Minimum Spending – Credit Cart
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Danodo
Posts: 1 Newbie
in Credit cards
Hello,
I'm interested in building my credit score as I was hoping to get a mortgage in a few years. I live quite frugally, have a secure job and own my home. However I was htinking of getting a credit card to boost my score. Since my expenses are quite low due to my lifestyle, I was thinking about whether Credit card companies impose 'penalities' for those who don't spend 'enough' per month. If for instance my credit limit was £1200 per month, would I have to spend a minimum of £300 on the card. I realise it varies from company to company but i was hoping for advice both on best credit card for building credit and whether there is a minimum spend on the card itself per month.
I understand at the end of each statement period, you have to pay off in full otherwise you'll incur penalties like 34% APR but what if you spend only £100 per month on it and you pay off in full. Will the CC company tell you to go away?
I'm interested in building my credit score as I was hoping to get a mortgage in a few years. I live quite frugally, have a secure job and own my home. However I was htinking of getting a credit card to boost my score. Since my expenses are quite low due to my lifestyle, I was thinking about whether Credit card companies impose 'penalities' for those who don't spend 'enough' per month. If for instance my credit limit was £1200 per month, would I have to spend a minimum of £300 on the card. I realise it varies from company to company but i was hoping for advice both on best credit card for building credit and whether there is a minimum spend on the card itself per month.
I understand at the end of each statement period, you have to pay off in full otherwise you'll incur penalties like 34% APR but what if you spend only £100 per month on it and you pay off in full. Will the CC company tell you to go away?
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Comments
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No, there's no minimum spend involved, and most cards are paid off in full every month, so go ahead.
And as usually stated, don't fixate on a credit score that's just a made-up number invented to sell services from credit reference agencies - just concentrate on building a solid credit history, by using credit responsibly and paying each statement off in full.
Read https://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards/ (ignore the pejorative reference to 'bad'!), including links to check your credit files and to the eligibility checker to see which cards you're likely to be able to get.0 -
Forget about the meaningless credit score.Hello,
I'm interested in building my credit score as I was hoping to get a mortgage in a few years. I live quite frugally, have a secure job and own my home. However I was htinking of getting a credit card to boost my score. Since my expenses are quite low due to my lifestyle, I was thinking about whether Credit card companies impose 'penalities' for those who don't spend 'enough' per month. If for instance my credit limit was £1200 per month, would I have to spend a minimum of £300 on the card. I realise it varies from company to company but i was hoping for advice both on best credit card for building credit and whether there is a minimum spend on the card itself per month.
I understand at the end of each statement period, you have to pay off in full otherwise you'll incur penalties like 34% APR but what if you spend only £100 per month on it and you pay off in full. Will the CC company tell you to go away?
If you want a credit card then get one. There are no penalties, no minimum spend and you won't be told to go away. However, there is no reason why you should not spend all or most of your regular budgeted expenditure (groceries, petrol, travel costs to work etc) on the card then set up a direct debit for the full amount and keep the money in your bank account, improving your average balance and hopefully earning you interest for an extra month.
You say you own your own home. Does that mean you already have a mortgage or own it outright without a mortgage? If so, are you sure your credit score actually needs improving? What do you want to improve it for? What is your objective? What financial product are you aiming for? Most homeowners with secure jobs already have established credit profiles. Presumably you have utility accounts, a mobile phone contract, a current bank account etc? What is this mortgage you hope to get in a few years time? Are you looking to re-mortgage, buy a second home, buy to let. move into a bigger property?
As for which card, you don't come across as a 34% APR card type of person. Suggest you try to obtain a mainstream card from the bank where you have the current account that your earnings from your secure job are paid into in the first instance.0 -
Forget about the meaningless credit score.
Yeah, I followed this advice & watched mine go to zero by missing payments and telling them I was never going to pay the money back. It was loads of fun, it's all just meaningless right?
On a more serious note, it's true that nobody else sees that number but that doesn't make it meaningless because it is a reflection of your credit file. A certain score doesn't mean you will or won't get a loan, but higher numbers are generally an indication of a better credit history than lower numbers (using a broad definition of better).
