Limits on total debt across multiple credit cards...?

[IanSmithCSE]

Good afternoon,

I got rid of my credit cards when I retired, just pay cash for everything. About the only thing that makes me think about getting one again is the slightly better protection you get from them. But I can use Paypal for similar protection.

I understand the lack of need but I have a credit card that I put almost everything I can on to and then pay off the statement blance at the end of the month.

The card is with Captial One, they are so used to dealing with high risk customers that in general their service is brilliant.

The sole purpose is to retain a proof that I exist and if something really unexpected happens then there is a credit history. On one of the COVID threads I got quite a lot of abuse for saying that I am not and never have been registered with a GP as an adult.

Both current and previous governments have become obsessed with online proof of ID and organisations have taken this even further. I once took an employer up on his misguided notion that I had to prove my right to work, they were flabergasted when I said no and took up their offer of if you don't prove it by Monday....

I had a bad time through COVID, no work and no furlough payments and this made me look at my bank again, basically they seem to say if your current account ever drops under £5k they won't offer an overdraft regardless of any amount in a savings account.

With banks having delegated responsibilty to computers it seems to me that it is worth it to play their game in case things go wrong.

Bye

Ian

 

[Ian H]

We, on the other hand, use the Credit card for almost everything beyond very small purchases and places that don't take card. We do carry some cash, just for those, but not very much.

We pay it all off every month by direct debit, it is about convenience, not debt. We could use the debit card instead, but you do get a little bit more protection by using a credit card. And if we make a purchase that would exceed what is in the current account, it gives us time to traansfer some from the savings account (very are, money usually goes the other way, whenever it builds up a bit in the current account).

When I say cash, I don't mean actual coins and notes, just not credit.

 

[Alex321]

Both current and previous governments have become obsessed with online proof of ID and organisations have taken this even further. I once took an employer up on his misguided notion that I had to prove my right to work, they were flabergasted when I said no and took up their offer of if you don't prove it by Monday....

I don't know when that was, but it is certainly a legal requirement now that they get evidence of citizenship or other right to work in the UK. So it not be a "missguided notion" now.

I'm not quite sure when this law came in, but it was certainly pre-2019.

 

[Gunk]

I got rid of my credit cards when I retired, just pay cash for everything. About the only thing that makes me think about getting one again is the slightly better protection you get from them. But I can use Paypal for similar protection.

I‘ve not used a credit card for years, I’ve spent my entire life being financially over cautious and avoiding any real risk, but I think that comes with 20 years of running my own business. However at the age of 60 I’m semi retired now with no mortgage or debt so it was probably a reasonable strategy.

 

[kynikos]

... I went with a 2 year baseline as that's the point at which you'll likely run out of your 0% offers based on experience.

The strategy of open the account/take the credit/pay it off at the end of the interest free period/close the account has worked well for me. You usually find that most institutions will then let you start all over again, often after only six months.

 

[wafter]

@wafter I have an account with Experian, it's free. Many years ago government websites were using Experian for identity checks. I signed up then. I've kept the account as it's useful to check my credit rating and credit offers.

By household expenses I've presumed you mean utilities, council tax, food etc? I prefer to pay household expenses as they become due. I feel if I can't cover these without credit I'm going beyond my means. I recognise it's a personal choice. For me the interest would need to be very substantial to make the exercise worthwhile. I view credit card spending as far too easy and only use it when I need the consumer protection offered. I always pay off the full amount unless it's the type of purchase I mentioned earlier.

I've only ever done balance transfer, never 0% spending. I do use PayPal credit for the interest free four months. It simply helps my cash flow. On a pension spreading, for example, £120 on a pair of bib tights helps cashflow for that period.

I like to keep an emergency amount of credit available. My CC debt is only 38% of the credit I can access on cards.

Thanks - that's an interesting approach with the expenses; surely since you've got to pay these anyway you might as well chuck them on a card and earn a bit of interest on the cash retained?

I have DD's setup for most stuff that I can't pay for with credit (mortgage for example) and pay the rest on demand with credit - especially because avoiding monthly payments keeps the money in your pocket for a bit longer.

Thankfully as wonky as I am at managing many elements of my life, impulsive / unnecessary spending has never been something I've had a problem with, and I certainly never turn to debt to finance purchases that I could otherwise never afford from accessible funds. This is probably because being perpetually saturated with anxiety has made me extremely risk-averse..

I've never tried Paypal credit but tbh couldn't be bothered as the interest free period is that short that it doesn't suit my nefarious ends. All good if it works for you though of course

Pretty much meant an extra part time job, be it uber or working in a shop part time. I've done it before to boost income but no reason it can't be done to boost savings - especially if you invest all of it, you'd only have to do 12 hours a month to beat the additional income at the two year mark - and invested it all you're doubling up effectively. And the upside is it is almost no risk.

