Credit Cards

Soldato
Joined
26 Aug 2005
Posts
6,901
Location
London
Hi guys,

Apparently having a credit card where you always keep up payments is a good for your credit rating. As I've never had a CC before, how entirely does it work? At the end of each month, do you transfer money across to clear it or does it come in a form of a bill? Am guessing you don't get charged if your payments are on time?

Oh - while I am here, does a overdraft effect your credit rating?
 
I got my credit card from my bank and have online banking. The way they do it is to send me a letter every month telling me how much i have paid in and taken out, and so how much i owe. I always start the month at zero work up a couple of hundered then pay it off. With online banking when they send me the bill on the 1st of every month i just transfer the money from my current account to the credit card. If you dont have online banking you can pay it off at the ATM or via direct debit which they will send with the statement.

I dont think overdrafts affect your credit rating.
 
You spend whatever amount during the month, then you receive a bill and have to do a transfer/cheque/card payment by a certain date which will be on the statement - if you always pay off in full there will be no interest charged.

You can also usually choose to set up a direct debit, or receive online statements but I always prefer paper statemens just in case I forget to pay :p
 
If you only pay off the minimum and then some for interest I think credit card companies are more inclined to loan you money in future because the interest is what earns them money (as well as transactions before somebody says it).
 
triggerthat said:
Do you have to pay interest on anything when you transfer to clear the amount? I always see this 'free transfer for the first x months' when they advertise CCs.
Read the T&Cs and it will tell you. If it says it's interest free for six months then it is self explanatory. Generally nowadays you will have to pay a fee upfront, of around 2% of the balance transfer total - which will be added to the balance.

But considering this would be your first card, you won't have a balance to transfer...?
 
After the introductory period you pay interest monthly on any outstanding balance if you decide not to pay off the full amount.
 
You want to be careful, if you decide to just pay the minimum then the majority of your monthly payment is interest - good for the credit card company but bad for you as it takes longer to pay off. If you can get one that offers 0% interest for quite a long period, there is also nothing to stop you at the end of that period to tranfer the balance of the card onto another credit card with an offer of 0% credit for a set time. If your clever you never have to pay interest......well thats the theory anyway
 
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