Credit Cards

[Ozwin]

Right, bare with me here, economics was not my strongest topic and at 1.30am I'm not at my brightest.

I want one, a) to help with my credit rating (which everyone goes on about these days) and b) I want a new TV and don't fancy splashing £500 in one go, I mean I could, but it'd be nicer if I only had to spend £100 for 5 months and spread it out nicely that way. I could probably get a better TV that way too.

Anyway I've had a look on MoneySupermarket and used their search function thing and it brought up a load of cards but I have absolutely no idea what anything means and to be honest, I have no idea what I'm looking for in the first place.

For example this is the first one that came up on the list:

I couldn't tell you what any of these terms mean:

Purchases

Balance Transfer

Cash Advance

Representitive APR

Rewards

So FoxesTalk, help a brother out. Find me a credit card if you want, it'd save me a bloody job!

[SOCCERROO FOX]

Worked for a major bank over here doing Credit Card fraud and littigation, therefore would never recommend anyone getting a credit card ever. Seeing the amount of crap people get themselves in to. Sometiem thru no fault of there own lose there job at the wrong time etc.

[ozleicester]

Right, bare with me here, economics was not my strongest topic and at 1.30am I'm not at my brightest.

I want one, a) to help with my credit rating (which everyone goes on about these days) and b) I want a new TV and don't fancy splashing £500 in one go, I mean I could, but it'd be nicer if I only had to spend £100 for 5 months and spread it out nicely that way. I could probably get a better TV that way too.

Anyway I've had a look on MoneySupermarket and used their search function thing and it brought up a load of cards but I have absolutely no idea what anything means and to be honest, I have no idea what I'm looking for in the first place.

For example this is the first one that came up on the list:

I couldn't tell you what any of these terms mean:

Purchases

Balance Transfer

Cash Advance

Representitive APR

Rewards

So FoxesTalk, help a brother out. Find me a credit card if you want, it'd save me a bloody job!

I could be wrong, so dont quote me on it but... I think this particular offer is for transferring an existing card to them. Nevertheless the basics are the same.

Purchases - you will not pay interest for the first 3 months - so, buy telly in March and pay off card before May and you pay no interest

Balance transfer is for a previous card N/A

Cash advance is rather than paying for the TV for $100 on the card ... you actually get $100 cash from the card...and then pay cash for said TV (or accidently stumble into Pub and have great Night)

The APR is most important as that is the amount of interest you will pay on whatever you borrow... APR 20.9% = borrow $100, over 12 months you will pay back an extra $20.90 (this is simplified and subject to me fookin up) it is variable and therefore can go up or down at the banks filthy greedy choosing

Rewards = we are giving this card to almost anyone who can string 2 words together.

Couple of suggestions..

Dont know if they do it in UK.... if you can get a card that gives you the 30-50 days to pay without attracting interest, they are great, effectively the bank is lending you money and as long as you pay it back before that 30 days... no interest charged

Only get a small limit to begin with until you are sure you can manage it.

Lower the APR... better off you are

Have lived with and used Credit Cards for 30+ years, if your careful and sensible they are invaluable and at times a life saver... if your stupid, dont get one!

[NeilyBoy]

^^^ Nutshell right there. The APR (Annual Percentage Rate) is a bit misleading as it's a monthly compounding rate instead of simple addition onto the money borrowed. The EAR (Effective Annual Rate) is the compounded rate. To work out the EAR use the following equation: ((1+(APR/n))^n)-1 where n is the number of months the interest is compounded over.

Example:

Using the above card and your 5-month TV plan the 'obvious' amount repayable would be 500*1.209 = £604.50

Whereas what you'd really have is an EAR of: ((1+(0.209/5))^5)-1 = 0.227 or 22.7% meaning you'd pay 500*1.227 = £613.50

I don't know too much about current credit card rates but upwards of 20% sounds a bit steep to me. Maybe that's just where the economy is though.

Glad my time at uni's finally getting used!

[MikeyT]

Worked for a major bank over here doing Credit Card fraud and littigation, therefore would never recommend anyone getting a credit card ever. Seeing the amount of crap people get themselves in to. Sometiem thru no fault of there own lose there job at the wrong time etc.

This, this and this entirely.

