Credit card upgrade to rewards card

pw007

I currently have Barclays platinum credit card with zero balance on it, I just checked my credit score on Halifax and it’s says it’s dropped 11 points because I haven’t been using my full credit allowance. I was looking to change to a rewards card and was wondering which one would be best? I looked at the Amex gold but can’t see me spending the 3k in 3 months to get the bonus points. So was looking at these instead

amex everyday cash back 0.5 cash back but not available everywhere and not great on foreign travel (going to New York next year)

Barclaycard rewards only 0.25 cash back but good on foreign travel. 

Any advice on these or any other cards would be appreciated 
Thanks 

MorningcoffeeIV

pw007 said:

I currently have Barclays platinum credit card with zero balance on it, I just checked my credit score on Halifax and it’s says it’s dropped 11 points because I haven’t been using my full credit allowance. I was looking to change to a rewards card and was wondering which one would be best? 

Always ignore your credit score. If using all your available credit increased your score, why would you do it when it would make you look far more risky to lenders? 

Only ever spend what you need to and always clear in full wherever possible. 

If you feel you need a rewards card, Amex cashback is a solid choice, but you may find something that suits you better points-wise, if you have an affinity to certain brands, or airlines, for example.

CliveOfIndia

As above, ignore your score - it goes up and down in response to the ambient temperature.  And it has no bearing on how a lender views you - not least because they can't even see it.

There are several credit cards that give you cash-back, but there are also lots that give you "points" - whether Nectar, Airmiles, ClubCard, Avios, whatever.  Cold hard cash is obviously always nice to receive, but you may find that some other form of "points" are actually of greater value to you.

There's an article here that may give you a good starting point: https://www.moneysavingexpert.com/credit-cards/best-credit-card-rewards/

But if you Google for "Rewards Cards" or similar you'll find many to choose from - as I say, it's really a case of what form of rewards would be most beneficial to your personally.  Airmiles are not much good if you hardly ever fly, Clubcard points are not much good if you don't shop at Tesco or any of their "clubcard partners".  But for other people, these particular rewards may be quite useful, maybe worth even more to some people than a relatively small amount of cashback.

pw007

Thanks for the replies.  I looked into points for rewards, avios I don’t do enough travelling mad I have a Tesco club card and nectar card that’s why I was looking more at the cash back options. I know that credit scores aren’t the be all and end all but I thought if I have to use a credit card I might as well get something for my spending
Thanks

CliveOfIndia

pw007 said:

credit scores aren’t the be all and end all

Not only are they not the be all and end all, they are utterly meaningless - as far as a lender is concerned.  They are nothing more than a marketing gimmick used by the Credit Reference Agencies to try and sell you stuff you don't need.  A lender will credit score you - but they do this by using their own internal systems, using their own (highly confidential) criteria which are tailored to their own preferred target customer base.  The generic score you see on your report means nothing at all.

pw007 said:

I thought if I have to use a credit card I might as well get something for my spending

There's nothing to say you have to use a credit card.  But if used correctly (i.e. use it for routine spending and always pay off in full every month) then it does build up a good credit history, which is what a lender likes to see - proof that you can use credit responsibly, borrow within your means and always repay what you owe.

And you're right - if you are going to use a credit card, then you may as well get rewarded for it if you can

pw007

 I wasn’t that worried about the score because it is very good it was just the fact it said i wasn’t using my full allowance, I haven’t used my card in a while so thought it was that. Tbh I’ve been loooking to move to rewards card for a while 

CliveOfIndia

pw007 said:

 I wasn’t that worried about the score because it is very good

At the risk of sounding like a stuck record, ignore your score, it means nothing!  Seriously, lenders don't even see it, pay no heed to it.

pw007 said:

it said i wasn’t using my full allowance

Likewise, since the CRAs aren't the ones lending you money, it matters not one jot how they view you.

Don't get me wrong, CRAs provide a valuable service to lenders, which is how they make their money.  They provide very little benefit to the consumer (i.e. you and I).  Certainly you should check that the data they hold is factually correct, but aside from that you can pretty much ignore anything else they "advise" you to do to improve your comedy score.

