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Hi, everyone. Welcome to the weapon on credit cards. We'll just give it a few more minutes for everyone to join, and then we'll get started. Okay? We'll just give it another minute or so and then we'll get started. Okay. So, hi, everyone. And welcome again to the webinar on credit cards. Eso before I pass it over to Sira and James just to quickly say that if you have any questions at all, just make sure you post them on the comments on Facebook and we'll try Answer anything that we can. If you think of anything afterwards, it always feel free to email s. But otherwise we will get started, so I'll pass it over to Sirena. Okay. Thank you. Uh, James don't have Ah, quick word before we start. Yeah, sure. Uh, stay here. Last week, we had a really good seminar with loads and loads of questions. Provokes Ira, and we put him on, which made that which may be even more interesting. That usually is, um, has already said this evening session is on credit cards. A topic. I'm sure many of you are very king to know that, but more about on is my pleasure to once again introduce Doctor Siracha is one of the ones during the academic program. In the oxygen every she is a chartered accountant. Um, thank you. Okay, goes, um I hope you all found the weapon on so far useful. Um, thank you so much to everyone who's been sending me messages on emails, asking questions, saying how useful you're finding them. I really love helping. I love being able to answer your questions. I was just really nice to know that you're finding a useful, Um, I'll keep doing this as long as you find it useful. So let's just stop straight in. Um, so today we're gonna talk about credit cards, which hopefully will be able to clear up a little bit more about what credit cards are, how they work the different types on just a little bit about how to use them Well, on what to avoid. So this is me. My face is missing. That's fine. You can see it here. Um, Andi, let's just jump straight in. So what is a credit card? A credit card, apart from being a bit of a plastic card, is agreement you make with the bank. Um, you're basically agreeing to borrow up to a fixed amount, Um, from them at an agreed interest rate, which is known as a P. R. We'll talk about that in a second. You are agreeing to pay them every month, at least for a minimum payment, which they'll tell you what that is, which is usually a proportion of the balance, Um, or for the whole payment, which is the best way to do it. So you don't actually get charged any interest? Um, the bank pays the person you are paying for in full, So the person you're buying a service or a product from they get their payments right away on. You don't have to pay for it in a huge lump sum. I'm actually having a credit card, and making payments through a credit card can offer you some protections. So, fraud, for example, if someone stolen your card in using it, if you can then say Oh, it was stolen on, that wasn't my purchase. You can usually actually get your money back because it takes some time for the payment declare from the bank to the bank connection. Stop the payment going. Um, One thing I will talk about is it's not in easy access to cash. It costs you a lot more to withdraw money on a credit card than it would if the men in money was yours on debit card on, I would pretty much avoid. We're drawing cash on a credit card if it all possible only ever in a massive emergency, because it can attract quite a large interest charge on you. Get a fee as well meeting on. So I talked about something called the A PR on annual percentage rate. This is the interest rate that you're agreeing to pay. On balance is month on month that you've got on your credit card. Eso. Normally they're around 19 to 22% for people with a relatively good credit school, um, on. For people with a poor A credit school, it can be around 60% so the annual percentage rate or the interest rate is based on on the success of you. Getting a credit card is based on your credit school on how much you earn, so you are less likely to get a credit card if you're no actually earning any money or if you are learning to little money because bank does that type of affordability calculation based on how much income you're getting on based on that, we'll decide whether it's worth giving you this option to borrow money cheaply or not. So there might also be different interest rates for different things you use. The card, for example, given here is that you have a normal 19.9% interest rate on your purchases. So you go to the shops, you spend money. If you don't pay off the balance and full at the end of the month a month from the purchase, then you will be charged interest on whatever balance is left over, and that gets added to the debt. Which means the next time you have you don't pay it off. That then gets charged more interest. So you end up walking or debt just from interest on, then 23.9% for the cash withdrawals, which is much, much higher on their world might that they would also be a fee, probably not even my will. Um, when you're paying this debt off, they spend that attracts the higher interest rate is paid off first, and that's called allocation of payments is not something you have to worry about too much. Okay, so why have a credit card? Um, you might want a credit card because you have a big spender coming up that you don't really want to lose the catch four. So say you've got the deposit on a car or holiday or wedding on. You don't want to spend the whole 1000 lbs at once. One spread out the cost. So it helps. It means that the supply gets them on you in full and you get a chance to spit the cost up. It can work as a safety net. So this is actually why I use a credit card. So in case I ever have any unforeseen expenses and I don't have ah, have enough cash available at the time, I can use the credit card to just cover me until I can bring make the cash available, either from a savings account or trying to figure out maybe asking my parents with the money if I if I can, um so that it's it's there is a safety net on then. The