My First Credit Card

[Clairey Fairy]

Ive got a £600 overdraft limit which is curently maxed out. I earn just over £800 a month. By the time my wages go in, standing orders for my rent and car payments (as in my own seperate savings pot for insurance renewals - no finance or anything as i baught him from my savings) come out on the first of the month, im back into the overdraft and having to live of that. Not ideal i think you'll agree.

Now, im fuly aware that im going to have to cut back on my spending and "live by my means" as my mum keeps telling me, but in the mean time i need to get myself out of the vicious cycle that is the overdraft.

Getting a loan isnt an option, but ive been looking at getting a credit card and doing a "balance transfer" ?! I wouldnt use the card for anything else, just purely to clear the overdraft say £40 a month at a time. Id cut the card up straight away/give it to my dad so i cant physically get to it.

Ive never had a credit card or loan in my life, closest ive got to credit is having a store card. Am i right in thinking that to get rid of this over draft using a credit card i need to look for one that is just 0% Interest and 0% on balance transfers? Ive seen a couple that say 0% on BT, but then have BT fee of 2.8%....

Im totally confused! Im too scared to go into the bank and ask, history shows that they have a habbit of getting me over a barrel

[Silver!]

Are you sure that an overdraft is transfreable as a Balance Transfer?

I just got a new card from Bank of Scotland with 0% and 0%, but as I don't have a balance to transfer I didn't read the small print in that section.

Just call a bank and ask. Don't necessarilly use your own.

Just done a search and found this thread...

If even think you may go over your interest free time limit, you would be better taking a card with life of balance. i.e. the interest rate is frozen until the balance transfer is paid off.

Edited August 26, 2008 by Silver!

[Clairey Fairy]

Ok...i still dont understand why it can say 0% on Balance Transfers, but then say Balance Transfer Fee 2/3%.....int that a bit contradictory or am i being painfully thick?

[Silver!]

Do you not have to pay an admin fee of 2/3% to transfer the money to your card?

[owieprone]

you pay a fee for the balance to be transfered which is 2/3% of the total balance, you then don't pay any % on whats on the card either for the time of the 0% offer or for the life of the balance whichever the provider offers, or until you spend on it at which point you will be charged their rediculously high APR%.

Your best bet may be to up your overdraft by another £50 to tide you over (or whatever you need) and simply claw your way back from there, you will be paying less (or nothing) for being in your overdraft than you would with a credit card, and you have less temptation to spend on it (unless you cut it up like i do the minute it comes through the door).

or, if possible, ask you mum/dad to sub you the £600 and you pay them back interest free. obviously dependant on your 'rents being able to afford this.

i would avoid a loan and credit card if possible. however, credit wise (as in whether you have good or bad) most companies prefer you to have a loan rather than a credit card. credit cards imply that you will be able to overspend and get into debt. loans imply that you had one large purchase that you decided to buy with a loan and pay back rather than save up for it, which implies no debt at all. however, with a small loan amount the apr will be high.

it's all very annoying! be glad your overdrafts only £600 and not £3000 like i used to have as a student.

[bossjohnc]

You have to be careful with these things, naturally!

A better way to do it in my view is to find a card which does 0% on new purchases for 12 months, then use that to spend money you'd usually spend elsewhere for a month, leaving the money you take in to pay off your overdraft.

That way you completely avoid the transfer fee that's always applied nowadays. BUT, you have to manage it properly and only spend where you would have otherwise.

They can be useful for other things too... Citibank have released a Shell credit card which gives me 6% off Shell petrol/diesel for 2 months, and 3% thereafter. Also gives 1% cashback on anything I spend. This is my favourite credit card at the moment

[Joe]

If you can get hold of an MBNA credit card, they offer 0% on BTs and purchases like everyone, but also offer 0% cash direct to your bank account which would be useful in your instance to clear the overdraft?

the handling fee is purely an admin fee based on the amount you are taking as credit. No way round it, just a money maker for the bank

[bossjohnc]

The handling fee never used to exist - they put it there to stop people making money by maxing out their cards and sticking the cash in a high yield account (and then just transferring the balance each time the offer expired).

The fee makes this much less profitable.

