Credit cards?

So I read this on money saving websites all the time. So if I buy stuff on my credit card and pay it off straight away it boots my credit score and I get other benefits.

I have a credit card but I’ve never used it. So if I buy eg a tv so I’m in -£500 of my credit limit, then I pay it back straight away by transfer money back in to my credit account from my debit account, I’ll be boosting my credit score?

Reply 1

martin7

20

Original post by Ivyreign

So I read this on money saving websites all the time. So if I buy stuff on my credit card and pay it off straight away it boots my credit score and I get other benefits.

I have a credit card but I’ve never used it. So if I buy eg a tv so I’m in -£500 of my credit limit, then I pay it back straight away by transfer money back in to my credit account from my debit account, I’ll be boosting my credit score?

You wouldn't normally pay the money to your credit card account immediately -- you do it once the monthly statement has been produced.

I suspect a one-off purchase on a credit card isn't likely to have a long-term impact on your credit score. (And the concept of a "credit score" isn't particularly helpful; a lender will review your credit record as a whole, not just one single numeric "score".)

You will however, get the benefit of section 75 protection from making the purchase on a credit card. (Section 75 of the Consumer Credit Act 1974 gives you rights against the credit card provider as well as the company you've bought the goods from.)

Reply 2

Ivyreign

OP

17

Original post by martin7

You wouldn't normally pay the money to your credit card account immediately -- you do it once the monthly statement has been produced.

I suspect a one-off purchase on a credit card isn't likely to have a long-term impact on your credit score. (And the concept of a "credit score" isn't particularly helpful; a lender will review your credit record as a whole, not just one single numeric "score".)

You will however, get the benefit of section 75 protection from making the purchase on a credit card. (Section 75 of the Consumer Credit Act 1974 gives you rights against the credit card provider as well as the company you've bought the goods from.)

So how long should I leave it before paying it off? I don’t want to pay any interest

Reply 3

Admit-One

Universities Forum Helper

21

Original post by Ivyreign

So how long should I leave it before paying it off? I don’t want to pay any interest

Unless you have an interest free period then you'll need to pay it all back within one month.

When viewing your credit report, companies can view a summary of the last 12 months of repayments, and in particular whether you have exceeded any repayment terms. For a credit card, that would mean failing to pay back the minimum repayment amount the next month.

Credit scores are more complicated than buying one thing and paying it off, but as long you always pay back what you owe in good time then this will add towards a good score and credit history.

Reply 4

Muttley79

20

Original post by Ivyreign

So how long should I leave it before paying it off? I don’t want to pay any interest

You'll get a statement telling you when you need to pay it to the credit card provider. I have a DD set up to pay off my credit card to the company every month before the due date.

Reply 5

Reality Check

22

Original post by Ivyreign

So how long should I leave it before paying it off? I don’t want to pay any interest

If the balance on the previous credit card statement is zero, then you usually get up to 56 days interest-free to pay it off. This will vary depending on the card, but is quite easily checked by either looking at the back of your statement or contacting the company.

Reply 6

martin7

20

Original post by Reality Check

If the balance on the previous credit card statement is zero, then you usually get up to 56 days interest-free to pay it off. This will vary depending on the card, but is quite easily checked by either looking at the back of your statement or contacting the company.

For the benefit of OP:

But note that the "up to 56 days" assumes that the purchase is made the day after the previous month's statement was generated, and that your payment clears on the statement's "payment due date" -- so in practice you don't get as long as 56 days.

The key thing is that full payment is made by the "payment due date", and that date will appear on the card statement.

The safest thing to do is to get the credit card company to take the full payment via direct debit. They typically do this a few days before the "payment due" date. That does presuppose that there's enough money in that account to pay the full amount.

Reply 7

Reality Check

22

Original post by martin7

For the benefit of OP:

But note that the "up to 56 days" assumes that the purchase is made the day after the previous month's statement was generated, and that your payment clears on the statement's "payment due date" -- so in practice you don't get as long as 56 days.

The key thing is that full payment is made by the "payment due date", and that date will appear on the card statement.

The safest thing to do is to get the credit card company to take the full payment via direct debit. They typically do this a few days before the "payment due" date. That does presuppose that there's enough money in that account to pay the full amount.

That's why I said 'up to 56 days'. You do get up to 56 days if you time it correctly: a payment made via Faster Payments will clear onto the credit card account the same day - gone are the 2-10 days for any sort of payment to clear. Thus, if the purchase is made on Day 1 of the cycle, and the payment is made via Faster Payments on the due date, you get the full 56 days interest free, assuming any other conditions regarding eligibility for an interest-free period are met, such as the previous one, or two statements being paid in full.

Definitely best to pay by DD, though.

Credit cards?

Quick Reply

Related discussions

Latest

Trending

Trending

Articles for you