Nationwide credit card bill questions.

SideWinder · 22 Apr 2012 at 11:41

Morning,

I today received my very first credit card bill. Basically i use my debit card a lot which isn't a good - especially if i lose it on a night out.

Just a few quick questions about my bill...

1) Cash reward, what does this mean? It looks like i am "earning" money back from using it but how can i use that money? Does it just go towards paying it off?

2) At the bottom it says 'Interest Summary'. Purchase Interest/Balance Transfer/Cash Interest. The only one with an interest rate next to it is Cash Interest. What does this mean? Is this my interest AFTER i have used up my 18 months interest free period?

The Halk · 22 Apr 2012 at 11:42

Nationwide cards give a small amount of cashback, it's not much, but it's free money.

Cash interest is for cash withdrawals and is charged at a higher rate than purchases, or special balance transfers.

SideWinder · 22 Apr 2012 at 11:44

Well i won't be using it for cash withdrawals. Cheers mate.

Chris1712 · 22 Apr 2012 at 11:56

Can I ask a question as well I've been thinking of getting the nationwide select credit card myself as I have no credit history, I'm a bit confused with the wording of the interest free period though? The headline is obviously 18 months interest free n purchases, but then in the detailed info it states the interest free period as 56 days? Does this mean I can make interest free purchases for 18 months but only get interest free for 56 days of each transactions value? I just assumed it was 18 months interest free, like a student overdraft for example?

The Halk · 22 Apr 2012 at 11:57

The 18 months is on top of the normal up to 56 days.

[TW]Fox · 22 Apr 2012 at 11:59

Chris1712 said:
Can I ask a question as well I've been thinking of getting the nationwide select credit card myself as I have no credit history, I'm a bit confused with the wording of the interest free period though? The headline is obviously 18 months interest free n purchases, but then in the detailed info it states the interest free period as 56 days? Does this mean I can make interest free purchases for 18 months but only get interest free for 56 days of each transactions value? I just assumed it was 18 months interest free, like a student overdraft for example?

This is two different things.

All your purchases are interest free for 18 months. Buy something today, and as long as you make the minimum payment, no interest for 18 months

The 56 day period relates to normal use of the card. Effectively it means if you buy something the day after your billing date, the due date for that months bill isn't for 56 days after the previous billing date. So, you've got up to 56 days interest free for that particular purchase regardless of whether it's 1000000% APR.

You only pay interest on outstanding balances after the due date (Though the interest you 'pay' is 0% for 18 months on this card).

Chris1712 · 22 Apr 2012 at 12:05

[TW]Fox;21739065 said:
This is two different things.

All your purchases are interest free for 18 months. Buy something today, and as long as you make the minimum payment, no interest for 18 months

The 56 day period relates to normal use of the card. Effectively it means if you buy something the day after your billing date, the due date for that months bill isn't for 56 days after the previous billing date. So, you've got up to 56 days interest free for that particular purchase regardless of whether it's 1000000% APR.

You only pay interest on outstanding balances after the due date (Though the interest you 'pay' is 0% for 18 months on this card).

Cheers Fox that sort of helps. So does that sort of mean the interest is 'applied' to the balance after 56 days then? Assuming your out of the 0% period that is.

I'm mainly looking at it to use a small loan towards a car (obviously depends what credit limit I'd get, not a lot I suspect), would this be a valid way to use it? IE, 2k on the card and meet the minimum repayment+pay off full balance within 18 months? Or would my credit be adversely affect by having such debt for 18 months even if the minimum repayment is met *but the balance not 0'd for 18months).

If using it as a small loan is a bad idea that's fine, I'll get a loan. But I've been thinking for a while I should get a credit card anyway because I have no credit history whatsoever (well mobile contracts but that's it).

The Halk · 22 Apr 2012 at 12:10

Examples...

You make a £50 purchase on the 22nd of April
It's charged to your card on the 24th of April

Your bill is due on the 6th of June and you're made aware of the £50 purchase.

Scenario 1 - You make the £50 payment on or before the 6th of June. No interest is charged.

Scenario 2 - You make a payment of £20 on or before the 6th of June. Interest is charged from the 22nd of April on the entire £50. A credit is applied on the date of payment and interest continues to calculate on the remaining £30.

It's fine to use a credit card as a small loan, it's usually better than getting a loan. Just be in control, and don't spend and forget.

It's also fine to spend 2K on the card and pay the minimum payment for 18 months then pay it off in full, that won't affect your credit rating.

Chris1712 · 22 Apr 2012 at 12:14

Thanks guys, that helps. I'm not one for spending money I don't have never have been, but I want to use it to enable me to get something I could afford to save for in a year, now!

Am I right in saying then in the Scenario 2 above, interest is still 'applied' after 56 days it just happens to be 0% (for the first 18 months).

<3 OcUK

The Halk · 22 Apr 2012 at 12:16

That's right Chris.

DIABLO · 22 Apr 2012 at 12:22

Chris1712 said:
Cheers Fox that sort of helps. So does that sort of mean the interest is 'applied' to the balance after 56 days then? Assuming your out of the 0% period that is.

You don't pay the whole interest rate unless you keep debt on the card for 12 billing cycles (i.e a year) as the interest rates are APR (Annual Percentage Rate) so if the APR of the credit card was 12% interest and you kept debt on the card for one billing cycle you'd pay 1% interest.

El Jimben · 22 Apr 2012 at 15:00

DIABLO said:
You don't pay the whole interest rate unless you keep debt on the card for 12 billing cycles (i.e a year) as the interest rates are APR (Annual Percentage Rate) so if the APR of the credit card was 12% interest and you kept debt on the card for one billing cycle you'd pay 1% interest.

That's not really how it works as interest is charged daily as banks use the daily rate which is the annual rate divided by 365 days. I used to work for RBS and my job was to provide interest breakdowns for customers so believe me when I tell you that it's hard to get your head round the exact methodology that is used.

Nitefly · 22 Apr 2012 at 19:54

I got a nationwide select credit card this weekend - wasn't too much trouble.

Something to know is that they expect you to make either a £25 or a 1% (whichever is greater) payment on your debt every month, even if that debt is interest free. Failure to do so will affect your credit rating and you'll get a £12 penalty charge. Not too onerous, but worth knowing.

I was going to use it for international purchases, but I think it charges for international cash withdrawals, so I'm going to be keeping my Santander zero for that.

[TW]Fox · 22 Apr 2012 at 20:04

Nitefly said:
I got a nationwide select credit card this weekend - wasn't too much trouble.

Something to know is that they expect you to make either a £25 or a 1% (whichever is greater) payment on your debt every month, even if that debt is interest free. Failure to do so will affect your credit rating and you'll get a £12 penalty charge. Not too onerous, but worth knowing.

I was going to use it for international purchases, but I think it charges for international cash withdrawals, so I'm going to be keeping my Santander zero for that.

To be honest other than the international purchase thing the Nationwide Select isnt that great - and given you already have international purchases sorted with a Zero I'm not entirely sure why you applied for a Select

Nitefly · 22 Apr 2012 at 20:12

[TW]Fox;21742736 said:
To be honest other than the international purchase thing the Nationwide Select isnt that great - and given you already have international purchases sorted with a Zero I'm not entirely sure why you applied for a Select

18 month interest free is appealing to me (i'm not illiquid but liquity may be my biggest challenge over the next year as ill be moving into my own place and I want a hefty holiday this summer) and that period has expired on my zero, plus I'm already with nationwide and qualified for it.

Was a little alarmed with the credit limit they gave me mind - better leave it at the hotel in Vegas :eek: