Will this look bad on my Credit Record?

Money_and_Travel

Suppose I used 80% of my Credit Card limit to buy one item (say foreign currency), then paid it off immediately the spend appeared on my card, ie. before the next statement date.

Would that go down as high credit utilisation, and look bad on my credit record?

Nasqueron

If it was paid off once it appeared and the lender allocated it to that spend, that is fine, it won't appear on the statement and unless the card issuer does live updates to CRAs, it's likely no-one would ever know

Credit utilisation is CRA nonsense related to their gimmick credit score 

MEM62

There is no point in paying it off before the statement and if you are clearing it the following month you are not using 80% of you limit.     

BoGoF

And no point buying foreign currency on a credit card if you have the cash available. Foreign currency is normally treated as a cash transaction on a credit card.

CliveOfIndia

BoGoF said:

And no point buying foreign currency on a credit card if you have the cash available. Foreign currency is normally treated as a cash transaction on a credit card.

Agreed, this would be of far more concern than the fake credit utilisation and score.

OP, with a very few exceptions, buying foreign currency will be treated as a cash transaction - so you'll be charged a cash transaction fee, and interest until the transaction is repaid.  The only time you wouldn't be charged - that I know of - is if you use an M&S card to buy currency from M&S (there may be a few other cards that have similar "deals").  But normally, foreign currency is always treated as a cash transaction, with associated fees and interest.

Money_and_Travel said:

Suppose I used 80% of my Credit Card limit to buy one item (say foreign currency)

If the foreign currency is simply a fictitious example, then you'll be fine.  For anything that's treated as a normal purchase then just clear it in full when you get the statement.  Percentage utilisation only becomes an issue if you're carrying a balance from one month to the next.  If you always clear in full, then it's only the CRAs who get their knickers in a twist about it - it has no relevance whatsoever to how a lender will view you.

Money_and_Travel

BoGoF said:

And no point buying foreign currency on a credit card if you have the cash available.

I never buy anything on my Card, that I don't have the cash to pay off, so I guess it'll be a cash purchase for my foreign currency.

I was just worried it might look suspicious, if I bought a large chunk of Euros with cash.

CliveOfIndia

Money_and_Travel said:

I was just worried it might look suspicious, if I bought a large chunk of Euros with cash.

How much of a "large chunk" are you talking about.  Yes, if you go into the Post office with £50K in used notes and ask for it to be changed into Euros, that may start ringing money-laundering alarm bells.  But if you're talking of a sum that could reasonably be expected to be holiday spending money, then you'll have no issues.

A debit card, though, is probably far easier and safer than actual cash.

And depending on where you're buying from (assuming it's a bricks-and-mortar outlet rather than online), you often need to phone up and pre-order it if it's more than a certain amount.  There's a limit to how much cash any establishment will keep on the premises - both for logistics and security reasons.

Money_and_Travel

CliveOfIndia said:

How much of a "large chunk" are you talking about.

Maybe 3 or 4 grand.

DullGreyGuy

Money_and_Travel said:

Suppose I used 80% of my Credit Card limit to buy one item (say foreign currency), then paid it off immediately the spend appeared on my card, ie. before the next statement date.

Would that go down as high credit utilisation, and look bad on my credit record?

Credit card companies only report once a month so unless you are unlucky that the report is run moments after the purchase then it won't show in your outstanding balance and so won't impact your utilisation. 

The problem is you say it will be a FX purchase meaning it will attract the cash advance fee and be shown as a cash advance in your credit history. 

Grumpy_chap

DullGreyGuy said:

The problem is you say it will be a FX purchase meaning it will attract the cash advance fee and be shown as a cash advance in your credit history. 

This all depends on the specific card.

My wife has a card where the store specifically encourages the card to be used for FX at the instore currency exchange desk.  It gets noted as store purchase plus the loyalty points are earned for store purchase, not cash advance.

I have a different card that allows overseas cash withdrawals with no fee and still earns loyalty points, but these are noted as cash advances.  Still worth doing as it gets the favourable exchange rate.

I agree that cash advance is not a good thing normally, but there can be circumstances where it makes sense.

Money_and_Travel said:

Maybe 3 or 4 grand.

I don't understand why anyone requires that amount of cash for their holiday.  Would it not be more secure to take, say, £1k cash and spend the excess / majority on credit card when at the destination?

CliveOfIndia

Grumpy_chap said:

This all depends on the specific card.

My wife has a card where the store specifically encourages the card to be used for FX at the instore currency exchange desk.  It gets noted as store purchase plus the loyalty points are earned for store purchase, not cash advance.

I suspect that's a fairly uncommon scenario.  As I mentioned previously, I do know that you can use an M&S credit card to buy currency from M&S, and you won't be charged any fees.  There may well be a few others that have a similar setup (for instance, using a Tesco card to buy currency from Tesco?  No idea, but that's just an example).  But on every other card I've got, buying foreign currency is one of the things that's specifically stated as being classed as a "cash withdrawal" type of transaction.

Grumpy_chap said:

I don't understand why anyone requires that amount of cash for their holiday.  Would it not be more secure to take, say, £1k cash and spend the excess / majority on credit card when at the destination?

I must agree with you 100% on this point.  That's what we always do - most stuff goes on the Halifax Clarity card (other fee-free cards are available, said in my best BBC voice).

Of course have a bit of cash available for taxis, tips at restaurants, the odd ice-cream, whatever.  But these days, credit cards are as widely accepted in pretty much every country as they are here.  Going back to my youth (more than a few years ago!!), you often did find problems where a lot of places wouldn't accept cards (or they'd only accept Visa, or only Mastercard).

But yep, do most of your spend on credit card.  Safer than having lots of cash lying around, plus you get the benefit of pretty much the best exchange rate you're able to get - as long as you pay in local currency and let your card do the conversion for you.