Credit cards... how do they work? (serious thread)

Agree with dowie, if you're that close to your credit ceiling on the card... you should seek some financial advice. If nothing else, even an unsecured personal loan would be much lower interest than the credit card.

Credit cards are almost the worst way to borrow money on anything other than a <month basis. The only thing worse is probably a payday loan company.
 
Phantom Shadow said:
The banks certainly seem to swing one way or the other when it comes to credit limits. I had one card with a limit of £250 up until recently, which is fine as it was just to build up a credit rating.

What I find surprising is that between me and my gf (who are students with nothing but student loan as income, no jobs) now have available between us a credit limit more than our student loans added together. I'm not bothered by having such high credit limits, but no wonder the financially irresponsible find it easy to end up in a mess when the bank are offering up credit limits >100% income.
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Banks will generally let you have as much credit as you want as long as you have a good financial history. My credit card limits extend me credit at >600% of my net monthly income between them, and I doubt that's even half of what they'd be willing to give me if I really pushed for more.
 
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buckeejit said:
Serious question here and sorry but I am actually simple :rolleyes:

I have a credit card and the limit is £1000 and the balance is -£948.63 so I have an available balance of £51.37.

Do I actually have £51.37 to spend? If I were to draw money out, I know there would be a fee so would draw out less.

I'm currently paying £32 off this card each month as I'm out of work and can't afford anymore. The APR is 29.9% (I know, shocking!)

What I can't work out (again, I'm simple) is that if I spend the £51.37, what will happen when the interest etc. is added on in the middle of the month (as usual)? Will I be over my limit of £1000?

Sorry for this stupid thread but if someone could answer my questions then that would be great :confused:
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Yes you will go over your limit and get charged for it.

Also why the hell do you have such a big amount owing on your credit card if you can only afford the min payments. You seriously need to learn to manage your finances better.
 
khodos said:
Thanks. By the way, I believe I read somewhere that credit cards are not recommended for cash withdrawals. Is that correct?

What do you guys think of this CC? https://www.metrobankonline.co.uk/Personal/Borrowing/Credit-Card/

I already have an account with them so it would be easier to get one from them.
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If you want a card for foreign travel then the Halifax clarity is the way to go... No transaction charges abroad and a very competative rate. When withdrawing money the same rate is used but you pay interest from the day of withdrawal. If paying off by DD every month the interest charges on the cash withdrawals are pittence. I'm not sure on exact amounts but something like £2 on a few hundred pounds withdrawen.

Alternatively you can look at this current account from norwich and Peterborough. The debit card allows free withdrawals abroad (not sure what the rate is) but you need to deposit £500 a month into the account. It's also useful as it's a visa rather than MasterCard which means it'll be accepted in more locations, especially if you're heading to less touristy places.
http://www.nandp.co.uk/current-account/gold-classic-current-account/
 
buckeejit said:
100% Rotty but I'm in a bad position atm. I plan on clearing this card and cutting it up when I get a job :)

I've tried applying for cards to balance transfer but have been refused as my credit rating appears to be bad atm :(
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Ace Modder said:
Yes you will go over your limit and get charged for it.

Also why the hell do you have such a big amount owing on your credit card if you can only afford the min payments. You seriously need to learn to manage your finances better.
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Or you could read the thread properly.

People hit hard times you know, not everyone has a 999 credit rating with 000's in disposable income and a perfect lifestyle, some people on here need to understand that.
 
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gurusan said:
29.9% WTF. Why did you ever sign up for it?
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=XDC=FluphyBunny said:
Many credit cards that I have seen charge for cash withdrawals, for example 3% with a £3 minimum.
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I've been with MBNA since 2005 and I've managed to keep the 0% interest grace period rolling for most of that time :-) As quoted above though, I am subject to the 3% / £3 cash point fee, but as long as I don't use ATMs, I don't pay interest. Just be wary that using the card in France incurs a £1.06 fee (that as last week). Presumably that changes with the exchange rate, but my £1.06 charge was based on a €44 spend in Intermarché (French supermarket), which appeared on my statement as £35.72+£1.06. The only other thing really is to stick with a min direct debit which I think you're using. For me, I set my MBNA to clear every month by direct debit, so I just really use the card for cash flow.
 
robgmun said:
I never have more than £500 on my CC in any one month but Barclay's keep upping my limit, it's now £6700 :/
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You can opt out of this, it's pretty easy to do. When you receive the next letter it will probably state "let us know if you're not happy with this"

On a different note, I think I have a couple of cards with over 7K limits - BC & Amex cards. I find it useful for high value purchases online / offline and holiday payments primarily, of which I couldn't do with a low credit limit card.
 
atpbx said:
They are brilliant tools to have available to you, but they must never be used as a regular source of funding for your day to day life.
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That's a sweeping statement.

I use mine on a daily basis for things like train tickets and petrol for the car. I already have the money in the bank to pay for the purchases upfront, but instead put these transactions on credit as I get better rewards from using it. I then pay the full balance off the following month at no extra cost to me.

As long as you're in control of your finances, then using one every day isn't an issue.
 
atpbx said:
They are brilliant tools to have available to you, but they must never be used as a regular source of funding for your day to day life.
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Semple said:
That's a sweeping statement.
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It's an accurate one.

There's a BIG difference between using a card as a "source of funding", which is what atpbx said, and as a rewards system, or to defer a payment for a few weeks.

As long as you're in control of your finances, then using one every day isn't an issue.
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The point is that many people aren't, and simply stick purchases on credit cards, assuming they'll just hobble along paying the minimum and get rid of the balance "eventually"...
 
The other thing to note about higher credit card limits is that the credit scoring systems generally see unused proportions of available credit as a favourable thing when scoring you.
So if you have - like a poster above, a credit limit of £6.7K and never really owe anything on it - that will geenrally be seen as positive and so it generally makes sense to keep the card with that limit.

I hope the OP is working his way out of his money issues.
 
I cant understand why people are taking about interest at the end of the month? i always go for a credit card that has 12+months interest free, and then spread payments for large out goings over a few months, i have never paid interest on a credit card in my life, at around month 11, i call them up cancel the card and move to the next interest free one, its as simple as that, my credit limited is something stupid like £8k, but most i have spent is just shy of £1k.
 
brightside229 said:
I cant understand why people are taking about interest at the end of the month? i always go for a credit card that has 12+months interest free, and then spread payments for large out goings over a few months, i have never paid interest on a credit card in my life, at around month 11, i call them up cancel the card and move to the next interest free one, its as simple as that
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I have a Tesco credit card, chosen mainly for the Clubcard points (which really add up with all shopping, all fuel, and all large purchases through the card). It's no longer interest-free but if I cancel it and change provider now, I'll lose that benefit. So I keep using it, paid in full every month. I can't use it to spread payments any more, but I don't have that need at the moment.

Others may have other reasons for not switching cards, such as being on a high-interest card for those with poor credit ratings, and can't easily get a new one.
 
so question. Let;s say I have a monthly bill of £500 but this month I can only pay off £450.

Does my interest charged apply to the whole amount or just the unpaid £50 for that month ?
 
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