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Original poster

Credit Cards... Does it cost...

108 replies

cjt110 · 29/05/2018 14:42

...just to have one?

My credit rating is pants. I've never had any credit cards or loans in my life. As such, when I go to, for example, get a new mobile phone it tells me my credit rating is poor and I am rejected.

My husband said to apply for a credit card, get it and then cut it up as it will help me improve my credit rating. Applied for a capital one card - am activating online and it's asking me about setting up a direct debit. Surely if I have a card and don't use it, I don't need a direct debit because they won't charge me anything? Or am I being stupid?

OP posts:
AlmostAJillSandwich · 29/05/2018 18:25

Wait, so im doing something wrong by paying off throughout the month?

For example, i put £130 on the card on May 5th, and it takes 3 days to officially register on my online running statement.
I pay it off in £20 or £30 installments each time i get paid (ESA fortnightly, PIP monthly) so Through May i have made 3 payments of about half the balance, even though it doesn't have to paid off til end of June, so my current credit limit goes back up as the payments clear.
My June statement will show just what i have left to pay off still, and my monthly minimum payment is calculated based on that. The rest of the balance will be split into 3 roughly equal payments and i pay those as soon as my payments come in to my current account each time. Not sure if it makes a difference but my account is handled 100% online.
Despite doing things this way i haven't had any interest and my credit score went up to almost maximum, but you say im doing it wrong?

I'm currently completely housebound longterm, so have no choice but for my dad to be the one who takes my cards out to buy stuff for me/us (online shopping is a no go, i have severe OCD and dont trust someone else picking my stuff and how they pack it, put it on the floor etc, not knowing if they wash after the loo, plus half the stuff if from places like aldi, home bargains etc who don't do home delivery, and since i can't leave the house at all, i can't even just go out myself once a month to withdraw my money in cash. I can't just transfer the money to my dad as he is almost always overdrawn within a day of being paid as all his DD's go out, so the money wouldn't actually be there, it would just lower his overdraft) and hes not so great with money. If i left the money in my account for the whole of May, and didn't start paying off til June, i can guarantee the money i would have paid in installments wouldn't still be in my account, or at least not all of it. My dad would think it was available money that wasn't earmarked for anything specific and so would likely buy a few extra luxuries in the food shop, or "treat" me by showing up with a bag of snacks or a little present like box of my fave chocs because he thought we had a bit left over that month to afford to have something nice. He's wonderful, he takes care of me and i wouldn't survive without him, but he's the type if he has spare money he'll spend it. I'm forever having to ask him to be careful with how much i have left in my account, remind him how long it is til i next get paid, how much i still have on the CC to pay off, i lose sleep over it, while he's the type to tell me to just not worry about it. A few bad decisions on his part since the beginning of the year has meant that my Savings of £300 i really didn't want to touch, and possibly even wanted to add to, has dwindled to £260 as he's spent more than he meant to then has a DD due and needs me to transfer him money to cover it. I did manage to add back to it after the last quarterly electric was paid off as i then did have a little bit extra at the end of a month, but had to transfer it back out to him again.

I hate hate HATE money, and knowing im always going to have to juggle it like this because my illness is long term and benefits pay so low. At least i don't have to worry about ever getting a mortgage, because i'll never be able to bloody afford to live on my own, even renting. Cue living with my father for the rest of my life, how completely depressing, god knows what happens if he has to go in to care and they want to sell the house, i'll have nowhere to go.

Tina851 · 29/05/2018 18:32

Wait, so im doing something wrong by paying off throughout the month?
Yes - have you been paying interest? Wait until you get the statement, and if you pay it off in full, you won't pay interest. If you pay it before the statement is issued, your payments will be allocated to the wrong month.

LemonysSnicket · 29/05/2018 19:45

We pay our bills on credit card and then pay them off as soon as poss. DPs credit rating is fantastic because of it.

SensoryOverlord · 29/05/2018 22:53

Do not pay it before you get the statement, otherwise you confuse the system and will miss that month's payment, if that makes sense?

