Can I pay and clear balance and repeat a few times in order to pay a big amount with a credit card?

taihai

Hi There,

I am new to MSE Forum and very excited to see so many live threads and discussions going on, which feels great.

I am relatively new to credit card, though been using Barclaycard for normal expenses for a couple of years now. But that's it. Recently I have been exploring different ways to utilise credit cards (to make life easier and enjoy more?), as I have three big payments each year for the next couple of years, and each payment is on the level of £5k, which is a lot.

I was just thinking, would it be reasonable to apply for a new credit card e.g. BA Premium Amex, to pay this whilst collecting the bonus points, and when £10k is hit I can also get a companion ticket? Or, is there any better way to do it? One caveat though is BA Premium Amex comes with a £195 annual fee, and also I would imagine the starting credit limit is on the level of ~1k pounds (or perhaps I can ask for more right from the start? Ideas?), so that means every time I need to pay that £5k I would need to make five payments in order to hit £5k. Intuitively, I guess I would need to pay £1k, debit £1k into the credit card to clear the balance, and pay another £1k and debit £1k, and repeat this process five times (on the same day?) in order to pay the total £5k. Would it work? If yes, that's great; If not, what would you suggest?

Many thanks for your time, and would love to hear your thoughts. 
Tidus

jay1804

taihai said:

Hi There,

I am new to MSE Forum and very excited to see so many live threads and discussions going on, which feels great.

I am relatively new to credit card, though been using Barclaycard for normal expenses for a couple of years now. But that's it. Recently I have been exploring different ways to utilise credit cards (to make life easier and enjoy more?), as I have three big payments each year for the next couple of years, and each payment is on the level of £5k, which is a lot.

I was just thinking, would it be reasonable to apply for a new credit card e.g. BA Premium Amex, to pay this whilst collecting the bonus points, and when £10k is hit I can also get a companion ticket? Or, is there any better way to do it? One caveat though is BA Premium Amex comes with a £195 annual fee, and also I would imagine the starting credit limit is on the level of ~1k pounds (or perhaps I can ask for more right from the start? Ideas?), so that means every time I need to pay that £5k I would need to make five payments in order to hit £5k. Intuitively, I guess I would need to pay £1k, debit £1k into the credit card to clear the balance, and pay another £1k and debit £1k, and repeat this process five times (on the same day?) in order to pay the total £5k. Would it work? If yes, that's great; If not, what would you suggest?

Many thanks for your time, and would love to hear your thoughts. 
Tidus

The minimum credit limits for UK Amex cards are £700 however many people get way more than that depending on their circumstances at application.

Yes, if you make a card payment to your Amex account the balance updates immediately allowing you to spend that amount again.

One thought is amex isn't accepted by everyone, so check that the company you want to pay accepts amex. Additionally, does the company allow you to spilt your payments into smaller amounts, incase your limit is big enough.

taihai

Hi @jay1804,

Many thanks for your reply. Much appreciated.

You have raised a couple of key points there. Regarding making a card payment to Amex account the balance updates immediately, my only experience with credit card, which is Barclaycard, is that it normally takes a while (normally 1-2 days?) to clear the amount I pay into the credit card in the card balance, and it certainly doesn't update immediately when you debit into the credit card. But perhaps different credit card providers might have different processing speed, but just wanted to make sure that Amex does work like what you said? I think it's quite key to me that the £5k would need to be paid on the same day.

Any ideas what dictates the credit limit Amex would give you right from the get-go? I know people can request a higher credit limit every six months or so once they have started using the card, but I am curious as to how much Amex would give from the start.

And thanks for the heads-up - the company I need to pay accepts Amex so that's not a problem, and yes they are ok with splitting the payments into a few chunks.

