How much to live on

hugheskevi

LL_USS said:

(1) i thought the direct debit for the minimum payment is set up automatically rather than us setting the level, so if the credit card for May 2025 asks for say £34.5 then the direct debit will just be £34.5, isn't it?

You can choose to pay the minimum amount, the full amount, or a fixed amount (with the minimum amount being taken should that be more than a chosen fixed amount). 

Card providers report to credit reference agencies whether the minimum payment is being made or not, so some people have suggested it could be preferable to pay slightly above the minimum to appear more desirable to lenders - I question this based on my own experience, but it is a possible marginal gain at very little cost so I do it anyway.

LL_USS said:

(2) I can see my credit card usage last year (all cards) was about 20K, so i thought this new 0% interest card with a limit of 15K can cover much of it (15K was the maximum they give in the application and I chose it, but not sure if they'd give that max). Perhaps I should apply for another 0% card then.

I've found the answer to 'What limit would you like' has very little bearing on what is offered, although when provisional limits are offered as part of an application I have always found those are honoured when the full application is completed.

Take as much as you can get if it is profitable. I've found having about 4 cards per person tends to be optimal, much beyond that and I start running into refusals or offers of low limits that are more trouble than they are worth for the gain.

The key metric that limits what I am offered seems to be balance across all cards in my name / my gross income - once that gets to about 50% refusals are commonplace. You can circumvent this by simultaneous applications with multiple providers though, which is particularly useful should you want to raise a lot of money at a given time, eg, close to the end of a tax year to enable a pension contribution.

Organgrinder

This reminds me I really need to get rid of some old cards.

Sometimes I'm not as disciplined as I need to be.

However it's a nice feeling to be sat on a plane waiting to take off, knowing half my holiday was paid for by last year's stoozing!

Happy days.

LL_USS

@Organgrinder :-P look at how chuffed you are with the outcome of utilising your financial literacy.

LL_USS

@hugheskevi I see, thanks very much for your detailed explanation. Very helpful.

I now see your point of setting your monthly payment a little bit over the actual minimum, using 100% usage divided by the months of the card while using about 95% of the limit. I will need to see what's the minimum monthly pay on this M&S card I've just applied and set the monthly payment as a fixed amount just above the mimimum. I have seen this minimum payments on my current credit cards but have never used them or worked out how they calculate it for those cards (I've heard it's about 2% of the outstanding balance). The outstanding balance will keep increasing so I think for the start at least I'll just automatically pay the amount asked, then later just use the average amount based on 100% limit of the card. 

Am I right when thinking that if the card is for 24 months, and say if the limit is £12,000, then assume the mimimum payment is 2% of the balance, we work out the total mimimum payment = 12,000 * 2% = £240 and over 24 months it is £10 payment each month?

EDIT: I've just realised this card I am applying is 24 months, and 15K limit is to be used during the 24 months whilst I already spend about 18-20k/ year on credit cards. Definitely need to apply for another 0% interest card then. I am reading around for how to implement this note of yours: "you can circumvent this by simultaneous applications with multiple providers". I already made an application this morning and it's approved with M&S.

LL_USS

I tend to spread out spendings, for e.g. monthly volunteer contribution to pension, rather than a lumpsum. But I see the point that we still want the flexibility of being able to pay a lot out at a particular time, i.e. applying for multiple credit cards. I thought I already have too many bank cards around. I am quite nervous when most cards these days are contactless and some people can get hold of them and use them. 

Also, I have a few credit cards just sent to me without me actually asking for it (for e.g. when I opened a current account to be able to get some deals, or to have a linked saving account). If I definitely do not use them and still want to apply for further credit cards for stoozing then I should close the non-active cards, right?

Sorry I've asked a lot for a day ;-). Thank you so much.

hugheskevi

LL_USS said:

Am I right when thinking that if the card is for 24 months, and say if the limit is £12,000, then assume the mimimum payment is 2% of the balance, we work out the total mimimum payment = 12,000 * 2% = £240 and over 24 months it is £10 payment each month?

Minimum payment applies per month. It is commonly 1% of the statement balance (plus some other definitions such as minimum £5, and taking account of charges and interest but the other measures should not be relevant), but some are higher. So for a card with a £15,000 statement balance and a 2% minimum payment, the minimum payment for the month would be £300. Then the balance would reduce to £14,700 and the next month the minimum payment would be £194.

LL_USS said:

EDIT: I've just realised this card I am applying is 24 months, and 15K limit is to be used during the 24 months whilst I already spend about 18-20k/ year on credit cards. Definitely need to apply for another 0% interest card then. I am reading around for how to implement this note of yours: "you can circumvent this by simultaneous applications with multiple providers". I already made an application this morning and it's approved with M&S.

A couple of applications from a low-debt position won't matter. It is relevant if you had, say, 30% of gross annual income already borrowed across several cards. You would be approaching the point when you will start to get declines and low limits, so might want to make, say, 4 simultaneous applications to get a bigger borrowing amount.