[Silver!]

Or you could always sell something.

[Picola]

Ive just bought some uber ace French Connection biker-esque boots on my card. Aswell as the coilies and doorcards, its been used for more than originally planned.

Must....cut...up

[Nicki]

You have to be careful with these things, naturally!

A better way to do it in my view is to find a card which does 0% on new purchases for 12 months, then use that to spend money you'd usually spend elsewhere for a month, leaving the money you take in to pay off your overdraft.

That way you completely avoid the transfer fee that's always applied nowadays. BUT, you have to manage it properly and only spend where you would have otherwise.

This is the wisest idea on here as you avoid paying the transfer fee.

BE CAREFUL though. Credit cards available to people with poor credit ratings or little credit history are notorious for ripping you off. I have a fantastic letter written by one of my friends to Capital One about one of their offers that he was "invited" to apply for, a card with a nice 29.9% APR.

[Picola]

Woah yeah I keep getting Capital one letters with that interest. No thanks!

[Alex_225]

I wouldn't even consider borrowing from another source at all.

Why don't you take £50 out right at the beginning of the month, put it away somewhere and make sure you don't touch it.

Then in 4 months you'll have £200 to pay into the bank that'll bring your balance up and chip that off the overdraft. You'll have that gone within a year or so and won't have paid any interest on it at all. Just a thought.

[tof1]

as per what bossjohn and nicki say i agree with there method to not incur an upfront fee however, .........if you do want to get out of your overdraft then virgin credit cards allow a balance tranfer to be paid to another credit card or more importantly to a current account, obviously you will incur the one off fee, so if you apllied for a virgin card and got a £600 limit (if they gave you 1k, you could reduce to £600), they would charge you £17.88 upfront, then for 15 months you would pay 0.0% interest if say you paid back the minimum payment each month, again virgin are one of very few credit card companies that let you balance transfer to current accounts , note at the end of the 15months the interest would jump considerabley, hope this helps

[tof1]

I wouldn't even consider borrowing from another source at all.

Why don't you take £50 out right at the beginning of the month, put it away somewhere and make sure you don't touch it.

Then in 4 months you'll have £200 to pay into the bank that'll bring your balance up and chip that off the overdraft. You'll have that gone within a year or so and won't have paid any interest on it at all. Just a thought.

the method claire is thinking of will certainly save here money in the next 12-15 months if its done correctly, basic current accounts have high interest rates on overdrafts, but you must also think beyond 12 months

[Alex_225]

Oh I see, I was under the impression that overdrafts were interest free! lol Shows how naive I bloody am haha.

[lunalupi]

Oh I see, I was under the impression that overdrafts were interest free! lol Shows how naive I bloody am haha.

Some of them are - I've got my old student overdraft maxed out at the moment with the money tucked away in a high interest savings account as it's interest free until June! So I earned £75 of interest by not paying it off straight away.

But most overdraft accounts have interest fees so getting that rate down while you pay it off is always something to try and do.

Edited August 26, 2008 by lunalupi

[Clairey Fairy]

You have to be careful with these things, naturally!

A better way to do it in my view is to find a card which does 0% on new purchases for 12 months, then use that to spend money you'd usually spend elsewhere for a month, leaving the money you take in to pay off your overdraft.

That way you completely avoid the transfer fee that's always applied nowadays. BUT, you have to manage it properly and only spend where you would have otherwise.

They can be useful for other things too... Citibank have released a Shell credit card which gives me 6% off Shell petrol/diesel for 2 months, and 3% thereafter. Also gives 1% cashback on anything I spend. This is my favourite credit card at the moment

Hmm....makes sense to do it that way, like you said id be aoiding any charges at all, but i know i wouldnt be able to trust myself using it for purchasing stuffs. Its almost as if i'd be using the 2/3% admin fee as punishment for letting myself get into this mess in the first place. Getting used to a 3.5k paycut is very very hard

If you can get hold of an MBNA credit card, they offer 0% on BTs and purchases like everyone, but also offer 0% cash direct to your bank account which would be useful in your instance to clear the overdraft?