This is NOT TRUE.

As long as you make payments 3 days before the Direct Debit is due, it won't 'confuse' anything and NO you do not get 'black marks' or missed payments for paying off your card in increments, as soon as you use it Hmm

The worst that can happen is that if you use the card and pay it off too close to your statement date, any pre-set Direct Debit may still be claimed, putting your card into overpayment (credit) - which can then be spent or returned depending on the banks rules.

If you do pay your card straight after using it, your statement will arrive showing a £0 balance as you've already paid it off before the statement date. Which means it won't be beneficial to your credit rating as the balance the credit card provider registers is always £0 - the same as if you hadn't used it at all.

THATS why you should wait for the statement, not for any other reason. For the poster banging on about missed payments and systems getting 'confused' you shouldn't be giving advice when you clearly don't understand how it works.

TroubledLichen · 29/05/2018 23:06

Sensory Thank you for your excellent post, really informative! I didn’t know that paying before the statement period ends would be beneficial to your credit rating. Doesn’t apply to me since I auto pay the full balance every month but it’s still really interesting to know.

Tina851 · 30/05/2018 05:41

The worst that can happen is that if you use the card and pay it off too close to your statement date, any pre-set Direct Debit may still be claimed, putting your card into overpayment
What I said is correct. You are confusing statement date with payment date. What I am saying is don't pay your credit card before you've received the statement. As long as you've received the statement you need to pay it before the payment date. If you pay it before you receive the statement, unless it reduces it to a nil balance, then the account will think you haven't made any payments that month

Tina851 · 30/05/2018 05:45

For the poster banging on about missed payments and systems getting 'confused' you shouldn't be giving advice when you clearly don't understand how it works.
I DO understand how it works. YOU haven't understood what I've said. Its ok if paying it off early reduces it to a nil balance, but if so much as a penny remains, then you are leaving yourself open to defaults

PlumsGalore · 30/05/2018 05:46

DS got one as soon as he left uni to build his credit rating. He got a specific one with a high interest rate that builds your rating quicker, I think it was a Reaco one. It has a very low balance like £500 and he had it once a month for petrol just before pay day then paid it off on payday. It really did increase his credit rating, we watched it go up on Clearscore, which is free btw.

Once he had a better score he got another with a low interest for emergencies and cut up the Tesco one.

PlumsGalore · 30/05/2018 05:48

Oh and agree with Tina, he waited until he had the statement before paying it.

Imchlibob · 30/05/2018 05:51

Set up the card to pay off the balance in full every month, then use it for one predictable and budgetable thing eg just use it when you buy petrol or when you go swimming or something else that you reliably do/need at about the same rate week in week out. Then you basically don't have to think about it.

Having a card and not using it does not improve your credit rating.

Having it, using it and paying it off shows that you can manage your money well. Saying that you don't want to do this because you are worried that you can't manage your money rather suggests that the ratings companies are correct to give you a low score - if you want to be trusted to cope when things are complicated then you mustn't be so avoidant of a little mild complication.

unicorn56 · 30/05/2018 05:53

I have a credit card from an actual bank, I got it by going in (with an appointment) and the bank guy set the direct debit up for me. So, if you worried you could do this?

Aus84 · 30/05/2018 06:09

Does your husband have a credit card? If he has a good rating you can become an authorised user of his card and build your rating that way.

ThatsNotMyToddler · 30/05/2018 06:18

Aside from the credit card I would suggest getting a copy of your credit history. If you’ve no cause to believe you have a bad history then it may be they hold incorrect information under your name.

I was refused a mobile phone contract once and when I asked why I realised that Experian or whoever it was had all my brothers (and their various teenage idiocies) linked to me credit-wise because we had (obviously) lived at the same address for many years. I believe credit rating is still mainly done on address so worth checking they have the right information for you and only you. (I’ve heard of other people who have been linked to prior occupants of their house also).