other thing is having a credit card regularly using it. I'm paying it off in full Really quickly. Build your credit score up. Well, it means that you are showing that you're able to afford all your payments that you're able to manage the the level of that you have on that you don't have any affordability problems. So having a credit card that has a small balance, say, 500 lbs, which is quite common for a student credit card. Um, doing your weekly shop on it for food on, then having a direct, uh, bit set up so that you pay it off pretty much at the end of whenever your billing period is means that you don't incur any interest on it. And you are building up your credit school types of credit card. So there are lots of different types. I've only mentioned a few main ones here, but I have actually in the article on mind the bleed dot com I have included a few more on dive included. Some resource is where you can go and look at these specific cards as well. So we've got a basic credit card, which will tell you a little bit about on Then you got special credit cards, which are about balance transfers and purchases. Reward credit cards. These are your a mexes, um, stool cards, which no one really uses anymore. This is one like Debenhams and House of phrase on things like that. They were like department stores were big. That's one store cart used to be in their element, and then you'll rounder. So we'll we'll go through each of them. So, first of all the basic credit card, this is your book standard bond or this card it called gives you a limit. Let's say 500 lbs, you can spend up to 500 lbs on your card or any time, um, on. Once you go to 500 lbs, that's that you reach the limit. You have to pay it off to be able to use the limit again. Um, it's got a fixed, um, interest rate for a fixed period of time that you agreed about on. Then, after that period, the interest rate will change to something else, which either they'll tell you what that is, or it will be a variable rate to do with interest rates at the time. Um, it usually doesn't come with any perks or offers any cash back or anything like that. Um, most people will be on this kind of credit card because you need to have a neck sexually good interest rate on D. Basically be earning to be able to have the reward credit cards, so the basic credit card is what people usually have as a way of building up their credit. Um, it's good for short term cash flow gaps and say, like you have a bill going out on a particular day, but you don't get paid until a week after that. Then the credit card could cover you up until you get paid, and then when to get paid, you can pay the credit card back pretty quickly. You don't have to worry about it. Um, you're more likely to get approved for these kind of credit cards because they don't require is go to credit school, um, on actually basic credit cards. There are some available to the students. Are not West, I know does a student credit card along with it student bank account, which has a limit of about 500 lbs. I think it does have a relatively high interest rate because of the risk involved in giving credit to students. But if you're paying it off every month, you have a direct of it set up. You don't even have to think about it. You just sit there quietly, making your credit school go up on. You don't have to worry about it. Cons. What? This is interesting to be quite high, so if you are not very organized, if you are not on top of your finances, if you can start backing up that it can negatively impact your credit school if you miss a payment. Some people worry about having direct debit set up because they're worried they might not have enough money in their account to cover whatever direct of it's gonna come out on. That's that's more about being organized, Um, so they end up opting for either a manual payment or like a standing order, which doesn't necessarily cover the whole balance, um, on Effexor. But it is a Ms payment, and you don't even make the minimum payment. This is especially dicey around things like bank holidays on Sundays, when the banks on open. If it's classes of MS payment that can hit your credit school massively. So best thing you could do, set up your direct, uh, bit. Just make sure that you're not spending more than you can afford on your credit card. On that, your account will have enough to actually cover whatever you're spending on your credit card on. Just let that just keep taking along in the background, improving your quite it's school, making sure that you're not missing any payments. So the balance transfer credit card um, these are advertised as nor percent on instruments were for 18 months 15 months on. Basically, what it means is, if you already have a credit card for the balance, our balance on it, which means get on it. You can transfer that debt on to a new credit card, which then gives you explanted months to pay off. That that for no interest. He's a great if you are spreading the cost over a long period of time. If you have decided that for a Ford ability purposes or cash flow purposes, it be better to spread the style on. If you have a relatively good credit school and you know you're more likely to be approved for one, then that's great, because every time you play for a credit card, there's not 100% guarantee you're going to get it. You can use online, um, websites, which are like an alleged of a gel. Excuse me, Eligibility checker, Um, on these kind of take some facts on give you an indication of how likely you are to be a pro approved for a particular credit card. But until you actually put your application and you're not gonna fully know whether you got it or not, um, so because of that is quite risky than just having some debt on your credit card on, then, hoping that you're going to get on your percent balance, transfer one of food to be able to then pay the debt. It's usually better to know you. Okay, I have 3000 lbs on my credit card. I have enough in my savings if I have to pay off. Hopefully I don't have to pay off in one lump sum because it be quite nice to have my savings in the background. Um, I