Black and white thinkers will say it's meaningless though.0 -
A certain score doesn't mean you will or won't get a loan, but higher numbers are generally an indication of a better credit history than lower numbers (using a broad definition of better).
Black and white thinkers will say it's meaningless though.
When you apply for credit you are assessed on the credit risk that the provider is willing to take on at that point. It will change over the year. As targets are hit, they will tighten up. Untill marketing says "WE WANT MORE"
Sure things like missing payments etc will effect your application. But most applications are 1st approved by systems. If they are happy you get a approval. (subject to possibly being reviewed) If it is not sure, than it will be refereed to a real person to delve further and see it they are that desperate for a new customer.
As to the OP.
A Credit card is handy for large purchases to give the extra protection of CCA.
Many people hold one and never use them. Only to find after a year or so that it will not work... If you get one then as other posts use it for usual spending and pay in full.
Might be better to apply with who you bank with now to keep things simple.Life in the slow lane0 -
I think it is useful to have a credit card and lenders like to see well managed credit so by all means use it and pay it off in full each month. We have a cashback credit card which gives us cashback on supermarket spends and fuel. If it is paid off in full you pay no interest. No credit card company is likely to turn you away for not using it frequently or for large amounts. There is no minimum spend. I sometimes don't use mine at all for a few months and certainly you will not incur penalties.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0
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I could go along with that. I have in the past suggested that a higher credit sore is an indication that the credit files do not contain any (seriously) adverse information while a lower credit score is an indication that everything in the credit files is not as good as it should be.it's true that nobody else sees that number but that doesn't make it meaningless because it is a reflection of your credit file. A certain score doesn't mean you will or won't get a loan, but higher numbers are generally an indication of a better credit history than lower numbers (using a broad definition of better).
Such opinions are unpopular on these forums however and no doubt the apparent anomaly whereby bankrupts are given 999 credit scores which is used to justify the 'credit scores are meaningless' school of thought will soon be pointed out.0 -
The credit scores are an excellent indicator on whether the credit agency in question thinks it can sell you a pointless product to help with your pointless score. This score can, however, broadly indicate whether you need to care about your real credit history.
If you go to the "Credit file and ratings" section there is a thread about what your credit score really means, and you will soon understand what matters and what doesn't.
Lenders don't see the score, only your history (aka your pattern of managing money), and different lenders look for different things. Subprime credit providers like to see that you're a spendaholic who "needs" this credit, so they can charge you lots of interest. Others might prefer someone who is very low risk.
Good: uses and repays credit regularly INCLUDING periodic bills like internet, phone, monthly insurance, car repayments, credit cards, loans, mortgages, providing always paid on time and in full.
Good: has 5-10 bank, credit, ulility accounts that have been open for a long time, has a long-established stable home address, is on the electoral roll.
Good: all the accounts show all the same matching address and personal details.
Neutral but bad: not having any real history of owing people money and paying it off. This hits those of us who spent many years with no credit card and no bills in our own names and who had never borrowed any money. Being an angel and living in cash doesn't show a lender anything good.
Bad: CCJs, defaults, late payments, payday loans, going into your overdraft
Bad: unmatching addresses, lots of different addresses in the past six years.
Bad: financial associations with people who have lots of "bad" items
Bad: tons of applications for new credit, lots and lots of closed accounts.
Again, since all lenders have different criteria, good/bad is subjective. But it's fair to say that spending conservatively on a low-limit credit card, waiting for the statement each month, and paying it off in full, is going to be a plus on ANY credit history.0 -
I understand at the end of each statement period, you have to pay off in full otherwise you'll incur penalties like 34% APR but what if you spend only £100 per month on it and you pay off in full. Will the CC company tell you to go away?
Nope, but they might not increase your limit. However, it is of no concern to use since you live frugally.Your cholesterol levels are not seen, or used, by your heart and arteries, so ignore it.
:eek:.0
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