Best regards,
Tidus

floppydisk1

your experience with Barclaycard is correct as Visa or MasterCard are not  directly issuing credit cards so every payment you make goes  from your bank to your credit card card provider or account and once credited, visa  or mastercard update their systems and whole process takes couple of days.
 Amex issue their own card - it is a payment system as well as your direct lender -so every payment you make can be ( and is ) credited immediately. As soon as you pay, your balance and credit limit is updated. Only Amex can tell you what your credit limit going to be, from experience  and their average customer / cardholder their credit limits are normally quite generous. They also issue charge cards - where in theory at least - is no credit limit at all, case by case they can authorise pretty much whatever you can afford to pay back. You can check in online account in statement, there's  check spending power option that indicate how much you can spend. Charge card has normally higher limit than credit card but you won't have S 75  protection. Having said that Amex are pretty good with their own refund or insurance scheme that can be used instead of S75 and in wider range of situations.

dcfc67

Amex gold card could also be an option, free in year 1 then £140 a year after that and 2 free lounge  passes for airport each year.

taihai

Hi @floppydisk1,

Thank you for your reply. That's very helpful. Didn't appreciate Amex is both a payment network and direct lender. I am more tempted now to get an Amex now and would like to give it a try.

Speaking of fees, BA Amex Premium Plus has £195 annual fee and as I have regular big payments to make in the next three years and that can justify paying this annual fee whilst collecting bonuses and getting a companion ticket, I am not sure what I can do three years later. I may want to cancel the card perhaps given there's no need to make big payments any more. I think quite a few websites say cancelling the credit card would lower your total credit limit hence increase your utilisation ratio, and that would impact your credit score negatively. However, £195 annual fee v.s. lower credit score, I am not entirely sure which one I should pick. Or, perhaps I am overthinking it too much/too early at this stage?

Best regards,
 

taihai

Hi @dcfc67,

Thanks for that - that's certainly something to think about.

Best regards,

maxximus75

Have you checked your eligibility for this card on the Amex website?

By doing so will show you the chance of you being accepted for any of their cards... that maybe a sensible place to start and work from there?

The eligibility check only does a soft search against your credit report. 

As always, there is the possibilty of decline even with 10/10 acceptance after a hard credit search.

Amex is generally pretty generous with credit limits.  Their website states you can ask for a credit limit increase/decrease at any time.  I think the six month mark, is a good idea as it gives them a history of your spend/repayment pattern.

pjread

for what it's worth, when I got first got my Amex it was my highest limit, can't recall exact figures and not really relevant but was maybe 50-70% higher than I'd had previously.  I'd be surprised if many people were taking out cards with noticeable fees and £1k limits. 

jay1804

taihai said:

Hi @jay1804,

Many thanks for your reply. Much appreciated.

You have raised a couple of key points there. Regarding making a card payment to Amex account the balance updates immediately, my only experience with credit card, which is Barclaycard, is that it normally takes a while (normally 1-2 days?) to clear the amount I pay into the credit card in the card balance, and it certainly doesn't update immediately when you debit into the credit card. But perhaps different credit card providers might have different processing speed, but just wanted to make sure that Amex does work like what you said? I think it's quite key to me that the £5k would need to be paid on the same day.

Any ideas what dictates the credit limit Amex would give you right from the get-go? I know people can request a higher credit limit every six months or so once they have started using the card, but I am curious as to how much Amex would give from the start.

And thanks for the heads-up - the company I need to pay accepts Amex so that's not a problem, and yes they are ok with splitting the payments into a few chunks.

Best regards,
Tidus

I have a barclaycard too, normally if you make a card payment the available credit updates within 2 hours.  However with amex, the majority of the time it updates the available credit within seconds. 

As for the starting credit limits it depends on the person. But i've seen  people get 1.5K, 5.5K 8.3K 8.9K, 15K, it just depends on the circumstance at application. 

jay1804

dcfc67 said:

Amex gold card could also be an option, free in year 1 then £140 a year after that and 2 free lounge  passes for airport each year.

I agree with getting the amex gold first, with a referral link you can get 32,000 MR bonus points. Additionally you could then apply for the BA Premium Amex and get welcome bonus as well. Just from hitting the minimum spends on both cards thats 64,500 Avios.