Id rather not use the card to draw out cash to then stuff into my current account to clear the overdraft (is that what you mean Joe?) MBNA is very popular on the money advice sites...will look into it

I wouldn't even consider borrowing from another source at all.

Why don't you take £50 out right at the beginning of the month, put it away somewhere and make sure you don't touch it.

Then in 4 months you'll have £200 to pay into the bank that'll bring your balance up and chip that off the overdraft. You'll have that gone within a year or so and won't have paid any interest on it at all. Just a thought.

Very good point...but im looking for a quick fix just to get HSBC off my back...they've been constantly overcharging me but thats another story. I got into the vicious cycle of getting hit with a charge, so increased my overdraft to counter-act the charges - which then in turn cost me more charges for increasing it. Its my own fault for rushing into it and not talking to grown ups about it first:P

Arrgh so many options...

[nfbr]

I once told Capital one that I'd mail bomb them if they didn't quit sending me "credit card invitations"

would you believe it I've not had one in two years.

[Nicki]

Ok, I'm going to have to post his letter now:

Dear Capital One,

Thanks for the junk mail (enclosed) that you sent me recently. I’ve taken the liberty of using your freepost envelope to send you a response. Plus a little dissection of the package in general. Ok, let’s see:

Status: “Pre-selected to apply”

Thank you, I feel so privileged. Given that anyone can ‘apply’, pre-selection to do something that anyone can do is hardly impressive. I feel that ‘Pre-selected to receive **** through the post” would have been more appropriate here.

Please respond by: “05/06/07”

This is the first time I’ve ever been disgusted enough reply to junk mail. I have, however, deliberately left it until after the application expiry date just to rule out even the most miniscule possibility that by simply replying I’ll end up with one of these cards in my wallet.

Card choice: “A free choice from 8 great* designs”

*A little presumptuous I feel.

Summary of benefits:

– “Credit limit of up to £2,500” (Included)

Which also means a credit limit of, quite possibly, hardly anything. In the same way as I’m “up to” 6ft tall with a **** that’s “up to” 12 inches long. Anyway, it’s probably a good thing that I’m not guaranteed a credit limit of £2,500 given your card’s APR – which is quite literally all the way up to a disgraceful 34.9%. More on that later.

– “Credit limit increase on your 4th statement… etc” (Included)

Hmm, this should prove very handy for any poor sap that’s gullible enough to apply for and accumulate a maxed-out balance on this card (clearly your target market) to run themselves further into the ground.

– “No annual fee” (Included)

No! Really? No annual fee? Capital One, now you’re really spoiling us. You mean I don’t have to pay for the privilege of being charged 34.9% APR? It’s a shame actually, because I’m sure the British Museum would pay a fair few quid for an actual living ‘annual fee’ these days; given they pretty much went extinct over five years ago. Still, nice ‘benefit’.

– “Your choice of our most popular card designs… etc” (Included)

Now we’re talking. Sign me up guys. If I may though, I’ll cease being flippant for a moment and concentrate solely on the sinister application of this marketing technique. This, to me, is clearly an attempt to distract people from the unattractive intricacies of what is, let’s be honest, a pretty appalling credit card. And I’m guessing that someone who’s financially naïve enough to base a credit card choice primarily its design is someone who’s going to be pretty vulnerable to the effects of your outrageous APR, as well as benefit number two above. But then, that’s probably the demographic you’re aiming for, hence the simplistic emotive nature of the designs: harmless fluffy animals (for the ladies) and, lest the boys felt left out, some dramatic lightening and an England flag. Oh, and a random picture of the earth – possibly to symbolize what running up a balance on this card would cost you. Some more depictive designs could, perhaps, be: a low-income couple strangling each other over a sea of red letters, the swinging cadaver of another debt-related suicide victim, or perhaps maybe just a plump, freshly-coiled turd; a real-life example of which your tiny ‘business reply’ envelope unfortunately allows no room for.

– “Worry free shopping – Active Fraud Protection… etc” (Included)

If I were shopping with this card I’d be very worried indeed. Besides, this is, again, another ‘benefit’ that you can get with pretty much any other credit card on the market.