[jonthefox]

Just wait and save.

As my dad said to me once "if you haven 't got, you can't have".

[Saxondale]

^^^ Nutshell right there. The APR (Annual Percentage Rate) is a bit misleading as it's a monthly compounding rate instead of simple addition onto the money borrowed. The EAR (Effective Annual Rate) is the compounded rate. To work out the EAR use the following equation: ((1+(APR/n))^n)-1 where n is the number of months the interest is compounded over.

Example:

Using the above card and your 5-month TV plan the 'obvious' amount repayable would be 500*1.209 = £604.50

Whereas what you'd really have is an EAR of: ((1+(0.209/5))^5)-1 = 0.227 or 22.7% meaning you'd pay 500*1.227 = £613.50

I don't know too much about current credit card rates but upwards of 20% sounds a bit steep to me. Maybe that's just where the economy is though.

Glad my time at uni's finally getting used!

Neil's right about APR being misleading.

When it concerns credit cards, though APR won't easily give you an accurate idea about what interest you're paying, it does give you an idea about how good value the card is.

When it comes to fixed term loans, this is slightly different because APR accounts for the cost of borrowing relative to the term (time) over which it's borrowed and NOT the overall cost of borrowing. That is why the APR on a mortgage looks really low even though you're actually paying hundreds of thousands of interest whereas on the other end of the spectrum you have these payday loans where a two week borrow might only cost you a 'real figure' of 10% but the APR shows as 4000% or something (literally).

In terms of building up your credit rating, they'll all have the same effect, so long as you can get accepted in the first place and you don't miss payments on them.

Contrary to public opinion, credit cards represent good value borrowing over the short term. They are only expensive if you keep balances on them and only pay the minimum.

I suggest you consult Martin Lewis' moneysaving forum website. He is the don.

Oh, and as a last point, don't use the cash advances, look for a good or 0% purchase rate and pay for the telly on your card.

[welck12]

I suggest you consult Martin Lewis' moneysaving forum website. He is the don.

Oh, and as a last point, don't use the cash advances, look for a good or 0% purchase rate and pay for the telly on your card.

Spot on. He dumbs things down so all of us idiots can at least understand thigns and then make our own choices. You should be able to find one with at least 6 months interest free to start with, thats a pretty standard option

All i do with my credit card is buy my monthly train ticket with it then clear it off each month, worth doing to build your credit rating up but like others have said if you arent disciplined or feel you have bad self control they can cause you a huge problem. And never use it to withdraw cash, you'll get charged a fortune for it

[Master Fox]

Just wait and save.

As my dad said to me once "if you haven 't got, you can't have".

uh?

[Saxondale]

uh?

You haven't got a clue so you'll never have a clue.

[Master Fox]

You haven't got a clue so you'll never have a clue.

If you haven't had, then you haven't got.

Pretty simple really.

[Ozwin]

Oh yeah I know not to withdraw cash with them or anything, they charge you a fortune. This'll just be for purchases which I'll then pay off within the month or my TV example a few months. I've got the money already like, it's just if I can help myself then why not?

So if I've got this straight, this representative APR is basically a total interest calculated from the amount you've borrowed over the year? And this is always going up or down? So no matter what you're always paying a little extra than you borrowed?

[Christoph]

Credit cards are for suckers. Just save up, they seriously aren't worth having. Plus by saving up your going to learn how to manage your money far better than if you were to have a credit card.

[Saxondale]

So if I've got this straight, this representative APR is basically a total interest calculated from the amount you've borrowed over the year? And this is always going up or down? So no matter what you're always paying a little extra than you borrowed?

No, don't get too bogged down in APR. It is representative figure based on a VERY, VERY complex calculation. But it does signify how good value the card is.

Yes you will pay interest unless they offer you a 0% period on purchases, which they often will on new cards.

[Ozwin]

Right, it's still a bit unerving not knowing exactly what everything means. Like I don't want to be getting charged for something I didn't even know about.

Anyway, I like the look of this one, looks pretty basic and it looks to be a decent one for new card holders, what do you reckon?

[Leicester_Loyal]

Don't get one mate, just wait and save, you'll appreciate it more trust me.

[Saxondale]

If you pay off the balance with the 15 months period then that's perfect. Free borrowing.

