Credit Cards

How does not being an Excel whizz kid not inspire confidence? Do you think I'm the sort of person who is going to get a credit card and max it out on junk? I managed to survive off student loan for 4 years without a job and have a living just as well as a lot of students who are up to their eyes in overdrafts and credit cards. I had to make £600 last me three months, maintaining my bicycle, buying new parts, buying food, paying for any travel, going out.
 
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Correct me if I'm wrong.

But paying off your CC in full each month does 'nothing' for your credit score. Obviously you need to make sure you make a payment each month, but it's good to have a little outstanding on there?
 
willhub said:
How does not being an Excel whizz kid not inspire confidence? Do you think I'm the sort of person who is going to get a credit card and max it out on junk? I managed to survive off student loan for 4 years without a job and have a living just as well as a lot of students who are up to their eyes in overdrafts and credit cards. I had to make £600 last me three months, maintaining my bicycle, buying new parts, buying food, paying for any travel, going out.
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I think the point is that you are asking for advice rather than working it out yourself.

Go for it i say and earn some rewards. I have a play card, a tesco card and a BA premium. Aiming for the companion flight by spending £10k in a year on it
 
Simon said:
I think the point is that you are asking for advice rather than working it out yourself.

Go for it i say and earn some rewards. I have a play card, a tesco card and a BA premium. Aiming for the companion flight by spending £10k in a year on it
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BA Premium have a £150 annual fee though, is the extra stuff worth it?

Edit - It has higher APR but lower threshold in Avois points for bonus, higher points per £ and inconvenience cover for travel..
 
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Hey willhub. First thing I'd do if I was you is check your current score rating if you haven't already. I previously (before I moved to Ireland) used CreditExpert. I found my bank a/cs, mobile phone etc were all tracked there but as others have pointed out even with a CC it will take time still to build up your rating further.

Also, I had a peek at your excel file and if you'd be interested you can have a copy of the one I use. It's something I've improved each year for several years now ... something many of my friends always poke fun at me for :p.

It looks as follows:

FinanceExcelPreview.png


The main functions:
  • Cells for monthly wages, bonus, interest and other misc income
  • Cells for total expenses, expenses to date, expenses due
  • Automated account balance from previous month - For Jan you would need to enter your current balance as a starting point
  • Allows you to have 9 tags to track the amount and % spent on each tag each month
    E.g Food, take-aways, books, games, social, medical, cash etc - Tags can be edited in the CP tab
  • Breaks down paid transactions, pending transactions and the total of all transactions
  • Green boxes = paid transactions
  • Blue boxes = pending transactions
  • Red boxes = total of all transactions
  • Grey boxes = highlights any differentiation/errors (this should always unless the sheet breaks be 0)

The file
 
redeye_uk said:
Correct me if I'm wrong.

But paying off your CC in full each month does 'nothing' for your credit score. Obviously you need to make sure you make a payment each month, but it's good to have a little outstanding on there?
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I work in the industry.

Pretty much wrong. Having a history of on-time payments will always be very appealing to underwriters and certainly better than nothing.

There's no such thing as a universal credit score - individual banks and credit card issuers can decide what sort of credit history they want to lend to. This means that carrying a balance could be a positive or negative factor.
 
Have a hunt around the usual comparison sites for a decent sign up offer and get one to use sparingly. Pay off the balance in full monthly by direct debit and you're golden.
 
redeye_uk said:
Correct me if I'm wrong.

But paying off your CC in full each month does 'nothing' for your credit score. Obviously you need to make sure you make a payment each month, but it's good to have a little outstanding on there?
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You're wrong. Lenders like to see regular ontime payments on your credit history.
 
[TW]Fox;23500384 said:
It isn't difficult to not spend money on things you don't need simply because you have credit available. Just because you have a £2k credit limit doesnt mean you have to rush out and watch 20 movies, go on an all night bender and buy a 50 inch TV you can't afford.

A credit card is IMHO an essential part of anyones wallet. Set up a direct debit for the full amount each month and then don't buy things you dont have the money for if you are concerned about debt (Which is a sensible thing to be concerned about, but not to the extent that you don't hold something as useful as a credit card).