get this know percent credit card, then great. I can spread it for X amount of months. If I don't, at least I have the savings in the butt. So, pros of this, it just gives you more time to pay off your balance and usually it nor percent, which means cheap thing, which is great cons. Some of them can have a transfer fee, which is around 3.5% off the balance that you're transferring. Um, on the problem with this is it makes your debt the age of your debt longer. Eso if you caught my credits. Corner age of your debt doesn't matter, and it dictates a little bit about your credit school longer. You have a particular debt? Um, the more it looks like to a company that you're struggling to pay off, so you need your debt to be no hold on. Then we also talked about of debt that's relatively new, your left knee to be approved, But any new credit until it a little bit of time is past. But you're not Chloe, the credit that you're not going for, um, borrowing because you're struggling. That's a that's a balance transfer. It just is. It's basically the similar thing. You get a north percent introductory interest rate for X amount of months to basically by whatever you want. Um, so say I needed to buy a washing machine. I could use a know percent credit card to buy this washing machine. Um and then as long as I make them mom payments, which is around 10% of the balance, that's on your credit card. I don't have to pay interest as the balance moves on one by month. So then what I can do is when I can afford it, I can pay extra in a different month. Um, I can just spread the cost out, which makes your cash flow a lot better if you're making big purchases. So the great thing about this is it's Ruby cheat bothering. It's great. I mean, you're able to manage your cash. No. Better on it means that you're, um no, um, spending a load, a patch on something, the on you are able to spread the cost. You're not getting any interest for the, um, credit that you're getting The problem with this is it could be really tempting when you've gotten your percent just purchase credit card to go. We'll just put that on the credit card. I've got that on the credit card on. Then it comes to coming towards the end of your period of north percent. Uh, you have not got enough to actually pay off the balance. So you have to be really careful with these that you're no overzealous with the way you use it, and you are using it for the right reason for what's credit cards? So a lot of credit cards eso the ones are Tesco MNS insanes rays, for example, give you next point. So clubcorp points for all your purchases, so you get more points if you shop with them. You get less points if you shop with somewhere else. Um, and then you can use those points for money. Offense stole. A max gives you fly a mile so you can use their points towards buying flights for holiday. I know a lot of people who travel a lot with work. We'll use a mix, but except abroad on, then use that to buy their own one a day mood today on then some cards could give you cash because while I understand it makes it does a 5% cash buy called at the moment for these kinds of cards. You need to have a good credit school because while else why would they reward you for your borrowing their money? Um, if they didn't think you could afford Teo, pay them back and take advantage of the cause. A few of these cards also attract feet to use them, so I believe a max has a fee, which is a monthly fee for using it. So if you're getting benefits or reward, um, but the fees outweighing it, then it's probably not was beneficial to help one. So the pros of this if you recognize your credit card anyway, you might want to make some awards off it. This goes more towards the the's Tesco seeing injuries cards that if you're if you're gonna do your weekly shop on them, then you might as well make some extra extra clubcorp points. Extra nectar points on them. Um, and then that way you're building up your credit school and you put a little bit of extra the end. The cons with them is some of them charge a fee a mix, for example, on if you are, um, trying to sort of maximize how many points you're getting on them. Sometimes it can have stipulations like, for example, I think it's the same card. You have to pay 400 lbs within the first two months or use 400 lbs within the first two months in order to get 200,000 points or something. Um, I need to double check that, but basically, if you're thinking I really want those 200,000 points, um, I think I might be too much. Um, then you might spend 400 that you don't have, um, so it's not You need to be careful with is what? I'm spending it on manageable. I'm not too booked on with the rewards. Be nice if I got some extra stool cards. So these have gone off fashion At the moment. They were more attractive when there were department stores where people you speak loyal to a particular department store. Um, it's like a credit card that has an interest rate, but you can only use it in one particular store, so people say, like house a phrase a stool card. If you have one, you might get 10% off or your house or phrase of purchases on Duodenoscope credit as well. On that where you don't have to pay straight away, you pay the bill off later. Um, so they definitely impact your credit school. And that's that's an issue with these. A lot of people didn't think they did. Because they are with particular stores. Why would they What they do? Um, in the same way. And more vocal cord drugs, too. The interest rate could be more attractive, but again, you can only use it in one particular store. So unless you do all your shopping, that doesn't really make any sense. Uh, the only things I would say modern use of it. Well, is this Like you say you're buying a wedding dress or something very expensive from one particular store on it means that you can spread the cost for it. Or you could really do without 10% off than then you can get one. Um, the problem with these are stool cards are really easy to get night. They, uh, such, uh, interruptive thing when, um, you you get a prize, buy them, for example. If you've ever