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Credit card question

robfosters

robfosters

robfosters

Caporegime
Joined
1 Dec 2010
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Location
Welling, London
ive finally been granted a credit builder card from Marbles. It obviously has a horrific interest rate, but it's a step in the right direction. I was getting flat out no's till recently.

Anyway, I obviously want to clear the balance every month to avoid interest, but is it the right thing to do for your credit record? Further down the line, I will be looking to transfer to a normal everyday card, but if I'm paying off every month and incurring no interest, will that put future lenders off? I wouldn't be a profitable customer.
 
You'll be in a much better position than you are now, use it and clear it.
You don't want a balance hanging around with the sort of interest rates they provide.
 
Credit cards can be useful for improving your credit rating.

Just purchase £10-£20 worth of something every month (or whatever you can afford) and set up the direct debit on your card to pay full balance each time. It should go down on your credit score that you are making regular payments and not defaulting. This in turn improves your credit score.

It wont matter to future applications that your current card is high interest or that you were only spending £10 a month on it. All they will do is check your credit scores, which you can improve by doing the above for a good while.

If you have time, do it for a year.
 
Thanks, good to know I don't have to pay that level of interest.

Although I don't blame the card company for sticking them on me. I already have a credit card default, so I am obviously thought of as a massive risk.
 
Make sure you set up a direct debit to pay it off in full every month. It can sometimes be very easy and forget to make a payment.
 
CJonny said:
Make sure you set up a direct debit to pay it off in full every month. It can sometimes be very easy and forget to make a payment.
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Or at least a DD for the minimum payment. You can still pay it off in full, but at least the minimum will always be taken and you won't default.
 
robfosters said:
Are the companies able to reduce APR if you prove yourself a trustworthy customer?

Has anyone ever got their rate reduced?
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Hasn't happened in my experience. Often I've had my credit limit rise, but if you want a lower APR then typically you need a new card.

Even as a trustworthy customer, I've seen APR rise. Not that I ever pay interest, so it doesn't really bother me.
 
Jim99 said:
Hasn't happened in my experience. Often I've had my credit limit rise, but if you want a lower APR then typically you need a new card.

Even as a trustworthy customer, I've seen APR rise. Not that I ever pay interest, so it doesn't really bother me.
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As above.

Normally you'll see what might be viewed as a premium credit card which has a rather large credit limit with a fairly small APR rate.

Then you get credit cards for people with bad credit - aqua always seem to come up, that have lower credit limits but astonishingly high APR rates.

Quite ironic really, those least able to afford generally get stung with a higher rate.

I'd suggest using the card every month and paying off your balance in full. Then within 12 months have a go at applying for a better card, you'll know then if your credit worthiness has improved.
 
Semple said:
I'd suggest using the card every month and paying off your balance in full. Then within 12 months have a go at applying for a better card, you'll know then if your credit worthiness has improved.
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This is the key, as far as the question in the OP goes.

I think sometimes paying off your balance everything could limit your ability to get bad forms of credit, i.e. very expensive storecards, as they don't expect to make enough money off you.

However, for the big and important forms of credit, i.e. 0% cards, cashback Amex, loans, mortgages etc you'll want a strong record of paying off what you owe. So that's the way to do it - set up your direct debit and make sure you pay off the full balance every month. If you can't do it, then make sure you a) rein in your spending and b) at least pay the minimum.
 
robfosters said:
Are the companies able to reduce APR if you prove yourself a trustworthy customer?

Has anyone ever got their rate reduced?
Click to expand...

You shouldn't even consider that as a question, especially if you have already had a CC default. Just set up the DD for payment every month and you will never incur any interest charges.
 
It's good that Experians credit expert seems to have done the trick though. Been following their pointers and working on my positives and negatives for 6 months and starting to see results, albeit small ones.
 
Jim99 said:
This is the key, as far as the question in the OP goes.

I think sometimes paying off your balance everything could limit your ability to get bad forms of credit, i.e. very expensive storecards, as they don't expect to make enough money off you.

However, for the big and important forms of credit, i.e. 0% cards, cashback Amex, loans, mortgages etc you'll want a strong record of paying off what you owe. So that's the way to do it - set up your direct debit and make sure you pay off the full balance every month. If you can't do it, then make sure you a) rein in your spending and b) at least pay the minimum.
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0% cards? Didn't know they even existed. Thought about 6.6 was the lowest you can get.
 
You get offer periods of 0% and they last for varying amounts of time and usually apply to balance transfers only.

It is a handy way of avoiding interest because you can jump from one 0% offer to the next (if your credit rating is good enough).

Generally credit card interest is 16-20%ish but some lower interest cards are out there.
 
robfosters said:
0% cards? Didn't know they even existed. Thought about 6.6 was the lowest you can get.
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If you have a very strong credit history, they're quite useful - but it's a promotional thing rather than a constant rate.

So for example, you might get a card with a 0% rate for 30 months, which allows you to buy some expensive things (say a holiday or a car), and then pay it off over 30 months. Effectively it's a cheap loan. The bank relies on you spending the money, then not having it available to pay off the bill in 30 months' time. Then you'll pay 16% or whatever, and they'll make a ton of money.

They're very useful for me, because it means I can earn interest on my cash rather than using it to pay for things, and then at the end of the 30 months I keep the interest and use the cash to pay off the bill.

Anyway, it's a very different proposition to what you're talking about here - the key to what I was saying is that to qualify in the future for useful products, make sure you always pay off the full amount.
 
Yeah, I thought you meant permanent 0%. Come to think of it, I think AMEX is 0% on some of their cards as you pay off in full. They charge an annual fee though.

My Dad did that recently. He wanted a new Martin guitar. Nationwide gave him a card with a 2k limit and 0% interest on purchases for 15 months. He loves his shiny new guitar.

He doesn't use his card at all apart from the guitar. He's pretty much given the account to me. I have an additional card, so I do actually have a 0% card till June next year and an APR of 17.9% after that, but it doesn't help my own credit record does it.
 
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