0% credit card for overseas holiday and maintaining credit record?

WorstwardHo

I joined MSE specifically ask this question, so I apologise in advance for my lack of understanding and any violations of forum etiquette.

Background: I do not have a credit card, having never found it necessary and being a bit naive with regard to personal finances, despite being numerate and tech-savvy.

I pay for things using my Natwest debit card. I have a small mortgage remnant and about ￡2,000 in planned debt from Sainsburys Bank, both of which will be paid off soon. I recently paid off a 3-year, 0% hire purchase for a new motorcycle, if that is relevant. My credit score on Experian is 966; I don't track anything else. Total household income for my wife and I is about 67k. We have two teenage kids.

I'm thinking of getting a credit card to pay for plane tickets for a forthcoming overseas holiday, possibly in August 2022. I could pay for it in cash, but I am interested in the buyer's protection aspect of the credit card. Also, in 18 months or so I should be debt-free and I'm thinking that a credit card could help me maintain a credit record that may come in useful at some point.

Having had a look around the forum it seems to me that a 0% card offering some kind of rewards would be ideal. However, I live in a very rural part of the UK and the only local supermarkets are Tesco (which we use several times a week) and Aldi. There is an M&S about an hour away, but we seldom visit. Sainsburys is farther still. I use Amazon a lot for things I can't buy in local shops.

The other issue that slightly concerns me is credit limits. The cost of the plane tickets will probably be £2,500-3,000. Would the card issuer be prepared to give me a limit large enough to cover the cost of the plane tickets or am I being unrealistic?

Any comments and advice both on cards to apply for and strategies for using them gratefully received!

Thank you

Dan

[Deleted User]

With your income, a credit limit may or may not be that high initially, though some issuers are more flexible than others if you earn enough. That said, they also take debt into account which might restrict your limit. Having a credit card and using it regularly will build a good credit history (ignore the fake score, it means nothing and no lender ever sees it).

S75 doesn't replace the need to have travel insurance bought at the time of the flights though and sometimes it can not be available.

Getting a card to pay for the flights is fine if you are going to pay it off after the statement using your funds though you could use a 0% purchase card that allowed you to pay off the flights over a longer period and have the money in a savings account

Ebe_Scrooge

As above, you need to remember that S75 protection is no substitute for proper travel insurance.

However, it does give an extra level of peace-of-mind.  You don't need to pay the full cost of the tickets on credit card to gain S75 protection.  Paying just a portion (even 1p) on card, then paying the rest in cash will still afford you the same protection.  Something to bear in mind if you're only able to get a card with a comparatively low limit.

OldMoneySaver

WorstwardHo said:

I'm thinking of getting a credit card to pay for plane tickets for a forthcoming overseas holiday, possibly in August 2022. I could pay for it in cash, but I am interested in the buyer's protection aspect of the credit card.

Note that you only obtain section 75 protection of airline ticket purchases if buying them directly from the airline, rather than contracting via travel agents.

Brie

check on MSE for the eligibility criteria for cards and see what one might suit you best.  you might also want to enquire (in branch or over the phone rather than just applying) with NatWest to see if they might give you a card as they will best know your credit worthiness.  Potentially they won't be able to commit to anything of course until you actually apply. 

If you are planning on booking the tickets so soon you need to get your skates on as it will take some time to get things set up prior to your ticket purchase.

Don't forget to look out for those that have no fees for overseas travel - a credit card is a handy thing when you need to suddenly come up with the cash for an emergency, a special meal, or those dream holiday gifts!! 

WorstwardHo

My thanks to everybody for the comments so far. Clearly the situation with regard to S75 is more nuanced than I had thought.

As for card issuer, I'm sort of leaning towards Tesco as the default choice, but I had not considered Natwest (seems obvious in retrospect).

Dan

Ebe_Scrooge

WorstwardHo said:

Clearly the situation with regard to S75 is more nuanced than I had thought.

If it helps to clarify, just remember that if you buy something between £100 - £30,000 and pay even a small portion of the total cost on card, then you're covered by S75 - as long as you buy directly from the supplier, not through an intermediary.  A useful extra level of protection, but - particularly for holidays - should never be regarded as a substitute for proper insurance.  S75 will cover you for things like if the airline goes bust.  Or, if you buy something online, and the item never arrives, or if it's faulty and the supplier won't play ball.  What it won't do is cover you if you break your leg the day before you're due to fly out, and you can't go on holiday - that's where your insurance comes into play.  Essentially, S75 covers you where the "supplier has failed to fulfil their contract with you", broadly speaking.

WorstwardHo said:

As for card issuer, I'm sort of leaning towards Tesco as the default choice, but I had not considered Natwest (seems obvious in retrospect).

Your own bank is often a good idea if you have very little credit history - in the absence of any other data, they can at least see how you've managed your finances over the years.  It's not guaranteed, of course, but it's better than nothing.

Having said that, you say you've got a mortgage, credit (a loan??) from Sainsbury's, and an HP deal.  So you do have some credit history, which is a positive.  Try for a Tesco card if that's your preferred option (for the clubcard points, I'm guessing?).  But if you get declined, then try Natwest.  Up to 2 applications in a short space of time is OK, more than that and it starts to make lenders jittery (the inference being that you're desperate for credit and no-one will lend to you).

If you do manage to get a credit card, then going forwards just use it for everyday spending (food, petrol, etc.) and always pay it off in full every month when the statement arrives.  Doing this is the simplest way of building up a solid history of responsible borrowing and repayment - at zero cost to you - which is what any future lender likes to see.

Anyhow, hope this brief summary is useful :-)

cymruchris

Use the eligibility checkers directly on card providers websites - don't use comparison tools.

If you're wanting something for travel - have a look at the Barclaycard Rewards cashback card - you get a small amount of cashback on regular spend, and fee-free interest-free international use for purchases and cash withdrawals (as long as you pay your statement balance in full each month.)

WorstwardHo

I decided to go ahead with a Tesco all-round card, and was offered 0% for 12 months on purchases, balance transfers, and money transfers, 24.9% APR, and £3,900 credit limit. Overall that seems not too bad for a first attempt (apart from APR) so I accepted the offer. I will see how it goes, and if it doesn't seem to be doing what I need it to do, I can always cancel it.

Many thanks to you all for the advice.

Dan

[Deleted User]

WorstwardHo said:

 I will see how it goes, and if it doesn't seem to be doing what I need it to do, I can always cancel it.

Don't cancel it, now that you've managed to get on the ladder.  Just get another that better suits your needs.

WorstwardHo

Deleted_User said:

WorstwardHo said:

 I will see how it goes, and if it doesn't seem to be doing what I need it to do, I can always cancel it.

Don't cancel it, now that you've managed to get on the ladder.  Just get another that better suits your needs.

Ah, good point, thank you, need to be smarter about this sort of thing!