Having a credit card is useful because:

a) You have additional protection under the Consumer Credit Act should something go wrong with your purchase
b) You have additional anti-fraud protection
c) You have the ability to earn bonuses such as cashback or loyalty points with some cards
d) Some cards give you fantastic rates when traveling - carrying the right credit card when abroad is more convenient, more secure, safer and cheaper than messing about with foreign exchange ripoffs at travel agents
e) It builds your credit history. It's credit HISTORY - the more you can show you can be trusted with credit, the easier you will find it to get accepted at decent rates for things like mortgages.

Credit cards are not the work of the devil. They are useful and important when used properly.
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An excellent and well presented summary... but no less than I would expect from Mr Fox! :)
 
matdom said:
Buy food with it and pay it off each month, the more you use it the better your rating.
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This. If you have discipline, are good with your money and stick to your budget then credit cards are wonderful things. I use mine for almost any and every purchase. I never buy what I can't afford, I pay off in time, I never pay a penny in interest.

This does build up your credit rating and in time will allow you to raise your CC limit for when / if you do decide or need to make a big purchase on it (which you can afford to pay for!)
 
My fiance and I use a tesco credit card for everything we can, petrol, shopping, big purchases...

I monitor it so that as soon as something appears on the online account it gets paid off straight away. Just a case of logging on once a day.

The benefit is that we get the club card points for every purchase whilst at the same time increasing the credit score.

Don't get me wrong, the amount of points you receive are not astronomical but they add up quickly, especially when you make all the normal monthly purchases along with anything big (holidays, car repairs, work expenses) using the card.
 
Willhub, if you plan on paying off your credit card every month, them your idea of getting one is fine, the problems come when you stop clearing the balance monthly, or over indulge.

Sticking to budgets is tough, but a great life lesson for when you eventually get a mortgage/rent other then from parents)

If you shop around there are some good credit cards that provide some nice benefits. Telcos credit card allows you to earn clubcard points that can be used for all sorts of fun, Santander do a 123 credit card and account that offer cash back (monthly charges apply to both) but depending on your spending you can easily earn money on them.

Other things to consider are opening ISA accounts and commit to paying in to the, by standing order, and just don't withdraw from them. Another is bond saver accounts, once you get a certain amount of money pop it in to bonds for 1-3 years and if you w/draw it you get no interest, so it's kind of encouraging to leave your money there etc.

Lastly, and the most extreme option is get a loan, then get your parents to put the money in to a savings account/isa on your behalf. Yes this will ultimately cost you money, and the only benefit here is it provides you with a commitment that you are tied in to and will benefit your credit rating if you stick with it, and punish your credit rating if you miss payments etc. I would only recommend the last option if you really want to improve your credit rating, and cannot trust yourself not to spend the money/overspend etc.
 
As others have said, always pay your credit card balance off in full each month. That way you get deferred borrowing without any penalties.

You can set your credit card account to always pay in full so you don't have to constantly remember.

It is far cheaper to extend your overdraft (I used to pay £15 per annum for a £1500 overdraft plus a penalty charge each month when in the red) as against credit card interest rates.

Ideally though, try and stick to the bank's standard overdraft facility if available.
 
You can download microsoft money for free now, and it's pretty good at setting up budgets and working out your cash flow. You can do forecasts and budgeting etc... I seldom use a spreadsheet anymore as it's just as easy to use a program that does it all for you. :)
 
Syla5 said:
Santander do a 123 credit card and account that offer cash back (monthly charges apply to both) but depending on your spending you can easily earn money on them.
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This is an excellent pair of products - its also worth noting that if you take both you get zero fee on the Credit Card for 1 year. Otherwise the fee on both is £2 a month.

But with the card you get 3% back on your petrol and rail ticket spend, 2% at department stores and 1% on supermarkets and with the current account they pay you 3% on direct debits for communications, 2% for gas and electric and 1% for council tax and water.

But perhaps even more appealing with the 123 current account is the 2% AER interest on balances of over £2k and the 3% on balances of over £3k. This outstrips the best easy-access savings accounts right now.
 
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