Edit to add: I've boosted my regular saving by using the round-ups on my card transactions. Natwest takes each transaction and rounds it up to the nearest £ and adds it to a savings account. They let you double the round up too. Just ensuring I pay for everything I can with my card means I'm saving up to £20 a week extra. Not hugely noticeable day to day but it adds up fast.

Ahh, OK. Tbh I'm less keen on more work as what I have is sufficient (both to cover my costs and leave me physically and mentally knackered at the end of my short working week).

That Natwest card sounds pretty good if they're chucking something extra into the pot

I got rid of my credit cards when I retired, just pay cash for everything. About the only thing that makes me think about getting one again is the slightly better protection you get from them. But I can use Paypal for similar protection.

A perspective I can certainly appreciate. Viewed under normal usage I see little point in them (other than the level of consumer protection they can provide) while I'm very dubious of the effect cheap / freely available credit has had on our economy, people's personal finances and the cost of goods.

This of course is also part of my motive to borrow at their expense and invest to my advantage, as a way of gaming the rotton system a little.

Rumour is the cash ISA annual limit will be reduced to 10k in the upcoming budget sadly, shares will likely stay at 20k

Thanks and yes - I've heard similar... although again with my finances this is of little concern to me personally. Potentially crap for exposing people to more risky investments / the creation of asset bubbles though.

Don't worry about your credit score, it won't have much effect. Keep on applying and be sure to have funds available when 0% rates expire. I'm retired and a long time stoozer with £90k+ on 0% and a similar amount invested which is giving me £5k+ a year income I wouldn't otherwise have. Latest offering is from Barclaycard 15 months balance transfer @ 0% with no fee.

Wow - you're really hammering that - great, aspirational work!

How are you managing to roll that from one card to the next - spending or balance transfers?


Since this thread has given me a lot to think about I've investigated a few more avenues.

My credit rating has actually gone up a little since I joined Credit Karma, so no obvious damage there.

It is lagging somewhat on my credit utilisation / the credit cards I hold and does make the point that card providers don't like full credit utilisation... so I'll keep an eye on how things look as I borrow more.

That said I maxed out my previous one before paying it all off and closing the account which didn't seem to affect anything; although it wasn't as flagrant as I plan to be in future.

 

[Ming the Merciless]

I don't know when that was, but it is certainly a legal requirement now that they get evidence of citizenship or other right to work in the UK. So it not be a "missguided notion" now.

I'm not quite sure when this law came in, but it was certainly pre-2019.

Pre 2015.

 

[briantrumpet]

I‘ve not used a credit card for years, I’ve spent my entire life being financially over cautious and avoiding any real risk, but I think that comes with 20 years of running my own business. However at the age of 60 I’m semi retired now with no mortgage or debt so it was probably a reasonable strategy.

My parents had no credit rating whatsoever, as the only borrowing (£2000 in 1960 for their lifelong marital house) was from my gran. No HP, no credit card. Literally nothing.

 

[kynikos]

...How are you managing to roll that from one card to the next - spending or balance transfers?

If you're dedicated and want to run up high balances you'll want to be doing both. Also be aware of other opportunities - I needed a new kitchen last year and, whilst I had the cash for it, I took £17k @ 0% over 3 years from the kitchenco and left the cash invested.

Keep an eye on the market, especially for BTs - you can often get 12/15 month transfers @ 0% with no fee.

 

[steverob]

We, on the other hand, use the Credit card for almost everything beyond very small purchases and places that don't take card. We do carry some cash, just for those, but not very much.

We pay it all off every month by direct debit, it is about convenience, not debt. We could use the debit card instead, but you do get a little bit more protection by using a credit card. And if we make a purchase that would exceed what is in the current account, it gives us time to traansfer some from the savings account (very are, money usually goes the other way, whenever it builds up a bit in the current account).

Same here. All day-to-day spending is on a credit card, essentially using it like a debit card, then pay the balance off in full each month. As well as the consumer protection, I also get points on it with a certain hotel chain that have come in very useful - has made for some really cheap holidays in the past.

I then have a second credit card that has no rewards but a very low interest rate and that is used for the one-off big purchases that will take a few months to pay off. But for most of the year that has a balance of £0.00 because it's not used for anything else.

 

[wafter]

If you're dedicated and want to run up high balances you'll want to be doing both. Also be aware of other opportunities - I needed a new kitchen last year and, whilst I had the cash for it, I took £17k @ 0% over 3 years from the kitchenco and left the cash invested.

Keep an eye on the market, especially for BTs - you can often get 12/15 month transfers @ 0% with no fee.

Thanks - as it stands I've just been accruing debt on spending as I'm yet to find a card that doesn't charge and up-front fee on balance transfers; and I can see an opportunity to come unstuck there - not only because it reduces the savings yield but also risks losing out if in future the savings rate falls below the transfer fee.

I did recently see a Santander card with 34 months 0% on balance transfers, although that still had a up-front transfer fee.