Info here (can’t do clever links, sorry)
www.moneysavingexpert.com/loans/check-free-credit-report

Tina851 · 30/05/2018 06:19

Does your husband have a credit card? If he has a good rating you can become an authorised user of his card and build your rating that way.
No. Having a card on somebody else's account has no effect on your rating. Only on theirs

BlitheringIdiots · 30/05/2018 06:20

We've got cards that earn nectar points. It means free food at Christmas. Just treat it like cash. I put everything on it that I would usually buy and pay it off every month.

BarbaraofSevillle · 30/05/2018 06:36

I believe credit rating is still mainly done on address so worth checking they have the right information for you and only you. (I’ve heard of other people who have been linked to prior occupants of their house also

Incorrect. People are only linked where they have joint accounts, generally limited to mortgages and current accounts. Being a second card holder on a credit card account doesn't count and unless you make a habit of opening joint accounts with previous occupants of your property, that wouldn't count either.

I DO understand how it works. YOU haven't understood what I've said. Its ok if paying it off early reduces it to a nil balance, but if so much as a penny remains, then you are leaving yourself open to defaults

Sorry but you DO NOT understand how it works. As long as you pay the minimum, generally 2-5%, there is no risk of default. However, if you leave a penny outstanding, you will pay interest on the whole balance including the amount paid off, so it's something to avoid.

Tina851 · 30/05/2018 06:42

Sorry but you DO NOT understand how it works. As long as you pay the minimum,
AFTER you have received the statement, NOT before. The OP was saying they pay money to the card as soon as they've spent money on it. You need to wait until you get the statement

Tina851 · 30/05/2018 06:45

there is no risk of default.
There IS a risk of default. If you pay money towards the card before you receive the statement, and have a penny or more outstanding, then you don't pay any money between the statement date and the payment date, you WILL default.

eurochick · 30/05/2018 06:55

Tina, please stop giving advice on something you don't understand you are looking silly.

Others on the thread have given good advice.

BlitheringIdiots · 30/05/2018 07:18

My dad paid the minimum early once as he was going to be on holiday when the payment was due. He got a default fee because he didn't pay on time. The payment he made was classed as an extra payment and not the one at statement time. Be warned!

Tina851 · 30/05/2018 07:24

Tina, please stop giving advice on something you don't understand you are looking silly.
I do understand.
My dad paid the minimum early once as he was going to be on holiday when the payment was due. He got a default fee because he didn't pay on time. The payment he made was classed as an extra payment and not the one at statement time. Be warned!
This. Set up a direct debit for the full amount to be taken automatically and leave it alone.

Aus84 · 30/05/2018 07:25

Tina - do you work in the industry? I CC piggybacked to build my score when I was younger. Perhaps the rules have changed or banks have tightened since then (GFC maybe) ?

Skiiltan · 30/05/2018 07:33

Finally Where is the best place to check my details - I have looked at experian who say I have a very poor rating but show me no details unless I subscribe

You can pay a one-off £2 fee to get your full credit record, although it's unlikely to mean much to you: it's only really useful for checking if they hold incorrect information about you, or in your case to see what is recorded against your different names. Remember there are three separate credit reference agencies, so you'd have to do this for each of them. I don't understand what the benefit of subscribing is supposed to be.

thelastredwinegum · 30/05/2018 07:36

Apologies haven't RTFT (have seen posts about paying off in full by DD though). They also offer protection for purchases >£100 so are worth having for that too.

SensoryOverlord · 30/05/2018 09:23

Tina if you pay only a small part of an outstanding balance before the statement date then yes a payment will still be due on the payment date. YES it counts as an additional payment only if you pay £20 of a £200 balance half way through your statement cycle.

BUT your statement would tell you £16 is still due by xx date anyway - as long as you read your statements and don't ignore requests for payments, there is no risk.

That wasn't what pp's were talking about - they were talking about credit ratings and clearing the card in full before the statement date and in that context, your posts were confusing and misleading.