bought on Amazon. I'm sure you've seen the advertisements, but I had probably lying for an Amazon credit card and you get 10% off or whatever. I just too easy to get on. Because of that. You end up walking up debt that you don't really need to wreck up. I get stuck with a particular stories. Well, so these are now going out of fashion? Um, I don't really rate them very much, but I'm telling you about many way, um, on allrounder card. So these are probably the most popular cards that people will try and get. Um, the reason for that is that you can transfer pre existing debt onto this card from another credit card, so you get your balance transfer, say, no percent for 15 months on. Then you can also make new purchases know percent for 18 months, for example, which means that you've got plenty of time to pay off your previous debt unplanted of time to pay off your new death. As you can imagine, there's some corns with this. If you're not careful, you can record that really quickly, especially if you're trying to pay off some old that possibly because you couldn't afford to pay it or you decided consciously, they want to smoke the cost on, then you're starting to add more purchases. On top of that, that's just going to keep mounting that debt. I think the best way for these to be used is really if you are paying off something big, like one off big purchases on, you are keeping that in mind, and you know exactly where you are with each side of things balance, transfer and burgesses brought than using it as sort of like a yeah, because it would be so easy to rack up the done so in summary. Um, and still why you're getting this card is the credit card, because you want to make a big purchase. Is it because you want to spread the cost of something? Is it because you want to build your credit school? Or is it because you're struggling with affordability and you're using it to plug a gap? Because, depending on what your purpose for it is, you might want to try a different types of credit cards. But also you need to really think about is getting a credit card the right thing to do? Um, is it going to make the situation worse. You next find out on make sure you can pay the balance off every month if you have to. So make sure that you're only doing something like your weekly shop. You're only doing things that you can actually afford to pay off if you if the cash was demanded of you right now, um, because there's no guarantee that you're going to get that button is transferred. Credit card. Um, so you don't wanna depend on that on then do a big purchase that you can't afford. Um, like I said before is a short time bandage over a long term problem. You need to have a chat with someone about affordability about debt. Do you need to consolidate existing debt? Therefore, getting an extra credit card is probably not the best plan. Um, that is just again the purpose of why you're getting the credit card on avoid using your credit card for cash withdrawals because it can charge you way more than your normal normal interest rate on you will get charged a seat. Um, so, James, do we have any questions? Okay. Thank you. Sorry. That is incredibly informative. Has always here we do have a few questions just a second to pull them up. So the first question is, the people who have been moving the UK for the first time is getting a credit card like a kind of a must have. They're getting a good credit school, and it's so oh, you need to maintain it in order to get a good credit score. Okay, that's a really, really good question, because when you first moved to the UK, you won't really have a credit school history. Um, So if I were you, the first thing I do is make sure that you have a phone contract that, um, you pay on time every once because that will help you build your credit school on. Um, if you're getting a credit card, uh, you don't necessarily need to have one, but if you are getting one again making sure you pay the full balance, you're more likely to get that credit card because of your earnings rather than your existing credit school. But it's probably not gonna have a really favorable interest rate, which is why I'm saying make sure you got that standing order that pace up balance in terms of how long you should keep maintaining it. Um, I think it's quite hard to put a number on it, so probably do a good year of using it regularly and then start tapering off because at least for the year, you've got a good track record that you've been making these payments on time every month on that looks fine. And then if they start to taper off, it's not gonna affect your credit school. You're not suddenly gonna lose points were not using your credit card on. At least they've got a track record to base it on. And if you want, you can start to use it for more sporadic expenses. But again, making sure that you pay it off each month on that, I'll just keep your credit score taking along okay, thank you. Hopefully that answered your question on. Also, just to refer back to the previous seminars, um, your pulses. There is entire video on the credit score, and there's not a clot on the monthly, um, hum seeking with her back there. If you wanted to know more about credit schools because very, very useful question, sure, a lot of people on do a follow up question. Same person. Uh, what is more worthwhile? A reward card or a card that gives cash back, for example, that helps service discount card. Um, it would entirely depend on which one would give you more. So, for example, if you're reward card gave you points, for example, well, the points be worth more to you than the actual cash back. So if you got, say, a seamstress card and you get more quints in next appoint, you can only spend them in Sainsbury's, A need A and all those. Where is if you have cash back, you can spend that contract anywhere, and you're not limited to where you spend it. So it depends what you'd be using your rewards for. Um So, for example, just based on that, I personally would probably go for the cash back because then it wouldn't limit me toe where I'd spend it. But if you're getting more