don't know if your history affects the rate, perhaps due to a higher risk.
Not really sure, but my intention was to improve my credit worthiness just in case I did go for a new car and if an improvement might open me up to new lenders that maybe offer a better rate.

Sorry OP, hijacked this post a bit but it is (slightly) relevant to your original query.