I assumed you'd always pay for a balance transfer, but if cards are out there without these fees I'll pay more attention next time one of the others is coming to an end

I nearly did similar to your kitchen when I bought my mattress, however the period was relatively short with regular payments so it made more sense to just chuck it on a card.

 

[IanSmithCSE]

Good morning,

I don't know when that was, but it is certainly a legal requirement now that they get evidence of citizenship or other right to work in the UK. So it not be a "missguided notion" now.

I'm not quite sure when this law came in, but it was certainly pre-2019.

It never has been and is still not a requirement in England for employers to obtain proof of the right the work. This idea is one those things that everybody knows that is not actually true and it comes from
2006 Immigration Act
(1)It is contrary to this section to employ an adult subject to immigration control if—......
(2)The Secretary of State may give an employer who acts contrary to this section a notice requiring him to pay a penalty of a specified amount not exceeding the prescribed maximum.
(3)An employer is excused from paying a penalty if he shows that he complied with any prescribed requirements in relation to the employment.

Immigration Act 2016
“(1A)A person commits an offence if the person—
(a)employs another person (“the employee”) who is disqualified from employment by reason of the employee’s immigration status, and
(b)has reasonable cause to believe that the employee is disqualified from employment by reason of the employee’s immigration status.

What happened is that the rules on employers changed from them commiting an offence if they knowingly employed somene who didn't have the right to work, to commiting an offence if they have reasonable cause to doubt the right to work.

To make this system work without the Government creating a Right To Work ID Card which would have been expensive, unpopular and being a large IT project probably a disaster they came up with a statutory excuse against liability.

They said that if you do this you will be deemed to have done all you could be expected to do. This got translated by in house legal departments to in our company you must do .... as part of the recruitment process so we qualify for this excuse and by external legal advisors as you are an idiot if you don't do this.....

There is no offence of employing someone who has the right to work and not doing a right to work check. It's just a case that for most employers it's not worth the hassle of not doing one and has become misunderstood.

With the current system the Government can wash its hands of any responsibility for implementing the laws it passed, for example they could add a Right To Work Flag to the NI Number along with a photo. But they won't because it would make them liable if someone can't get a job because of these checks and they were in the wrong.

Remember COVID and the view that the law was that you could go out once a day to exercise and the BBC, all the newspaper and the perceived wisdom was that was the law, when it was just an interpretation that got parroted so often that it became the law

Whether this distinction between what the law says and how it has become misrepresented matters to you is a topic for NACA.

Bye

Ian

 

[Pat "5mph"]

I'm yet to find a card that doesn't charge and up-front fee on balance transfers

There are many.
Martin Lewis reviews them periodically here - app available too.

 

[Psamathe]

Assuming I'm not limited by the total amount I can borrow I reckon this could net me a non-trivial amount of interest annually, once I've got a couple of years worth of outgoings invested.

When credit cards set their limit they do take into consideration credit limits on other cards (from different companies). I assume they find these from the credit check agencies. So high limit on one card will often mean lower limits on other cards.

 

[PaulSB]

When we retired, 8/9 years ago, I was determined to make savings not locked away long-term work hard. At the time interest paying current accounts were "a thing." "Experts," like Martin Lewis, urged people to take advantage. I tried this opening multiple accounts, each needed regular management to meet the minimum requirements.

This took significant effort and time. After 6 - 9 months the returns were so small that I gave up. I suggest your project will require a significant effort. Before worrying about rates etc. you need to ask yourself if you have the time and motivation to follow this through?

Most 0% interest CCs allow spending for a limited period. Balance transfer cards usually incur a fee. Both offer an opportunity to spread capital purchases over a long period. My recent Barclaycard CC gives £7500 over 22 months for a 1.49% fee. I will use £1700 only, the fee is £25.33 or £1.50/month. Three years ago I borrowed to buy a car, over five years the interest paid will be £659 or £11/month. Our long-term savings earn far better returns and our capital is preserved.

Your plans are funded from monthly income. I doubt cards and savings accounts exist were the margin between interest/fees paid and interest earned makes the project financially worthwhile. The real danger is a couple of slip ups or inability to pay off a large sum could incur penalties wiping out much of the return.

You're accruing debt. How long will it take to earn sufficient to cover that? My guess is quite some time. My advice would be to think very carefully about this project and decide if the returns justify the significant management effort it will require.

A final comment. Barclaycard offered me £7500 for 1.49% fee, +/- £112 total. Barclaycard has to administer this account for 22 months earning a maxium of +/- £5/month. I will only use £1700 at a total cost of £25 or £1.50/month.

Why does every business one encounters encourage online statements, transactions, close bank branches etc? Because admin is very expensive.

This business model is reliant on the customers who default in some way incurring penalty charges, high interest, long repayment periods etc. The CC companies know this and calculate there is sufficient to be earned fro. defaulters to cover customers like me and turn a profit.

Do you want to risk being one of those people? You would effectively be funding my very, very cheap loan!