Can someone tell me about credit cards please? Not ever had one before.

[Rhubarb]

I just applied for the WWF Credit Card, filled out their online form thingy and at the end of it all, got turned down!!!!
We're not in debt.
Dh has a job as do I.
We don't own our house but rent.
We've never had a credit card before. tbh, never really seen the point of 'em. We have a debit card and our philosophy has always been, if we don't have the money to spend then we don't buy it.

But if we are to be applying for a mortgage, we've been told that having a credit card would help our application.

So any ideas as to why we would have been refused one?

Also, can someone just run me through the whole 'thing' of credit cards. I mean, if you don't use it then you don't have to pay for it do you?

I could be wrong, but it's possible that you're not getting a credit card because you have no credit history - they don't know how likely you are to pay back.

The best way to get a credit card for the first time is to do so via your regular bank - they have a history with you etc. They'll give you a card with a small limit to start with but that will begin giving you a credit history...

... which is why you've been told to do it for the mortgage as the mortgage lender will want to see a credit history too.

Other reasons credit cards can be declined include regular housemoving (They think you're a flight risk), low salaries (in this market - didn't used to be a problem), insecure/irregular work. If you're willing to sign up for a direct debit, you're more likely to get one too.

As for paying, that depends on the card. certainly, you won't pay any interest if you don't use it, but many cards have an annual fee that you will still have to pay.

It's like getting a job for the first time, they want you to have experience so don't give you the job but you can't get experience until you get one.

Same with credit. Haven't built up a record of credit, then you can't get credit!

Bloody stupid system.

There are some cards available to build up a credit history but they tend to have high interest rates.

If you are getting one just to build up a history then try one of these, but be sure to only use it once or twice and pay off the balance in full immediately. That way you get a recorded history of good credit without getting into the spending spiral that credit cards encourage.

Right, so I need to go to the bank and say I'm interested in their credit card but I don't want one with an annual fee.

I'm presuming that the interest rate won't apply to us atm anyway because we won't be using the card for anything. But if we did, say use it for a hire car or something, we'd pay the balance off straight away, so they'd be no interest to pay, is that right?

The thing of credit cards:

You buy stuff using the card
At the end of the month (or on a set date each month) you get a bill
On the bill is a list of what you have bought, with a total
The bill will say 'you have to pay by X date' (usually a couple of weeks after the date of the bill)
You can choose to pay off the whole balance, or pay a minimum amount (usually £5) or something in between
If you pay less than the full amount for a bill, the remainder is rolled onto the next bill, and interest is added (this is in general a bad idea)
So if you pay it off in full each month it doesn't cost you anything

I think that's it. Any other questions?

I think it depends on the small print of the credit card offered .. most credit cards offer an interest-free period on purchases, but other features attract interest straight away - for example if you take cash out it attracts interst immediately ...

If you do pay off the full balance you shouldn't pay interest ...

Yes, do not use credit card to take out cash.

Do use the card if you get one, even if you go to your internet banking and transfer the money as soon as you get home. I think it helps your credit rating more if you use it rather than just owning one.

You may have to get one with a fee, but they are usually in the region of £10-20 per year so probably worth it to build up the history.

Be wary of making too many applications by the way. Credit applications show on your history too, regardless of if you are accepted of not. Too many applications in a short space of time can be a big black mark on your record.

Speak to your bank, ask them for a genuine opinion of if they think your have a good chance of acceptance based on their usual criteria before they credit check the application. If in doubt, look elsewhere.

You can take cash out? What like a debit then?

So, you buy summat on this 'ere card.
You wait for the bill.
You pay the bill.
No hidden charges? No transaction charge?

How about if you just put the little shiny card in a safe place and not use it at all, would they want it back? Try to charge you for keeping their little shiny card?

If I ring up the bank now, what questions do I need to ask to stop myself from seeing like a complete oik?

seeming

Transfer? Transfer what?
You mean to say I can put money from my bank onto the little shiny card?
What for?