LL_USS said:

I am quite nervous when most cards these days are contactless and some people can get hold of them and use them. 

In the case of a card being used for balance transfer, you may well not even activate the card (although some providers require this prior to transfer). The card then could be destroyed if you like as it won't be used again.

LL_USS said:

Also, I have a few credit cards just sent to me without me actually asking for it (for e.g. when I opened a current account to be able to get some deals, or to have a linked saving account). If I definitely do not use them and still want to apply for further credit cards for stoozing then I should close the non-active cards, right?

I very much doubt they were sent to you without asking, given it is a credit product. Some would argue there are merits of keeping unused cards open (eg managing used/available credit use, and keeping credit record stable), but I find it far easier to close any that I am not using.

LL_USS

Thank you very much again @hugheskevi

Am laughing at the calculation I showed in the first place. I meant I have £15K limit but not using any yet and assume I spread that usage across 24 months - which is ridiculous proposition I raised anyway.Yes if the balance is already 15K (like for me to transfer from an existing debt) then the % for minimum payment would apply on this balance of 15K. For my new card, I will right away spend a few thousands on it and I'll just have direct debit to cover the mininum payment for whatever balance I have each month for now.

I currently have no debt - always paying off my two credit cards right away every month. I am learning to stooze to make my cash work harder.

Yes I'll always make sure to have the money borrowed to use ready in the saving account ready to pay back before the due date of the 0% interest card. 

I do think I had a few credit cards that I don't remember applying for (perhaps when I applied for something else with the bank and the application included an offer for a credit card and I just ticked it - no idea). Some providers asked to close the card if it had been inactive for a long time (like House of Fraser - a long while ago). Perhaps my Barclays credit card has gone in the same way (i.e. non-active after a while). But for e.g. I can still see my Nationwide credit card on my internet banking though I have never used it (it just shows 0.00 balance). All the cards I don't use I put them away - perhaps I will do a spring clean to see what I have. After I get the new M&S 0% interest card I suppose I'll put my current active credit cards away too.

Problem of the era: too many bank cards around, too many bank accounts to keep track of, and too many pieces of information for the accounts (and much to update for our will too)......

PS: enough of learning finance today for me. I was supposed to spend today doing an outstanding piece of work for my work place and instead I've done some personal development :-). I do feel it's very worthwhile learning how to handle personal finance. It has served me well over the past decade.

Organgrinder

@LL_USS as I wake this morning to a spectacular view half paid for my our banking system I can assure you that you're doing the right thing!

I put everything on my 0% purchase cards. Food shopping, fuel, holidays, eating out. I could probably add a couple of subscriptions but I don't do that purely because I don't want the hassle of managing them and changing card provider.

You'll maximise your card in no time if you use it for all or a much of your spends as possible. Then you'll be earning interest for the life of the card, and longer still if you then move it to a new 0% balance transfer card.

Here's the result of the above in a 4.5% ISA from a calculator at www.stoozing.com over £800 from one card alone.

Credit Card Limit (pounds).............. 15000
Monthly credit card expenditure (pds) .. 1000
Purchases interest rate (%) ............ 0
Introductory period (months) ........... 24
Min Monthly Payment Type ............... Percentage
Min Monthly Payment Amount (% or pds) .. 1
Savings interest rate (AER %) .......... 4.5
Tax rate ............................... Not taxed or offset

Your Results
Stooze pot balance at end of intro ...... 15728.49
Credit card balance at end of intro .... 14850
Tax on interest to be paid ............. 0
Your Profit ............................ 878.49

[i]Created using the Slow Stoozing Calculator at www.stoozing.com. 
Reproduced on Moneysavingexpert with permission.

WYSPECIAL

LL_USS said:

Thank you @Organgrinder

I searched for card options on MSE, but now i remember I went to the option of "up to 24m"

Let me try with this one and see how it goes. The direct debit for the minimum monthly payment is from the account that receives my monthly salary so it should be fine to cover this.

I plan to keep my ISAs intact so i think I'll still use GIAs to keep the money to pay back the balance (trying to keep the interest under my tax-free allowance).

May I ask, say after 24m I pay off this amount, then I can start another round of 24m on the same card, right?

Once you've got a few cards the ones that you've previously cleared often come up with offers, especially it seems around Christmas, not usually as lucrative as initial offers when you take out a new card but often they are worth taking to extend a stooze period.

 You can bounce the same "debt" around for years and just keep paying minimum repayments.

Every time I think it's all over and I'll have to repay from an ISA some card provider seems to come up with an offer.

[Deleted User]

I am sorry but aren’t some recent posts better places in the credit card stoozing section of the forum?
This thread originally concentrated on ‘ How much to live on’ but in recent times has drifted away from that focus. I expect some to disagree but I feel I need to make that point.