– “Convenience for you – 24 hour, fast and friendly customer service… etc (Included)”

As well as being just as weak (and for the same reasons) as benefits three and five, I notice that you’ve not mentioned if the line’s free or not. I assume not as, not only would you mention so otherwise, but also, like most businesses, you probably don’t want to be inundated with pesky ‘customers’ wanting ‘service’. I know I wouldn’t. I hate hearing people cry on the phone.

Lower headline: “Remember, the sooner you apply, the sooner you could be accepted.”

You mean the sooner I do something the sooner something might happen? What a staggeringly vapid sentence. Still, it’s in nice big type for no reason so at least it’s got that going for it.

Interest rate: “Typical 34.9% APR variable”

This is in all honesty** the highest rate I have ever seen on a credit card. Evidently you think the same as you’ve hidden it away in the bottom corner – and even then, presumably, only as your legal department and FSA regulations don’t allow it to be sequestered in the small print. I’m guessing that the reason I’m being offered a rate this high is because your systems flag me up as ‘sub-prime’ (fiscally inept) borrower material. Which, for the record, I’m not, but that’s besides the point.

The thing I find genuinely troubling is the prevalence and ubiquity of the kind of manipulative, cynical and insidious marketing techniques employed in exemplary fashion by your mailing. It is using knowledge gained by the study and analysis of human behaviours and tendencies to knowingly manipulate the most vulnerable within our society. Simply because it’s profitable to do so. In my view, information gleaned about people from the study of people should be used for the benefit of people – and not to their detriment. This is, I think, profoundly inhumane.

This mailing, and many others like it, is as much a waste of time and scarce natural resources as your company’s directors are of skin, living space and oxygen.

So, in summary Capital One, no I’d rather not ‘benefit’ from one of your credit cards. In fact, I’d rather present my ******** to an angry swan. And if you could take me off your mailing list I’d be grateful. Hopefully that small concession alone will save more pages, printing press electricity and ink than I’ve taken up by sending this to you. Cheers.

Yours really very sincerely,

Simon

PS: I’ve e-mailed a copy of your mailing, along with this letter, to both the FSA and the advertising standards authority. I know they won’t actually do anything as your mailing takes great care to not actually be illegal, I just think disgraceful **** like this needs to be highlighted.

**In case this word is unfamiliar to you, contained within my dictionary’s definition of honest are the phrases “Free of deceit and untruthfulness” and “Morally correct or virtuous”. Try using it in a conversation with someone from your marketing department and see if their head caves in. I hope it does.

[dazraz_uk]

Another thing you have to remember is that the 0% period is likely to be 9 months or so and at the rate of £40 a month paying your overdraft off you'd be 6 months short. You'd then have to go through the balance transfer scenario again and incur a transfer fee again, but doing this time after time could also harm your credit rating.

Best bet would be to call your bank each month and get them to reduce your overdraft limit by £40/50 or whatever you think you can afford, it'll be paid off in no time!

Worse thing I ever did was get a credit card or loan, seem to have been paying them off forever, as you get into the habit of using money that isn't yours and promise yourself you'll pay it back when realistically you wont

Edited August 26, 2008 by dazraz_uk

[Nicki]

Another thing to consider would be getting a 2nd job - evenings/wkends etc just to earn you a bit more £££ in the meantime? Got a few friends who had full-time day jobs and evening bar jobs to keep them afloat.

[Clairey Fairy]

Another thing to consider would be getting a 2nd job - evenings/wkends etc just to earn you a bit more £££ in the meantime? Got a few friends who had full-time day jobs and evening bar jobs to keep them afloat.

Ahh yes, i forgot to add - i have another job working weds nights and sunday days. It brings in roughly £80p/w. It pays for stable fees

[tof1]

just curious if you know what is your actual interest rate on your overdraft is?, my lloyds currenct account is % per day overdrawn, but my alliance and leicester is fixed to £5/month maximum, from what you have said i would assume you have a basic cuurent account and that your interest rate is between 15 - 20 %, and also from your frustrations you have been getting screwed with exceeding your limit and getting charged with unathorised overdraft fee of approx £15 -£20 a go?

[Nicki]

Ahh yes, i forgot to add - i have another job working weds nights and sunday days. It brings in roughly £80p/w. It pays for stable fees

Could you get more hours?