Very basic credit card terminology question

elsien

For the OP, I have three credit cards.
 One I opened because it pays cashback rewards.
The second is an affinity card so Instead getting of cashback a charity, gets a small amount. I use this one for work expenses just because it’s easier to keep those separate when I’m making a claim.
The third is the clarity card which I got for use abroad.
One  is Visa and the others MasterCard so I’m covering all the bases in case of any acceptance or technical issues.

Also as other people have said, it’s for the section 75 protection for larger purchases.

Rosenkrantz

QrizB said:

itsthelittlethings said:

There are very few 0% cards that offer 0% on purchases indefinitely.

Sure, but during the 0% period you set the DD to "minimum payment" and when you get close to the end of the 0% period you:

- pay it in full, or

- balance transfer to another 0% card (ideally at 0% fee).

Thanks for this. When you say 'balance transfer to another card,' do you mean, 'pay off the remaining debt with another card' ? 

Rosenkrantz

Wow, this is all so helpful - thanks everyone for humouring me and my basic questions! I now have a lot to think about. I'm freelance, so my income is unpredictable and irregular, which is part of the appeal of/need for a credit card, but I don't have a very high income and I've also moved around a lot (which has made it hard to save), which is possibly (?) why I've not been accepted for cards before. Hopefully I can get approved for one now.

It strikes me that one needs to be very organised so as to (eg) avoid charges once the 0% period runs out...

elsien

You don’t need to be organised at all. You just set up a direct debit for whatever amount you’re paying off, in my case all of it. Then it happens automatically.
Or you can set the direct debit for a lesser amount, knowing that it will then start to accrue some interest. 

Or at the end of the interest free period you can try to balance transfer to another card, which basically means yes shifting the debt from the one card onto a new one ideally with a new nought percent interest period, 

The organised bit comes with knowing your budget and not over spending on it so you have got the money to do that.
 Or if you’re using it for bigger purchases, budgeting for them in advance where at all possible instead of simply whacking them on the card, because that is how people get themselves into debt. 

prettyandfluffy

Rosenkrantz said:

Wow, this is all so helpful - thanks everyone for humouring me and my basic questions! I now have a lot to think about. I'm freelance, so my income is unpredictable and irregular, which is part of the appeal of/need for a credit card, but I don't have a very high income and I've also moved around a lot (which has made it hard to save), which is possibly (?) why I've not been accepted for cards before. Hopefully I can get approved for one now.

It strikes me that one needs to be very organised so as to (eg) avoid charges once the 0% period runs out...

Having previously been hopeless at managing money, I turned over a new leaf and this is how I do it. As an example, I got a credit card with 0% for 12 months and used it to pay for some unexpected work on my car.  I keep track of my money on a spreadsheet* but a notebook etc would be fine too.  I made a note of the balance on the card and when the 0% period ends, then I pay a proportion every month so it's cleared by the end of the 0% period.  Alternatively I could put that money in a savings account and pay the minimum every month and just clear the balance at the end of the 0% period.  
*The beauty of the spreadsheet, for me, is that it doesn't require a lot of input from me once set up.  I copy the previous month's data into a new sheet, amend dates and amounts and that's about it.  Plus I can add notes. Takes 20-30 mins at the start of the month and then I tick things off as they're paid.

35har1old

Rosenkrantz said:

km1500 said:

If you don't pay off the balance spent in that month you will get charged interest on everything you spent that month

So if your statement balance is £1000 and you pay off £999 then you still get charged interest on the £1000 of spending - you have to pay it all off to avoid interest

thanks. Ok, so, next silly question - why would someone use a credit card for doing this and not just a regular debit card?

You get more protection if there's a dispute
Plus there's a few out there that give you cash back or rewards
With a Debit card the payment is taken nearly instantly 

Nasqueron

surreysaver said:

Brie said:

QrizB said:

itsthelittlethings said:

There are very few 0% cards that offer 0% on purchases indefinitely.

Sure, but during the 0% period you set the DD to "minimum payment" and when you get close to the end of the 0% period you:

- pay it in full, or

- balance transfer to another 0% card (ideally at 0% fee).

or you could pay off a set amount each month to ensure the full balance is cleared over the 0% period.  So if you spent £1200 and set the payment to £100 then the full balance would be cleared in a year.  That's a nice thing if you are budgeting.   

You'd obviously have to make sure the fixed amount covers the minimum payment if doing this.
But if you've got a 0% credit card, surely it makes more sense to make full use of the 0% period and only pay the minimum payment?

It makes more sense but at the same time, some of us are just that bit more nervy!

I do my BT cards as balance / number of months = DD amount - I don't foresee any issues that would prevent me from putting all the cash in the bank and paying the minimum but at the same time, I like the security of the balance going down just in case. If, say I was to lose my job then I would have less to pay back and the minimum payments would be lower if I had to reduce outgoings. I still stooze, with thousands in debt on 0% with the money in savings but it's just that safety net of having more of the balance paid down.

Jami74

Rosenkrantz said:

thanks. Ok, so, next silly question - why would someone use a credit card for doing this and not just a regular debit card?

For me it is so I have one payment come out of my current account each month for all my spending, I know in advance how much it will be and when. Much easier than loads of little transactions (especially if I go to multiple shops in one shopping trip). 

wiseonesomeofthetime

If this is your very first credit card, you will have done very well to be offered a 0% purchases card in the first place.

Read the T&Cs for each card you research to ensure you fully understand what they are offering. I have seen reports on here that MBNA 0% purchases card may only cover purchases made within x number of days of opening the account. While this is unusual, in my experience, it is obviously out there still.

Good hunting and good luck!