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Credit cards
Centipeed
Registered User regular
Registered User regular
I have this weird obsession with knowing everything I can possibly know about a situation before I enter into it. I've never had a credit card before (I'm 18 ), having always used a cash card given to me by my bank (Natwest). I live in England, if it makes any difference.
Now, I have plenty of money in my bank account. I don't see myself running out for a long time, owing to recent inheritence. As such, my ONLY reason to get a credit card is to facilitate online purchases abroad, because some websites won't accept Switch/Solo/Maestro cards. Because of this, I am considering applying for a credit card.
Now, given that I won't be getting into debt ANY time soon, so that I defintely WON'T be going into my overdraft, is there any reason NOT to get a credit card? Remember, I won't be spending any more than what I've already got into my account, ie. I won't be going into debt.
I just wanted to know any possible weird fees or whatever that might apply, even if I'm NOT going to spending any money I don't have.
Now, I have plenty of money in my bank account. I don't see myself running out for a long time, owing to recent inheritence. As such, my ONLY reason to get a credit card is to facilitate online purchases abroad, because some websites won't accept Switch/Solo/Maestro cards. Because of this, I am considering applying for a credit card.
Now, given that I won't be getting into debt ANY time soon, so that I defintely WON'T be going into my overdraft, is there any reason NOT to get a credit card? Remember, I won't be spending any more than what I've already got into my account, ie. I won't be going into debt.
I just wanted to know any possible weird fees or whatever that might apply, even if I'm NOT going to spending any money I don't have.
Centipeed on
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Pay what off every month?
Your bill.
A credit card works by buying stuff on credit. Visa or whoever effectively loan you the money to make a purchase. So at the end of every month, you need to pay a bill, unlike with debit cards where the money is withdrawn from your account automatically.
So long as you pay off your bill every month you will not incur interest. Most credit cards also have a minimum payment (usually something like £5 or 10%, whichever is greater) that you have to pay each month otherwise they will fine you in addition to charging you interest on your outstanding balance. Note that the minimum monthly payment isn't a monthly charge. It only gets applied if you've used the credit card that month and will be deducted from your current outstanding balance.
It's maybe worth considering that some bank accounts, such as Halifax, use a Visa debit card which theoretically can be used anywhere that accepts Visa credit cards and can thus be used abroad just like a Visa credit card.
My personal favourite credit card is the Amex Blue, which gives you points for every spend that it then credits back to your card balance at the end of the year. It's a simple deal, but one of the best on the market and there are no charges.
If not, explain this minimum monthly payment in detail, plzkthx.
Basically:
If you don't spend anything, you don't have to pay anything.
If you spend £2, then all you have to pay that month is £2.
If you spend £10, then you have the choice of paying nothing and getting charged interest plus a fine, paying the minimum (ie £5) and then getting charged interest on the remainder of the bill next month or paying the full £10 and not incurring any additional interest or charges.
If you spend £60, then the minimum may switch to a percentage (ie 10% or £6) and you then have the choice of paying nothing and getting a fine and interest added to your bill, paying the new minimum payment value and getting charged interest on the remainder next month, or just paying off the full £600 and not incurring any additional interest or charges.
As I say, the minimum monthly payment might vary between deals, but usually it's a single value (such as £5) or a percentage of your bill (such as 10%), depending on which is greater. So if ten percent of your bill comes to less than the minimum monthly payment then you just have to pay the standard amount, if it's more you pay the percentage and if the total value of your bill is less than the standard minimum monthly payment (and thus also less than the percentage fee), you just have to pay the total value of your bill (which will normally be listed as the minimum payment) to avoid incurring additional penalties.
It only really comes into effect if you can't afford to pay of your bill in full each month though. So long as you aren't spending more than you can afford, you don't really have to worry about it, although it can be a good idea to set up a direct debit with the credit card company for the minimum payment so that they can collect it automatically in the even that you forget to pay your bill for any reason, so that while you'll get charged interest, you at least won't get hit with the extra penalties. It also means that if your bill comes to less than the minimum payment, it will be paid automatically, so you don't have to arse around writing cheques for a £2 credit card bill.
Most banks (In Australia) either offer no fees or waiting periods. No Fees means, duh no fees, But you pay interest the day after you dip into your credit. With waiting periods they charge a yearly fee (60 dollars here) and you get 30 to 60 days before you have to pay it off.
Personally I have a 60 day grace period. Also I only have a small amount of 1000 dollars credit as I know I can easily pay that off in a fortnight if I need to. Really don't ask how much credit you can get cause they offer you a stupid amount that you realistically couldn't pay back if you took it all. Choose an amount that you can pay off easily and don't see how much money you can get.
Satans..... hints.....
We get no fees and a 30-day+ grace period in the U.S. for the vast majority of cards.
Edit: Just realised one downfall of doing Debit card. Or atleast something I've had a problem with. Some sites, I think NewEgg is one of them, require a phone number from the back of the card which atleast my Debit card doesn't have.
Might be a small thing to look out for.
Seriously. It sounds like in Australia they are basically just 'loan cards'. At least most places you get a chance to pay off any credit you've used before they start charging you interest. If there are any cards in the UK charge you interest from day one, forget about it. There are plenty that don't. There are cards that charge an annual fee, but they are normally for large sums of credit and have extra fancy features, like the Amex gold and green (and black I guess) cards. I have a £3000 credit limit on my Amex blue with no annual fees.
Oh, it also probably bears mentioning that most credit and debit cards will charge a small fee for foreign transactions and/or rape you on the currency exchange. Not much though, maybe a couple of quid or so per transaction. Probably less than PayPal.
Not saying you lack control, but many do and that can lead to horrible amounts of credit card debt.
I use my CC for almost all my purposes because it A) builds credit as others have stated and
Forsake, Warlock of Stonemaul
I really need to do this more. I'm overly cautious with my CCs. I pretty much only use them when I'm on holiday or when I make overseas purchases because I just don't trust myself to balance the credit, but I really ought to be taking better advantage of the reward scheme with Amex, especially as I can pay off the balance once every three days or something online so I shouldn't ever get out of control.
Is VISA a specific company, or do all banks offer VISA debit cards? I want to stick with my current bank for all my cards (Natwest).
If your Amex has a good reward scheme, definately up your usage of your card. But like you said, dont let it get out of control. Carry around a "credit book" and write down every purchase you make with it (like a cheque book) so you dont lose track and overspend.
You may not trust yourself now, but as you use your CC more and more often, and pay off that balance, you can gain confidence in your responsibility with credit.
Forsake, Warlock of Stonemaul
Visa is an independent company, but they issue cards through other banks only. Some banks use Solo for their current account debit cards and others use Visa. It looks like Natwest only offer Solo, unfortunately.
You might consider something like American Express' prepaid credit cards. I'm not sure what sort of fees, setup costs etc. are associated with them though.
If you are getting a credit card, you want master card or visa.... American Express I don't usually see as being accepted at many places.
Get a credit card, just because you want to start building credit.
That's becoming much less of a problem, especially online. It is a good idea to have a choice of cards just in case though. I have a £3000 credit limit on my Amex and a Visa with £800. I try to use the Amex for almost all credit card purchases because of the cash back incentive (0.5% cashback on the first £3,500 every year and then 1% on everything above that - I think I'm looking at getting about £70 cash back at the end of this year from an annual spend of around £8,700) and then use the Visa as a reserve card for the odd occurrences when Amex isn't accepted (like...in Cuba).