[lcfcadam]

Credit cards are for suckers. Just save up, they seriously aren't worth having. Plus by saving up your going to learn how to manage your money far better than if you were to have a credit card.

This really isn't necessarily right at all. For people with stable jobs earning a decent income, a credit card can be a much more efficient way of managing your finances than just paying for everything you want at the time. For example, say my Dad wants to book a holiday abroad - despite having a decent and stable income, he's unlikely to end up in a situation where he can just fork out say 600 quid on demand.

With a credit card he can spread that amount (with low interest due to a good credit rating) and end up with added extras like air miles (he's already had several free domestic flights out of these to a combined cost of a few hundred quid). So by having a credit card he's ultimately saved money, and been able to pay for something he wouldn't have been able to afford in one big pop.

Granted, there is always a risk which is why you should obviously think carefully about whether it's right for you or not. Basically if you're not fully confident in the security of your job for the foreseeable future, then it's probably not a good idea.

[Babylon]

Get a cash back card that pays you for spending on it, but set up a DD so that you pay it off when it's due = FREE money.

And if you time your purchase correctly you can go about about 7 weeks before it comes due. So you spread it over two months.

[dave_the_fox]

I always have a 0% interest card on me. I have had that tesco one a year or so ago, just make sure u pay at least the minimum amount each month and make sure it is at £0 after 15 months. Then chop the card in two - free borrowing :-)

[Jackirius]

Don't spend what you haven't got is what i would say. And why do you need a £500 quid tv anyway, I've got a £200 32inch and it is perfect, i don't see the need in these big 50 inch latest whatever tvs.

[Ozwin]

I always have a 0% interest card on me. I have had that tesco one a year or so ago, just make sure u pay at least the minimum amount each month and make sure it is at £0 after 15 months. Then chop the card in two - free borrowing :-)

This is what I'm going to do I reckon. Is the minimum amount calculated once you've bought something or is it the same for everyone?

Don't spend what you haven't got is what i would say. And why do you need a £500 quid tv anyway, I've got a £200 32inch and it is perfect, i don't see the need in these big 50 inch latest whatever tvs.

Because a) I'm a massive techy nerd b) I'm well picky about brands (especially when it comes to TVs) c) enjoy your Panaphonic TV bro, see you in 6 months when it's bust,.

[dave_the_fox]

This is what I'm going to do I reckon. Is the minimum amount calculated once you've bought something or is it the same for everyone?

I think it says what it is on that tesco link you hav put on (on phone so not easy to check)

If I was you anyways, I would probably just pay £100 off a month which would easily cover your minimum payment and also have your telly paid off in 5 months

I got my card(s) when I first bought my house and when my son was born - it really helps

All I'm gonna say is heed the warnings be sensible and don't go mad :-)

Btw I've currently got that m and s card the link mentions!

[Ozwin]

I think it says what it is on that tesco link you hav put on (on phone so not easy to check)

If I was you anyways, I would probably just pay £100 off a month which would easily cover your minimum payment and also have your telly paid off in 5 months

I got my card(s) when I first bought my house and when my son was born - it really helps

All I'm gonna say is heed the warnings be sensible and don't go mad :-)

Btw I've currently got that m and s card the link mentions!

Sweet, the M&S and Tesco ones are pretty similar aren't they? They're basically dependant on which shop you visit most, I don't think I've been in M&S for about 3 years haha whereas Tesco is just up the road.

As for the post about cashback cards, I think they're a lot more picky about giving people those, like you need to be earning a fair whack, and I bet it's even harder if they've never had one before (ala me). But it's certainly something to look into maybe after my first one.

[dave_the_fox]

Sweet, the M&S and Tesco ones are pretty similar aren't they? They're basically dependant on which shop you visit most, I don't think I've been in M&S for about 3 years haha whereas Tesco is just up the road.

As for the post about cashback cards, I think they're a lot more picky about giving people those, like you need to be earning a fair whack, and I bet it's even harder if they've never had one before (ala me). But it's certainly something to look into maybe after my first one.

Yeah the cards are the same, i already had the tesco one so i had to go onto M and S. I have £4 in m&S vouchers thanks to my card so far - i dont think ive ever spent a penny in there