for points on, you, do your shop there anyway, it might not be such a bad idea to go for the point. So it's basically just having to think about what's your use? How often are you gonna use it? What you're going to get out of both of them on D. Which one's gonna meet your needs more? Okay. Yeah, that might actually make sense on then. Another question is just popped up from So what goes into a credit school history. So if I I'm not gonna go through all of that at the moment, what I'm gonna do is ask you to have a watch off the credit school weapon. No, um, which is life on mine? A bleep on. Also, have a look at the article. If you're still stuck after that, please feel free to drop me a message on. I'll be happy to clarify anything up. Well, I've gone through credit scores in quite a lot of detail on those weapons, so it might help to watch that because, um, you're clear a picture in a lot of, ah, less rushed way, which might help you? No, Absolutely. Here. Definitely. Check out the resources. Um, another question. So again relating to building up a credit school, Is there any advantage of having either a bigger limit that you pay off every month or having, for example, multiple credit cards? That's a really, really good question because a lot of people tend to get multiple credit cards when they don't have a big enough limit. Um, so I think personally depends on the terms of your credit cards. So say, if you've got really good for like so you've got no percent person's for 18 months. That's an excellent credit card. It's giving you free borrowing for 18 months. Brilliant. If you can fit all of the spend that you need to fit in the limit that they're giving you, then great stick with it. You don't really need more credit cards if you don't have enough limit. And you feel like I really need, um, more borrowing, because is I'm maxing out this credit card there. Obviously gonna think about getting more credit. Um, but all of that were count towards total debt. So whether you've got 5000 lbs on one credit card or you've got 1000 lbs on five credit cards each, it still counts. Is your total debt Um five 1000 lbs on five? A. Teach might be an absolute or leg to manage. You might have different dates for when all of those finish you might have different times on each. If you dropped the ball on one of them, you'll incur interest. It depends on how organized you are and how helpful it is for you to have that. Um, that's saying there might not be a lot of choice that you have in the limit. So, for example, if you're only being given a certain limit on they're not willing to budge over that, you might have no choice but to get another card. A college. What I consider in that sense is just stay on the ball, make sure you're organized. Make sure that the terms, whatever that they are, your meeting them on, that you are not incurring any or more interest. Then you have to excess. Uh, a few more comments coming in s as it says. Thank you. You're supposed to say that she is going to go check out those resources within. Have another question. How easy is it? Too close? A credit card account. So basically. So, um, most banks out based now on most of that well, they all have, ah, function where you can message through the up on that secure messaging. Um, on basically, when you want to close the credit card. You have to make sure that you paid it all off. There's a zero balance on it on. Then you just drop them a message saying I'd like to close this credit card, please. On most of them will just go. Okay. No problem. You've done it through the secure up. You are who you say you will. Well, close it for you. First. Direct. I believe we'll probably ask them. Ask you to give him a call just because they tend to do a lot more stuff over the phone. Um, but it's just a case of I don't need to anymore, right? I have never encountered anyone trying to convince me not to. I think I don't know whether the questions based on, well, they make it a massive fact for you to leave. Like when you're trying to change. Um, phone, Probably. Just things I don't not at all is just one of those where if you no longer need it, it's best not to have it because it sits on your, um, credit file on. You don't want it to. Okay. Thank you. Hopefully alleviate. Some of you worries you another question. is coming from NECA. So do you think a credit card is They must have in order to build a good credit school? Um, I did for a little while, and then my mind got changed. Eso turns out you don't actually need a credit card to build a good credit school. You need a good track record off paying off credit, which means any source or credit. Your mobile firm contract is a really easy one. I keep anyone about that one. Um, if you Lisa car, If you have got finance with apple, for example, if you bought a laptop from them and despite it to spread your payments, that's credit, um, or gauges. So any where that you borrowed money will be on your credit file on as long as you pay it off. Um, on time, without any delays, you will be building yourself a credit school on the other thing, which I wouldn't for you to watch. The webinar is about making sure that you're addresses up to date and you are registered on the electoral register for that drug, because if you are, then it means that you are reliable. It means that you are, um you have a settled base on that's going to improve your credit scores. Well, okay. Uh uh, your system keep the previous reply. Uh, more questions coming in at the moment. Um, but we'll keep an eye on it once the someone has finished a Z said before, you're more than welcome to send kind of a message or email in in several. Try and address those questions. Uh, just a couple we wrap up. Just wanted to remind everyone toe Please, please, please give us something back. We really appreciate with response. We've had so far on it. It's been really useful. And, uh, no. Siree go through all of it before making new seminar, um, cover than that. I think we're all finished. So thank you very much so. But that was it was really good. Okay. Thank you so much. Everyone for listening