Can somebody help help me with Credit Cards, im a newbie lol

[adnanshah247]

Ok guys im 24 and have never ever had a credit card. i have now got one and havent got a clue about it. can somebody in english explain to me exactly how they work and how the intrest etc. all works on it? sorry but im a lil dumbass when it comes to all that

 

apparently i have a limit of £2500.

 

Also can anyone make sense of this stuff for me?

 

1) 0% for 15 months on balances transferred within 30 days of you opening your account. 2.9% balance transfer fee applies, minimum £5.

 

2) 0% on purchases for 3 months from account opening.

 

3) Typical 16.9% APR variable.

 

4) No annual fee to pay.

 

5) Free additional credit card for partners or family members over 18.

 

6) Up to 56 days' interest-free period available when you pay your whole credit card balance in full and on time.

 

THANKS!

[Stonkin]

In simple terms, items will go on it, they will appear free at the time as no 'cash' is handed over.

 

You will make a promise to yourself to pay the said items off at the end of the month to always keep in credit.

 

This wont happen, or the minimum will be paid off to keep the pestering phone calls off your back.

 

More items will be placed on the card, because they are 'free'

 

The slips will come through each month and the amount you have to spend on the card will reduce.

 

You will eventually pay a large amount off and feel good about yourself.

 

Then you'll realise the £1000 item you originally purchased actually cost you £1500 with interest.

 

But now that you have paid a chunk off, you'll think sod it, what can i buy next.

 

You will forever chase you tail like this and realise getting a credit card was the worst decision of your life.

 

PS, if you had a supra, that £2500 would have just gone towards a single kit

 

Congratulations

[adnanshah247]

In simple terms, items will go on it, they will appear free at the time as no 'cash' is handed over.

 

You will make a promise to yourself to pay the said items off at the end of the month to always keep in credit.

 

This wont happen, or the minimum will be paid off to keep the pestering phone calls off your back.

 

More items will be placed on the card, because they are 'free'

 

The slips will come through each month and the amount you have to spend on the card will reduce.

 

You will eventually pay a large amount off and feel good about yourself.

 

Then you'll realise the £1000 item you originally purchased actually cost you £1500 with interest.

 

But now that you have paid a chunk off, you'll think sod it, what can i buy next.

 

You will forever chase you tail like this and realise getting a credit card was the worst decision of your life.

 

PS, if you had a supra, that £2500 would have just gone towards a single kit

 

Congratulations

 

yes stonkin i do realise that but you have come from a completly negative perspective. im sensible with loans and credit cards, i dont need them but its good to know in worst case scenario i have something to fall back on.

 

i know credit cards are really bad if you can control your spending but does that necessarily mean credit cards are a bad thing? can anything positive be said about them?

 

also i have a pretty basic credit rating, lenders know im not a risk but im not exactly high up so will a credit card boost my credit rating?

[Stonkin]

Chill mate, i'm kidding, sort of

 

I agree, they can be a good thing, as a backup. Its learning to use them correctly. There will be a lot of items that can be purchased that are handy to buy on credit cards. If you have a problem with them you have more of a come back than if they were purchased by cash or debit card.

 

My advice, would be to learn to respect them or you can genuinly get in a mess. If you havent got the money to buy something, dont think i can just use the card and sort it out later. No disrespect to you at all mate, hopefully you are good with managing things like this, but some people are not.

 

Never pay off the mimimum amounts, or you will ring up lots of interest. Learn that if you need to buy something 1 month and are a bit short, and use the credit card. Make sure that item can be paid off within a month if possible to avoid paying stupid interest on the item. Yes you do get interest free periods, but they quickly go and the way money is paid off a credit card it doesnt always end up being paid off in the right order of how items were put on there, its managed by the company to end up making as much interest out of items as they can. Someone will explain this side of it better.

 

Take my first post in jest pal, but in all seriousness it can be quite easy to end up like that.

[neo2810]

My opinion, honestly, is that if you need a credit card, you shouldn't have one. Really, think about it. If you don't have the money to spend, all you're doing is spending money you don't have to pay back and it will catch up to you.

 

Now I'm not saying credit cards are not useful, but they are only useful if you don't need them. Let me explain what I mean.

 

I have 2 cards, one with a limit of £12k, the other about £9k. I use them every month to spend as much as I can on them, and then pay them off at the end of the month, before the interest kicks in (30 day interest free on all purchases). This kicks in the "features" on the card, like cashback and nectar points so in essence my credit cards make me money, not me making the cc companies money.

 

Stonkin has given you useful advice above. It doesn't matter how sensible you are, there will come a time when your card will tempt you to spend the available credit on something you don't really need. That's when you get into trouble. Just set yourself a strict rule that if you use it for something, you pay that off in full before using it again.