What would you normally use your credit card for then? Food shopping? Petrol? I can do those I suppose, once. But I'd much prefer it to come directly out of the bank than be sent a bill!

Sounds like this little shiny card is really more trouble than it's worth. Why do people get them?

credit rating - if you are not in the system they don't know how to rate you.

Get one from your bank - one that charges no fee. Use it for purchases and pay off each month - then you pay no interest.

Don't take money out on it - you are charged interest straight away - use your debit/cash card for that.

You can have it and not use it - but that probably won't build up your credit rating.

You can take cash out. From a cashpoint. Like a debit card. But DON'T! If you take cash out they charge interest from the moment you take it out.

If you buy stuff they charge interest only if you don't pay the bill in full by the time the bill says it needs to be paid.

Buying stuff in shops, in the UK, should have no charges attached whatsoever.

If you just put the shiny card in a drawer nothing happens. You'll get a bill each month saying 'you didn't buy anything so we don't need anything from you'.

Ring up the bank, say:
I've banked with you for X years
and I think I'd like a credit card
do you think I will be eligible for one
which one would you recommend for me
can you promise me that there will be no charges
what is the interest-free period on purchases (the time between when you buy it and when they want the money)

we have ones that give us cash back (about 1%) on what we spend - so we use it for food, petrol, and other stuff and pay off each month. Costs us nothing and we get a little bit back.

Some use it to ease cash flow - eg pay for something now and then pay it off once the wages go in at the end of the month.

Some use it to borrow - but that is an expensive way of borrowing money - and not relevant to your approach to money.

NO, cash taken out on a credit card is not like a debit card. You will be charged interest immediately and usually a set fee as well.

Otherwise yes - you purchase, you wait for bill, you pay. You can pay before the bill comes, no problem. You can set a direct debit up for 'pay balance in full' or whatever and set it for a date before the payment due date. Job done.

Make payment in full and on time - no interest.
Make partial payment and on time - interest added to balance owing.
Make payment late or miss altogether - penalty fees to pay.

Trillian is right, using the card will build up your history more.

Leaving an account inactive can mean that they will withdraw it, but not likely to happen very quickly.

I us it for cash flow and because it's apparently safer on the internet (if a website takes your money and doesn't send you the thing it promised to they have the credit card company's money and not your money, or something).

rhubarb - I have one purely because I pay for everything at the beginning of the month, just after I get paid - all my bills from the prior month. Then I know how much money I have left over for 'stuff'.

Also, I have a john lewis one and I get vouchers for using it.

I think most people have one because if they do have to spread the cost of something, they can. Also they provide a measure of protection so that if a company goes bust and you buy from them on your credit card, I think you're protected.

Have a look on moneysavingexpert though - sure he's better at explaining them than me!

You might want to have a look here for info on credit ratings.

Right ok. So you can pay your bills with them too can you?

I need to speak to my bank don't I? Can I ask for an extra shiny one? With maybe a hologram on it or something? Summat pretty to look at!

With the protection thingy though, if renegaded on a purchase made using your debit card, would you not be protected anyway? I know you are if someone takes money out - someone copied dh's card details once and used it to buy top-ups. Ok, he had to send his card back and wait for a new one, but we did get all our money back.

You do need to speak to your bank. It would be better if you could actually go in there, they could help you fill out whatever forms were needed and get it all sorted. If you phone them they'll just have to send you forms and then send them back and get it checked. If you go in they can check that you're eligible then and there.

Ooops on phone now!

No worries, let us know what they offer you.

She's babbling about stuff, sounds like a lot of monetary terms. I'm getting a bit bored.

You will have to pay for card protection ion some cases - ask them what that cost is as it can be weirdly high.

Also ask about any loyalty programmes/cash back. They can be very good.

Platinum card 15.9apr. No fee. Blah de blah. Been accepted though! A bit of hard sell on the insurance. And blabbing on about upgrading our account and stuff. I switched off and then realisd she was waiting for an answer!

And am now late for kid pick-up, oops!