Just lost my credit card virginity! Officially a credit card holder!

Lucy2016

Hi All,

I have just applied for my first credit card (Aqua) and got a whopping £300 limit at a staggering 59.9 APR.

Have a few questions as I am new to this :

1) Is the credit limit a monthly balance of £300 per month or per year?

2) If it is an annual limit; can I not just pay it off in a month?

3) With a limit so low; should I cancel the card anyway? I needed at least £1200, so £300 is insultingly low.

4) I wasn't able to indicate how long the credit was for; should I call them to ask or will this be shown on my CC statement.

Thanks all for your patience and apologies if these are stupid questions!

[Deleted User]

The limit is neither monthly nor annual - it's an ongoing limit. You need to stay below it at all times.

It's not an insultingly low limit - it's an appropriate limit based on your risk. If you manage it correctly, it will rise.

The credit is ongoing, unless you or they cancel the card.

MallyGirl

Lucy2016 wrote: »

Hi All,

I have just applied for my first credit card (Aqua) and got a whopping £300 limit at a staggering 59.9 APR.

staggering 59.9 APR is irrelevant as you are going to pay in full every month - you are aren't you? It would be madness to incur interest at that rate.

Lucy2016 wrote: »

Have a few questions as I am new to this :

1) Is the credit limit a monthly balance of £300 per month or per year?

It is the most you are allowed to build up at any one time.

Lucy2016 wrote: »

2) If it is an annual limit; can I not just pay it off in a month?

you should always pay CC in full unless they have given you a 0% deal.

Lucy2016 wrote: »

3) With a limit so low; should I cancel the card anyway? I needed at least £1200, so £300 is insultingly low.

Everyone has to start somewhere - you started here.

Lucy2016 wrote: »

4) I wasn't able to indicate how long the credit was for; should I call them to ask or will this be shown on my CC statement.

Thanks all for your patience and apologies if these are stupid questions!

The credit lasts as long as you keep the card in good order. Use and pay off after the statement date but by the due date, and repeat. Spend some time demonstrating that you can handle credit and they may offer a higher limit, or you might be able to apply for a more generous card.

D_M_E

Why do you need £1200?

Whatever card you get, don't forget to pay the balance IN FULL as soon as you get your monthly statement, especially when the interest rate is enough to make your pocket feel like it's got a BIIIIG hole in it, as well as making your eyes water..........................

MallyGirl

As a follow up - it is not a good idea to apply for a product when you don't understand how it works. Best to ask the questions before applying.

davedelaney

Marbles (same company as Aqua) started me off at £300, 6 months later increased it to £1200, 6 months later to £2400, and 6 months after that to £4,000.

Pay in full each month, be a responsible lender, and you should also receive credit limit increases to reflect that in future.

This is certainly not a card to be borrowing any amount on, let alone £1,200. It's a credit building card to show your credit file that you can lend responsibly, to enable you to get a more favourable card down the line.

eskbanker

davedelaney wrote: »

Marbles (same company as Aqua) started me off at £300, 6 months later increased it to £1200, 6 months later to £2400, and 6 months after that to £4,000.

Pay in full each month and you should receive the same.

Why?

Lending decisions are inherently personal and it's unrealistic to assert that others will be offered the same as you as if it was fact - OP might not be offered rises at all, or could be offered worse (or better) ones, so it's not helpful to generalise from a sample size of one.

Putting aside that aspect, it's not unheard of for companies to apply different policies to different brands within their range, so it's unwise to assume that Aqua will act in exactly the same way as Marbles.

PRAISETHESUN

See here: https://www.moneysavingexpert.com/credit-cards/how-do-credit-cards-work/

As you are new to the world of credit you need to start off by demonstrating that you can manage credit responsibly. You do this by using your card for a few purchases every month and paying it off IN FULL every month. Set up a DD for your full statement balance so you do not forget. If you pay off the full balance every month then you will not incur interest charges, but even 1p less and you will pay interest on the entire balance. At almost 60% APR you do not want to be paying that, so definitely do not use this card to borrow money.

The credit limit is small but it's pretty standard for a sub-prime credit building card. Don't be offended as it's merely the lender catering to your risk profile - in my experience "thin" credit files are worse than "bad" credit files, but you've gotta start somewhere some lenders factor this in and offer limits accordingly. As above, if you manage the account well you will start to get limit increases over time, and become eligible for better products down the line.

Terry_Towelling

I suspect that because Lucy2016 is saying things like, 'how long does the credit last' and 'I need at least £1200' they are intending to borrow for an extended period. That is not a good strategy with such a high interest rate.

The ideal mind-set for a credit cardholder is, 'I intend to use this card to pay for all of the things I would normally buy with cash/debit card on a monthly basis and then clear the entire balance when the statement comes in.' Effectively it is to be seen as a debit card where you are simply deferring payment; you are asking the card company to pay for things for you, and you will pay them back when they send you a statement listing what you've spent.

Never use an interest-bearing credit card to buy things you cannot afford. Easier said than done when financial events conspire against you, but that is the ideal way to use credit cards.

phillw

Terry_Towelling wrote: »

Never use an interest-bearing credit card to buy things you cannot afford.

I wouldn't buy something on a 0% that you can't afford either. If you can't put by the money in a savings account every month to cover the debt then you should ask what makes you think that you will be able to when the 0% runs out.

abz88

phillw wrote: »

I wouldn't buy something on a 0% that you can't afford either. If you can't put by the money in a savings account every month to cover the debt then you should ask what makes you think that you will be able to when the 0% runs out.

And if its an emergency purchase you hadn't planned on needing so hadn't saved for? (Car repairs, new boiler etc). Lots of people don't have a spare £2,000 but can quite easily commit to paying it off at £100 a month over two years.