[stevie_b]

As I understand it, see red:

 

apparently i have a limit of £2500. You can spend up to £2500 before you have to pay some of it off.

 

Also can anyone make sense of this stuff for me?

 

1) 0% for 15 months on balances transferred within 30 days of you opening your account. 2.9% balance transfer fee applies, minimum £5. If you have balances on other credit cards or store cards, you can transfer the balance over to your new credit card and owe your new CC provider the money, rather than your old CC/storecard provider. It's the 0% bit that makes this worth considering: transferred balances will incur no interest for 15 months. There is a potential gotcha: sometimes CC providers will put any money you give them towards paying off the interest-free part of the balance (i.e. put it towards the balance transferred from other cards) instead of putting it towards other spending which (after 56 days or less) will be accruing interest.

 

2) 0% on purchases for 3 months from account opening. No interest to be paid on spending for the first 3 months. After that, interest will accrue on the outstanding balance (if there is one) at 16.9% variable.

 

3) Typical 16.9% APR variable. The rate at which interest will accrue on outstanding balances, once the special 0% offers/periods are over. This rate can go up or down, it's not set in stone.

 

4) No annual fee to pay. Some cards charge a flat fee (e.g. £10 per year) as well as the interest. This one doesn't.

5) Free additional credit card for partners or family members over 18. You could give a card to someone else: the account will be the same, they just have their own piece of plastic to hand over in the shops when you're not there with them.

 

6) Up to 56 days' interest-free period available when you pay your whole credit card balance in full and on time. The credit card company will send you a statement every month, and will give you a date (often 10 days after the statment date, something like that) by which time you need to pay off at least a bit towards the outstanding balance (if there is one). They will tell you on that statement the minimum payment they will expect from you. If you pay off the full balance by that date, you'll incur no interest. The variable 56 days is because the date of purchase may have fallen just before they produce a statement (in which case you'll get 28 days to pay it off without icurring interest), or it could have been just after the statement date (in which case you'll get nearly 2 months, i.e. 56 days). They give you at least 28 days to pay purchases off, and instead of giving each purchase its own payment-due date, they collate them all up into monthly statements.

 

THANKS!

 

They can be useful if you know how you'll pay off the balance. I'd strongly recommend paying off the balance in full each month. Don't use them to put off the inevitable payment date if you don't have the money right now.

 

Avoid withdrawing money from a cash machine using a credit card: it will accrue interest immediately: you don't get the "up to 56 days" interest free period.

[Rob]

Then you'll realise the £1000 item you originally purchased actually cost you £1500 with interest.

 

But now that you have paid a chunk off, you'll think sod it, what can i buy next.

 

You will forever chase you tail like this and realise getting a credit card was the worst decision of your life.

 

This is the truth, plus, you will build up a credit rating so you will be offered more cards and you will do the above on each of those.

I would just stick to a debit card to be honest. I had to remove all my credit cards about 6 years ago, and have managed ok with just one bank account and one debit card since.

You may tell yourself you will be disciplined, but who knows?

[Snooze]

Good advice above.

 

Am loving this line:

 

My opinion, honestly, is that if you need a credit card, you shouldn't have one.

[adnanshah247]

thanks for the advice guys, i understand now what its for, to be honest i think it will just sit and collect dust in my wallet. i only spend what i have so if i do use it ill be able to manage it. its good practice because sure you can get in trouble with big intrest bills but if you cant manage your finances and just avoid it then you're pretty usless i guess. thanks guys really appreciate the help!

[JustGav]

Why do you need a credit card... what is wrong the 100% down 0% to pay scheme?

[ivan]

A caveat - NEVER use a credit card as a source of cash withdrawl from an ATM machine as the interest charge will stack up month after month even if you pay off the full amount on your statement each month. The reason for this is in the small print about the order in which they disburse the payments you make.

 

If for some reason you do so, make sure before you pay that you check online exactly how much you owe, taking into account any outstanding transactions and ones made after the statement, then pay off the new full amount.

 

Personal experience from a while ago...

[Attero]

I took out money on my credit card via an ATM and didn't notice a thing... I guess it depends on your contract.

[johnny g]

I use a credit card each month, I pay for everything on it and pay it off in full every month. It's a Tesco card and I collect the club card points. The Mrs does the same with her card.

 

As has been said, you have to be disciplined in the use and remember one key thing. You're agreed credit limit is in fact a limit and not a target.

[ozz]

As long as you know what you are spending and you set it up to pay off every month then you'll be fine. In fact, its a great way of maximising money in your account (useful for offsetting) plus you get the bonus you are covered for fraud. All online purchases should be done with a credit card.

 

Look at it another way, someone gets your credit card details then its really someone elses money thats lost and they have to recover it. Someone gets your debit card details...its your money and you'll face a battle getting it back.

