New to stoozing

Henno

Ok, so I've never had a credit card before, but I've been looking into this stoozing for a while and feel it might be worth a go.

I do have a mortgage, which has 3.5 years left of a 5 year fixed term. Will doing this affect me when remortgaging in the future?

Also, if I do get a card, how do you pay off the minimum each month? Is it automatically done by direct debit for example?

Thanks!

cymruchris

Henno said:

Ok, so I've never had a credit card before, but I've been looking into this stoozing for a while and feel it might be worth a go.

I do have a mortgage, which has 3.5 years left of a 5 year fixed term. Will doing this affect me when remortgaging in the future?

Also, if I do get a card, how do you pay off the minimum each month? Is it automatically done by direct debit for example?

Thanks!

If you've never had a credit card before, you may find that you don't get offered the best cards with the best offers at the best rates initially. If you have a fairly 'thin' credit history you'd likely also not get the highest limits.

Using eligibility checkers directly on card providers websites might give you an indication of success.

If you do get a card, and it's well-managed, then that won't affect any future mortgage application.

Credit card payments are usually recommended by direct debit, and if you're just buying 'stuff' should be for the full payment if you can afford it, and if you're on a promo, the minimum payment with the funds available to pay it back when the promo rate ends.

Bear in mind to get a 'money transfer' there's usually a fee - and the duration of the promotion period might impact on how profitable the move might be. (Or not as the case may be)

Brie

Yes as already stated - always set up a DD payment.  This should be at least for the minimum but could be for the full balance if you are only using the card for purchases without any kind of deal.

If you do have a deal how you do the payments will depend on the deal. 

If it's a 0% on purchases for 18 months or similar then you want to set the DD for the minimum but set aside enough each month to ensure you can pay off the entire balance at the end of the 18 months to avoid paying interest.  

If it's a 0% either balance transfer (which means from another card) or money transfer (putting money into a bank account) check the T&Cs carefully.  The majority of cards will charge you interest on any purchases you make if you haven't paid the balance in full - which you won't want to do if you've done a transfer.  So best to keep things completely separate.  This is why some regular stoozers (like me) have a card for normal shopping transactions that they clear every month and a separate card for transfers that isn't used for anything else.  Also means you can leave your stooze card at home rather than stuff out your wallet and take the chance of using it by accident.

PixelPound

As all initial 0%  offers will be less than 3.5 years then if the card is managed correctly (DD for at least min payment + £1) and the balance cleared before the initial offering ends, shouldn't be a problem. In fact you'll have a CC that shows you are okay managing credit.

The main problem new stoozers find is the discipline to ensure they clear the balance in full before the end. For example getting a 0% purchase card and not putting the equivalent spend into a savings account for when time comes to clear the balance at the end of the initial promo.

Of course as has been said, with a thin credit file, you might get a low limit (say under £1k) and/or maybe a short promo period (6 or 9 months). So any returns from interest might not be great (say a few £10's).

Though as an initial test of how it works, might be okay if you think the reward is worth the effort.

Henno

Thanks for your replies.

1 question which may sound stupid but I don't quite understand. Why would you clear a balance in full if you are trying to spend in order to put the money into a savings account for interest? Surely you'd only clear the balance in full at the end of the term?

daivid

If you are lucky enough to get a decent 0% card then it would be a case of paying the minimum each month, and shifting the difference into the highest interest savings you can - ensuring the money will be available to repay just before the 0% ends. If you cannot get a decent 0% card then it may be worth taking the best available and using it for regular spends, repaying in full each month. That way you'll build a positive history to open the options of better cards perhaps 6mths/a year down the line.

cymruchris

Henno said:

Thanks for your replies.

1 question which may sound stupid but I don't quite understand. Why would you clear a balance in full if you are trying to spend in order to put the money into a savings account for interest? Surely you'd only clear the balance in full at the end of the term?

I mentioned if you’re just buying stuff with a regular credit card pay in full - but if you’re in a promo period - use the minimum payment ensuring you have the money to settle the balance once the promo expires. 

amanda1024

Use the eligibility checker (https://www.moneysavingexpert.com/eligibility/credit-cards/search/) to check which cards you're likely to be accepted for - if you're looking to stooze choose 0% spending from the drop-down. Only apply for cards you're likely to get - lots of failed credit applications will impact your credit rating. Once you've got a card there are usually a couple of options for direct debit; for stoozing you want 'minimum repayment'. Make sure you keep an eye on this - if you miss a payment it's likely the 0% deal will be cancelled. And keep a close eye on the end date of the deal, making sure you're ready to pay off the balance. If you're new to this it might be safer to put the money you'll be using to pay off the balance in an easy access savings account rather than locking it away in a fixed term deal - interest rates for easy access are still pretty decent. 

daivid

amanda1024 said:

Use the eligibility checker (https://www.moneysavingexpert.com/eligibility/credit-cards/search/) to check which cards you're likely to be accepted for 

Then check providers own eligibility checkers. Nothing wrong with the MSE search as a start point (MSE Credit club too), but the eligibility results can be wildly inaccurate. I have been rejected for cards despite 90% eligibility (on MSE) and accepted despite 0%, others on here have reported been rejected at 100% pre-approved. Using providers own eligibility I've never been rejected.

Altior

Personally I would look toward closing off a stoozing session at least a few months before a mortgage application. So you have a few years to play with. If you renew with the same lender then it is not relevant, but you won't know the deals on the table in advance.