# Credit cards and the workings



## Spoony (May 28, 2007)

I was looking at getting one of these 12 months 0%

I've saved up for my iPad but I keep considering getting a credit card and paying it up as I find it hard justifying the high outright spend. Also think getting a credit score and building it up might be of use.

How do they work in terms of when I'm done with it, are they easy to cancel? Does it affect anything if you do cancel?

I'm fairly new to credit.


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## Ravinder (Jul 24, 2009)

The credit card will continue to be an active account unless you physically close it. No, it won't affect you at all if you decide later you wish to close your credit card account down. It is a good way to build credit though, especially if you don't really have much credit. Just be sensible with it and whatever you do don't EVER miss a payment on it. Best bet is to set up a direct debit up with the credit card company when you do open it This way, the company can take the payment from your bank account when it is due. Saves you having to remember to pay it yourself and running the risk of missing your payment as the credit card company will charge you and this will also go against you on your credit report.
You can usually choose to set up a direct debit for the minimum payment, full payment or payment of your choice as long as it is not below the minimum payment. I usually set up a direct debit for the minimum payment but make additional one off payments to my credit card each month from my bank account as a bill payment.
But yes, you can spread the costs over the interest free period and just pay back what you spent in the first place so you can keep your savings this way. Hope that helps.


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## The Cueball (Feb 8, 2007)

Credit and credit cards work very well, if you are strict in how you use them...

I have one now, since I had a very low, almost zero credit rating as I am not in debt :lol:

Amazing how this country works... you are only "good" if you have "debt".... 

Anyway, I have been given one to help out, but with a £100 limit... it's not even enough to fill up the car with petrol... what I am doing at the moment is buying some fuel every month and paying the balance...

*most* of the people I see in trouble, a) don't understand that it's not free, and you have to pay it back, and b) pay the minimum balance each month...

a)	Is just being stupid.
b)	Is a bit more dangerous, as you are them classed as a "good" customer, and they put your credit limit higher and higher... which in turn leads to more debt.

As I say, if you are strict with what you are doing with it, then they are good to use, esp if you get a 0% transfer rate...

One thing about paying off the "full" balance each month as well.... I have found my card has their own "special" cut off date, which, guess what... means that they never actually take the full balance... all very odd, but basically a scam to try and earn interest....

:thumb:

<edit> As long as you have paid any balance off, there is no harm in closing it down when you want...


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## SteveTDCi (Feb 8, 2006)

0% is very good if you can get it, we put our sofa and TV on it and then just made regular monthly payments, providing you are not stupid and keep adding to the debt then its a cheap way of getting something expensive where you can spread the payments.

Ours is no longer interest free but absolutley hammer it every month, everything goes on it fuel, shopping, even the occasional car  we pay the balance off every month so we don't get charged interest. We also collect tesco points, so far we have had hotel accomodation, a watch and an iphone 4 all free ...... thats courtesy of tescos.


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## Pezza4u (Jun 7, 2007)

Tesco's wouldn't give me a card when I applied a few years ago, don't know why as everyone else hasn't refused. I really wanted one to collect the points on rather than my M&S card, which I get vouchers to use instore...pays for the odd dinner though!

Whatever you do cut the card up once you've used it to buy the ipad so you're not tempted to carry on spending on it!


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## Spoony (May 28, 2007)

Thanks folks, I've applied for a tesco one with 15months 0% so that was ideal.

Thanks for the knowledge on it.


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## justina3 (Jan 11, 2008)

i thought the 0% rates where balance transfer deals shows how long since i have looked at them


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## Spoony (May 28, 2007)

9 months 0% balance transfers and 15 months 0% purchases sounded ideal to me.


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## bigslippy (Sep 19, 2010)

justina3 said:


> i thought the 0% rates where balance transfer deals shows how long since i have looked at them


I was just thinking the same:lol:


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## Guest (Mar 19, 2012)

Spoony said:


> 9 months 0% balance transfers and 15 months 0% purchases sounded ideal to me.


Just be aware how they allocate your payments (towards reducing balance transfers/purchases). That will help dictate how you use the card.


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## Bero (Mar 9, 2008)

Used correctly credit cards are great - you likely won't get near enough to buy an ipad with to start. On the other hand misused they can be rather dangerous.

In times of better interest I used to put all my day to day costs and work expenses on a 0% card (or 'super balance transfer money straight to my current account if the card would let me!) and pay it off the day it came off 0%. It worked out well as I earned interest on the money in your bank then paid it off before I were charged anything; my limits were going up and up with companies. But interest rates started coming down and CC companies could see what I was doing and understood they would not make any money from me......so new card limits got very small again.

On the scarier side I ended up with >£50k of available credit....


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## SteveTDCi (Feb 8, 2006)

Tescos also do 6 months interest free on purchases from tesco direct, there is a minimum spend though.


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## TubbyTwo (Apr 14, 2011)

15 months 0% for me. 

if your sensible, its the cheapest way to borrow money PROVIDING you pay the amount off in the time period. 

I put our Kitchen on mine, when the card runs out bump it to another 0% one and so on.

Work out what the monthly repayment would be on your amount and set that amount as a DD. Then pay off any extra as and when you can.

Simples.

If you have poor self control, dont do it. lol.


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## TubbyTwo (Apr 14, 2011)

Bero said:


> On the scarier side I ended up with >£50k of available credit....


Crazy isnt it, at one point over 3 cards I probably a total of around that.

So easy to financially f**k yourself over if yoy wanted to! :devil:


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## TubbyTwo (Apr 14, 2011)

also worth noting that I have never closed an account when the 0% runs out.