[Dr_Doom]

I've not got a credit card either & have never had one. I've just made do with a debit card.

 

Is it true that it's worth getting a credit card and barely/not using it so that you can build up a credit rating?

[caseys]

My opinion, honestly, is that if you need a credit card, you shouldn't have one.

 

Thirded.

 

The only excuse for having one I think is Johnny's mantra. If you've got a card which gives you either points or cashback and you clear the *entire balance every month without fail*. Only then are credit cards worth it but many people do not have that discipline.

 

Otherwise you're just paying more money for your impatience. As Gav said, pay 100% upfront. Truly own what you own, rather than the bank/creditors owning it.

 

If you're having to use credit and have no savings you're living far far beyond your means.

 

Avoid credit cards like the plague imho.

[stevie_b]

Is it true that it's worth getting a credit card and barely/not using it so that you can build up a credit rating?

 

AFAIK it's a grey area. You'll start building up a credit rating as soon as you take out a credit card, but it might not represent a rating that you particularly want. How the Credit Reference Agencies compile a rating on you is not trivial and depends on many things, for example how many cards you have, much you use the card, whether you incur interest charges, whether you're an overdue payer, etc etc.

 

This is really at the edge of my knowledge, but I think a credit card provider's wet dream is someone who incurs interest charges but always pays eventually without having to be chased. Taking out a card but not using it will go on your record, but it won't make you a perfect risk because the credit report will (I think) show that you haven't spent anything.

 

It's difficult to say whether having a credit card but not using it will give you a better credit rating than not having one at all. The existance of an unused credit card might put off some loan/credit providers because they can see you have an available line of credit and might be reluctant to add a few thousand to your total available credit.

 

Another reason for having a credit card is Section 74(?) of the Consumer Credit Act. It gives you a certain amount of protection when buying goods of high value, and you can legally hold the credit card provider jointly but fully liable for goods that are faulty. So, you buy a new TV from Dodgy & Dodgy. It turns up broken, you try and contact them but they've either packed up shop already and moved on, or don't answer the phone or your letters. You can pursue the credit card company for the full cost. Dodgy & Dodgy may have done a runner, but the likes of MBNA aren't fly-by-nights and won't be going anywhere in a hurry.

[Soop Dogg]

I use a credit card each month, I pay for everything on it and pay it off in full every month. It's a Tesco card and I collect the club card points. The Mrs does the same with her card.

 

As has been said, you have to be disciplined in the use and remember one key thing. You're agreed credit limit is in fact a limit and not a target.

 

Both I and the Mrs do this also with a Tesco credit card. Tesco points are excellent! If you exchange them for vouchers with other 'participating' companies, they're usually worth 4X their face value.

 

For example - when we go to Europe each summer, I can exchange £35 worth of Tesco Reward Points for £140 of vouchers with Eurotunnel. Usually the fare is about £5 more than that, so I pay the balance using my (Tesco) credit card. Paying ANY of the fare on a credit card - even £1 - means that if anything goes wrong with the purchase, the Credit Card company MUST insure the it. So, if I buy a package holiday (or anything else) and the company goes bust or anything else goes wrong with the purchase then I'm insured.

 

Earlier this year we had about £800 worth in tesco reward points. We'll often get vouchers for restaurants to, so £10 will get us £40 off a meal out once every couple of months.

 

The other thing which has already been said, is that while you're spending money on a credit card, you're spending the banks money. If the account gets hacked, I can still use my own cash to get by until they sort it out. If that were to happen to my debit card, I might have to get by for weeks with my account being frozen, debit card cancelled and no cash in my account to pay the bills while they sort the mess out.

 

And yes, I pay the credit card bill in full every month too.

[Whitesupraboy2]

My opinion, honestly, is that if you need a credit card, you shouldn't have one.

 

I 100% disagree. I never had a credit card until recently. I almost lost £700 as I bought sofas fully and the company went into liquidation.

 

The only protection given to the buyer in the UK is if you use a credit card.

 

Direct debit - tough

Direct bank transfer - tough

 

I now have a credit card for the larger purchases. A credit card is great protection, just use it correctly.

[creative]

as others have said... dont go mad, pay it off straight away if used and you will do ok.

 

I got into huge debt with loans and cards and I will never do it again! I learnt the hard way and for the last 10 years I have only had a debit card.

 

I have recently got another card as I needed the protection a card provides as I was spending $2500 and it was paid off straight away.

 

Its a nice safety net in a crisis but dont use it unless you A: absolutely have to or B: are able to pay it immediately.

[Lbm]

For 12 monthly repayments of £59.99, Adnan, I'd be delighted to tell you

about credit cards, in my new pamphlet "Lbm's How To Use Credit Cards The Easy Way"

 

Alternatively, you can buy it up front in a one off payment of £1.99