Credit Card rookie

Discussion in 'Financial Planning' started by Bean27, 3rd May, 2019.

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  1. geoffw

    geoffw Moderator Staff Member

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    geoffw, 3rd May, 2019
    #21
  2. Fargo

    Fargo Well-Known Member

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    Why not set it up for the repayment to be made on the due date, silly to pay it back immediately. What hassle is a credit card ? It removes hassles. Even just using it one for the insurance benefits for goods travel and services purchased with it, the permanent record of purchases, quickly, being able to see at a glance on the statement where your money is going and not having to keep and find illegible faded receipts makes it silly not to use one. If you use cash you will have no record of where and how, or even that your money is being frittered away or see in black and white how small amounts have added up to a large amount.
     
    Fargo, 3rd May, 2019
    #22
  3. Beano

    Beano Well-Known Member

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    It's quite easy to get 55 days credit on every purchase
    You only need 30 credit cards with the cut off day on a different day for each card.
    Use the card that has just started the cycle for the month :)
     
    Beano, 3rd May, 2019
    #23
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I would not say its incorrect, id say its out of context for this thread

    Until recently, there wasnt good credit or bad credit

    there was neutral or bad.

    In the last 18 mths some lenders have jumped on board with comprehensive credit reporting which provides positive or negative data, and I believe in the next 18 mths all lenders will be forced to join.

    For someone with NO credit history at all, obtaining a card with the lender you want to work with will aid your application if you have looked after it. It may have nil effect for a lender that cant oversight what you have done with the card.

    For someone that has an existing mortgage, additional credit card liability, especially recent enquiries will have no effect to a negative effect, especially at higher LVRs

    I should add, that one can have a equityfax credit score of "fantastic" 700 or 800 and still be declined a loan, because most lenders us their own scoring and different metrics.......... the " get your free credit score thing" is a marketing piece, not a factual outcome you can take to a lender to argue a decision.

    ta

    rolf
     
    Last edited: 3rd May, 2019
    Rolf Latham, 3rd May, 2019
    #24
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  5. geoffw

    geoffw Moderator Staff Member

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    My apologies. I've had clarification - though my information is from somebody who worked from a credit check agency a few years ago, so may have changed.

    Having a credit card, no matter how good a record you have, is more likely to do bad than good. Unless you are trying to establish a credit record for the first time - and then your record has to be perfect. As Rolf has stated.

    In the context of the thread, the OP is trying to determine if it's worthwhile to get a credit card while refinancing. Possibly they have been offered a card by the bank. So while they may do harm to their future credit history, the bank would really like them to have yet another, potentially lucrative, credit card. The worse they are with paying, the worse their record gets, and the better the bank does from them.

    A credit card with a small limit may be better. Debit card possibly better.
     
    geoffw, 3rd May, 2019
    #25
  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    To get a good credit history pay your bills on time A credit card isn't going to help.
     
    Peter_Tersteeg, 3rd May, 2019
    #26
  7. TMNT

    TMNT Well-Known Member

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    Having credit cards vs not having credits does affect your score positive or negatively , depending on many factors.

    Some people's scores go up when opening a credit card.
    Some people's scores go up closing a credit card

    All other things being equal
     
    TMNT, 4th May, 2019
    #27
  8. Bean27

    Bean27 Well-Known Member

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    Another Credit card noob question- Say I get a statement May 15th and it says you owe $1500 due by May 30th, I pay back the 1500 on May 16th and then on May 29 I make a purchase, does that mean I will get stung interest on June 1st?
     
    Bean27, 9th May, 2019
    #28
  9. The Y-man

    The Y-man Moderator Staff Member

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    No.
    The Y-man
     
    The Y-man, 9th May, 2019
    #29
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  10. The Y-man

    The Y-man Moderator Staff Member

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    To be a bit more detailed:

    You can pay the $1,500 due on May 30th, AND still spend up to your credit limit on May 29th.
    The May 29th spend will go to the June payments.
    The Y-man
     
    The Y-man, 9th May, 2019
    #30
  11. QldKoolies

    QldKoolies Well-Known Member

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    The credit card can make your finances easier to manage and save you interest on your mortgage at no cost, only gain. If you have an offset you SHOULD get a credit card. You don’t have to change anything about how you spend.
    1. Get the card and cut the chip and magnetic strip off. (if you don’t trust yourself). Leave it at home in the kitchen.
    2. Setup all your direct debits to the credit account.
    3. Setup ‘auto sweep’ from your offset to your card. This will automatically pay your card at the last safe moment to maximise use of interest free days.

    Done. You’ve made money management easier and you’ve saved interest. You’ve also gained a whole bunch of free insurances.
     
    QldKoolies, 9th May, 2019
    #31
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  12. Bean27

    Bean27 Well-Known Member

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    Does anyone know with these cards you can sign up and get "40000" Bonus points but then the annual fee is $225 per year, is that charged as soon as you get the card or after one year has passed?
     
    Bean27, 9th May, 2019
    #32
  13. The Y-man

    The Y-man Moderator Staff Member

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    Depends - but usually on application (pay before you get the card)

    The Y-man
     
    The Y-man, 9th May, 2019
    #33
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  14. Bean27

    Bean27 Well-Known Member

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    Interested to here anyone's tips on cards that don't do it on application, would be an easy way to get lots of points. Velocity Escape $0 annual fee is the safest choice
     
    Bean27, 9th May, 2019
    #34
  15. The Y-man

    The Y-man Moderator Staff Member

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    Do fee free until you figure it all out.

    I use a spreadsheet (nerd!) to calculate the value of points vs fee for example.
    For example the actual value of Velocity points is $0.0064 or thereabouts according to the last time I used them.

    So 40,000 Velocity points = $257 which is not much at the end of the day (similar conversion rates for Qantas FF)

    AND remember you don't get points for paying big bills like rates, land tax, etc (or they charge a surcharge which is far higher than the value of points you'll get).

    The Y-man
     
    The Y-man, 9th May, 2019
    #35
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  16. Beano

    Beano Well-Known Member

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    Yes if a portion of the $1500 relate's to a old item.
    No if it is all current
     
    Beano, 9th May, 2019
    #36
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  17. Bean27

    Bean27 Well-Known Member

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    I love that, nerding is good if you save/make money
     
    Bean27, 9th May, 2019
    #37
  18. Bean27

    Bean27 Well-Known Member

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    Does your spreadsheet include how many points per dollar the card earns and future forecasts? Yeah ok so a general rule of thumb don't pay anything government related with a credit card?
     
    Bean27, 9th May, 2019
    #38
  19. The Y-man

    The Y-man Moderator Staff Member

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    Basically you need a column showing the conversion rate of points (whether Velocity, Qantas, or card specific rewards points) per dollar spent.

    Next column for what those points are worth.

    Next I have the min non-gov spend required to earn the amount to cover fees less benefits I will *definitely* use (eg travel insurance)


    You still use you card to pay gov fees IF they don't have a surcharge to get the interest free periods.

    The Y-man
     
    The Y-man, 10th May, 2019
    #39
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  20. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    On a $500k loan at 4% this would still save you $4,952 in interest - assuming a monthly credit to the loan (couldn't find a calc where the daily extra repayment is taken into account).

    Plus the rewards points.

    Sounds like it would be worth considering, but factor in fees.
     
    Terry_w, 10th May, 2019
    #40
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