Stick the card in the safe and forget about it. Usually after 6months or so they will write to you with another 0% deal again. I have 3 cards (Virgin, Tesco and M&S) and just keep rotating them everytime they offer a new 0% run.

I was at one point putting all my tesco shopping and fuel on the Tesco CC, as you pretty much earned double points on food an fuel until they reduced it 

If I was going to get an I pad I would use a CC. if you have the cash already makes sense to leave it in your bank and jsut pay it off bit by bit and earn a little interest.

Have a read here:

http://www.moneysavingexpert.com/cards/best-0-credit-cards


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## Bero (Mar 9, 2008)

Another point worth noting is the protection you get using a credit card.

Say you pay a £100 deposit on a car with a CC and the £19,900 balance the following month in cash/debit card; but the day after the garage goes bankrupt.......your credit card who pay you back the FULL amount you paid (£20k).

I'm having issues with something I bought from the Best Buy closing down sale; I put the item on my card as: -

A) I get a % back in cash each year.

B) BB may not be around to cover any claims.

Best Buy will get another chance to sort it out....next step a section 75 claim against American Express.


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## Pezza4u (Jun 7, 2007)

TubbyTwo said:


> also worth noting that I have never closed an account when the 0% runs out.
> 
> Stick the card in the safe and forget about it. Usually after 6months or so they will write to you with another 0% deal again. I have 3 cards (Virgin, Tesco and M&S) and just keep rotating them everytime they offer a new 0% run.


Don't forget if you do this you will get charged to transfer the balance, usually 3-5% of whatever it is. It's still alot cheaper than paying the monthly interest though!!!


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## Ravinder (Jul 24, 2009)

^^

Good point.


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## Huw (Feb 16, 2007)

Bero said:


> Another point worth noting is the protection you get using a credit card.
> 
> Say you pay a £100 deposit on a car with a CC and the £19,900 balance the following month in cash/debit card; but the day after the garage goes bankrupt.......your credit card who pay you back the FULL amount you paid (£20k).
> 
> ...


Exactly what my old man did, except he paid in full on the card. Car turned out to be faulty, he tried to reject it, garage not interested. Ending up getting all his money back, plus all of his out of pocket expenses; engineer's report, two trips to Bristol to try & resolve the issue and the cost of a transport company trailering it from West Wales to Bristol when it was finally returned.


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## PaulN (Jan 17, 2008)

Credit cards arent an issue if handled well, Debt isnt an issue if you handled well.

I guess to make use of a interest free period you might need 2 cards though one to buy the ipad the other to transfer the balance over to.

I buy everything on my cards and clear the balance monthly. I also give at least 7 days for the payment to clear because they do get a bit savy and hit you with a fee.

Out of interest i might check my available credit......... must be £50k-£60k!!!!!

My advice is if you can buy it on a credit card completey free then great if not buy cash. btw it will take at least 7-14 days for your card application to be accepted.

PaulN


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## JJ_ (Oct 26, 2005)

Tesco have a card just now which is 0% for 16 months I think, I use it for holidays or bigger purchases. 

I get points and the items I want slightly quicker! I am currently paying mine off after renovating the flat, came in great for that. 

John.


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## Matt. (Aug 26, 2007)

Tesco give you an instant answer. Within 10 days I had my card & pin.

0% 15 months on purchases and 0% on balance transfers 9 months.


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## Pezza4u (Jun 7, 2007)

I decided to apply for a Tesco credit card again and got accepted this time, really not sure why I was refused last time as I have a good credit rating. Anyway 15 months 0% on new purchases will be handy. I normally get a new card for the balance transfers but I might as well take advantage of this and use it for my day to day spending and build the points up.


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## Shug (Jul 13, 2007)

BareFacedGeek said:


> Just be aware how they allocate your payments (towards reducing balance transfers/purchases). That will help dictate how you use the card.


The law has changed on that and they are obliged to use payments on the higher interest items first now.


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## Guest (Mar 26, 2012)

Shug said:


> The law has changed on that and they are obliged to use payments on the higher interest items first now.


Thanks, I didn't know that. Got caught out by that last year.


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## Spoony (May 28, 2007)

I've got my Tesco card in. I'm tempted to just put everything on it and pay it off each month - thus collecting club card points as I go. If I were to spend 500 a month on it for 15 months I'd have a cool £75 of clubcard points after the term. 

Potentially £500 a month on it is excessive but I'll at least put my fuel etc on it and get points


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## Beancounter (Aug 31, 2006)

As said above debt it ok.......as long as you're managing it, and it's not managing you!

I have a credit card and use it for all our household expenditure plus my work expenses when I travel (hotels, dinners etc).
It's cleared off every month and allows us to receive circa £100 of John Lewis vouchers each quarter, which is nice 

The key is not to think, ooh look at that credit limit and then spend up to that, thats how people get into trouble


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## Pezza4u (Jun 7, 2007)

Beancounter said:


> It's cleared off every month and allows us to receive circa £100 of John Lewis vouchers each quarter, which is nice


What card is that mate? I have an M&S one I use to collect the vouchers but it doesn't stretch very far as it's not cheap there!


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## Beancounter (Aug 31, 2006)

^^^ John Lewis Partnership Card Prezza:thumb:

The vouchers are good as you can use them in Waitrose too 

Bear in mind though that we have joint cards and get everything on them; food shopping, fuel, train travel to work, Internet purchases (Amazon etc), you name it, it goes on there - at the end of the month the full balance is taken via DD.


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