MrFrugalFever

If looking at a rewards credit card, I would suggest you try to work out exactly HOW you wants to benefit from the rewards. So for example, I have 2 x rewards credit cards (Amex Gold and Barclaycard Avios) because I travel more than the average person although not as much as i'd like and I want to have cheaper flights, money off hotels and cabin class upgrades. 

I also have several credit cards which provide 0% foreign exchange fee's and take real time visa/mastercard bank interchange rates at point of sale - saving up to 3% per transaction of fees when purchasing in a foreign currency.

All bar 1 credit card I have has a specific purpose to me and my needs so I make them work for me.

The bulk of my spending which is often £1-1.5k per month is done via AMEX and BC Avios (I try to put everything on the CC's that is possible).

lr1277

You mention you think you are penalised for not using your full credit allowance.

From what I have read on this site and other sites, lenders don't like to see borrowers use up their full credit limit.

I don't know what a good target is for percentage of limit used, but I try and stay below 30% of my credit limit. I have occasionally gone over my self-imposed target, but that is when I had a big spend and I knew where the money was coming from to pay it off on the next statement.

I don't know how % utilisation affects credit score (not that it is important) but lenders don't like to see you use too much of your credit limit as that indicates you are in financial trouble.

As an aside, Amex is widely accepted in the US. But as you say there is the fx fee.

When I was looking for a rewards card, I looked at were I spent most of my money which was at the supermarket, after my rent. I got the card from the supermarket. Benefit was that not only did I get points and vouchers at that shop, I got more points and hence more supermarket vouchers for every place I used the card.

The other way you can decide on a particular rewards card:

If you get hotel points, you can reduce the cost of a hotel stay with points. Which might be useful in NY. You can get a card specifically for that hotel chain, or get an Amex that awards points and you can move the points to a few popular hotel chains. I don't know the number of points you need to reduce the cost of a hotel stay, but it is worth investigating. You could try some dummy bookings for likely hotels in NY either on a cash only or cash and points basis.

I think the same with airlines.

And as you know there is probably a card for your preferred supermarket.

HTH

Edited to add: some serious points collectors don't mind using the Amex Gold to spend in a foreign currency because you get double the number of points if you spend in a foreign currency. Also their employer might be paying for their work related expenses so they don't care about fx fees.

BEWARD: some rewards cards have annual fees so you need to work out if the rewards outweigh the fees.

CliveOfIndia

lr1277 said:

From what I have read on this site and other sites, lenders don't like to see borrowers use up their full credit limit.

I don't know what a good target is for percentage of limit used, but I try and stay below 30% of my credit limit. I have occasionally gone over my self-imposed target, but that is when I had a big spend and I knew where the money was coming from to pay it off on the next statement.

I don't know how % utilisation affects credit score (not that it is important) but lenders don't like to see you use too much of your credit limit as that indicates you are in financial trouble.

The percentage utilisation thing depends a lot on how you use your card.  Each lender will have a different view, of course, and will assign a different weighting to that particular data point.

But generally speaking, using a high proportion of your available credit is viewed negatively if you don't repay in full every month.  The obvious inference being that you're using your credit card to buy things you can't afford, and are relying on credit to fund your lifestyle (whether through choice or not, that's immaterial in a lender's eyes).  Quite aside from the fact that you'll be paying a lot of interest by doing this (unless you've got a promotional rate running).

But if you always pay in full every month then it's less of an issue.  The lender doesn't really care how much you're spending on the card, so long as they're always getting their money back, and it doesn't look like you're relying on credit.  In fact, there's an argument to say that spending a lot on your card makes them view you more favourably, since they're making more money from you (indirectly, by means of the fee they charge the retailer every time you use your card).  Though please don't take this as meaning you should ever spend more on your card than you'll be able to repay !!

WillPS

pw007 said:

Thanks for the replies.  I looked into points for rewards, avios I don’t do enough travelling mad I have a Tesco club card and nectar card that’s why I was looking more at the cash back options. I know that credit scores aren’t the be all and end all but I thought if I have to use a credit card I might as well get something for my spending
Thanks

Don't be so quick to write off Avios - I don't fly at all but I still have the Avios Barclaycard, the points are automatically converted to Nectar giving me an effective earning rate of 0.66%, which is unbeatable as an 'all spend' non-Amex credit card rate.

Almost 2.5x the rewards rate of the 'Rewards' Barclaycard.