First Credit Card, 0% Interest Period Coming to An End - What Now?

meatballgingersnaps

Hi all,

I was hoping for some advice - I got my first credit card last year. I have been following all of the best practice guidance, and have never over-spent or been late with a repayment. I usually buy what I need and then pay it off straight away, using the card just to build up a positive credit score and so on. However, I'm now coming to the end of my interest-free period, and I have realised that I don't know what the next steps are. I know that I could pay off the card in full, cancel the account and then open a new interest-free card to continue with what I have been doing. However, I'd prefer to be able to transfer the balance remaining on the card to a new card using a 0% balance transfer type deal. I then want to be able to just continue spending on that card and repaying it as normal. 

My question is, does anyone know whether this is a "thing" that can be done? I'm sorry if it seems such a basic question. I don't have any family, and I wasn't raised by anyone I can ask. Everything I have learned about trying to manage money sensibly has pretty much come from the internet and Martin Lewis in particular!

Thanks in advance for reading. 

CliveOfIndia

Transferring the remaining balance to another 0% card is certainly an option - assuming you can get accepted for another card.  However, you will very likely have to pay a balance transfer fee.

For that reason, if you have the funds available to repay the card in full before the 0% deal expires, that is likely to be the best option from the point of view of saving money.

Another option is to transfer the balance then put an equivalent amount of money into a savings account, where it can earn interest until you need it to repay the balance on the new card when that 0% deal expires.  Just check that you'll earn more interest on your savings than what the BT fee will cost you.  And remember that, even if you're on a 0% deal, you'll still need to make the minimum payment to the card every month.

But if you're interested purely in building up your credit history (ignore the meaningless score), then the best option is to repay the balance when the 0% deal expires, carry on using the card for routine purchases and repay in full every month.  Long-standing, well-managed lines of credit are viewed favourably by lenders.

molerat

If you pay off the card in full each month you don't need an interest free card as the interest is waived if you do that.  It is only if the card is not paid off in full by the due date on the statement that interest is charged.

Nasqueron

meatballgingersnaps said:

Hi all,

I was hoping for some advice - I got my first credit card last year. I have been following all of the best practice guidance, and have never over-spent or been late with a repayment. I usually buy what I need and then pay it off straight away, using the card just to build up a positive credit score and so on. However, I'm now coming to the end of my interest-free period, and I have realised that I don't know what the next steps are. I know that I could pay off the card in full, cancel the account and then open a new interest-free card to continue with what I have been doing. However, I'd prefer to be able to transfer the balance remaining on the card to a new card using a 0% balance transfer type deal. I then want to be able to just continue spending on that card and repaying it as normal. 

My question is, does anyone know whether this is a "thing" that can be done? I'm sorry if it seems such a basic question. I don't have any family, and I wasn't raised by anyone I can ask. Everything I have learned about trying to manage money sensibly has pretty much come from the internet and Martin Lewis in particular!

Thanks in advance for reading. 

If you are buying something on the card then immediately paying it, such that your statement is empty, it will look like the card is not being used which defeats the purpose of having a credit card to build a credit record as there is effectively no use from it. If you mean you pay for something and wait until the statement and pay in full by the due date, that is fine. Credit cards pretty much all work the same way - buy, get statement, pay by due date and you pay no interest and get a positive history (ignore the fake score, nobody but you sees it).

Gandalf644

Just to add, if you do get a '0% Balance Transfer Card' the conventional wisdom is not to put any normal spending onto this card. Most banks will charge you interest if you buy something on this card (it is in the usual small print).

Have one Balance Transfer card (for the balance transfer only) and another card for day to day spending. Fully clear the spending card on time every month and no interest is payable.

Jami74

meatballgingersnaps said:

Hi all,

I was hoping for some advice - I got my first credit card last year. I have been following all of the best practice guidance, and have never over-spent or been late with a repayment. I usually buy what I need and then pay it off straight away, using the card just to build up a positive credit score and so on. However, I'm now coming to the end of my interest-free period, and I have realised that I don't know what the next steps are. I know that I could pay off the card in full, cancel the account and then open a new interest-free card to continue with what I have been doing. However, I'd prefer to be able to transfer the balance remaining on the card to a new card using a 0% balance transfer type deal. I then want to be able to just continue spending on that card and repaying it as normal. 

My question is, does anyone know whether this is a "thing" that can be done? I'm sorry if it seems such a basic question. I don't have any family, and I wasn't raised by anyone I can ask. Everything I have learned about trying to manage money sensibly has pretty much come from the internet and Martin Lewis in particular!

Thanks in advance for reading. 

Credit cards seem really complicated until you get the hang of them and they don't come with easy to understand instructions so I'll try and explain it.

1. Spend on your credit card.
2. The credit card will send you a statement (find it on the app/online). Set up a direct debit to pay the statement in full.
3. Let the direct debit pay the credit card. You won't get charged any interest if your direct debit is set up to pay off the full statement balance (and you paid the full balance last month). If you don't pay the full amount on the statement (don't worry about what you've spent since, that will show on next months statement), then you'll start getting charged interest. 

The credit reference agencies update about once a month and will show a monthly balance each month and how much you pay off each month. This is your credit history. 

If you are 'carrying a balance' that means you haven't been paying off your credit card in full (either as you go or monthly). If you can't afford to pay what you owe on it, then you try and get a 0% balance transfer card so you've got longer to pay it before you have to start paying interest. Sometimes people do this on purpose to spread the cost of a big purchase.

TLDR: Spend on the credit card, each month check the statement and make sure you pay the full amount on the statement by the due date specified. You won't pay interest.