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

[wafter]

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

Thanks - that's usually my go-to for a quick squiz at financial products

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.

Thanks - that was my assumption, which is why I was somewhat taken aback to have one card offer me around twice what the two previous ones had; especially when one of the former ones was still in use.

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!

Thanks - an excellent summary that echoes my own findings and experiences.

I agree totally that it basically boils down to return versus time cost / grief of admin and risk of getting stung for interest / fees should one exceed the credit limit or fail to pay off the debt once the promo period ends.

As for the former, thankfully my finances are one area of life over which I do have some control / can exercise some order. All accounts are summarised in a spreadsheet with relevant details including the end of promo periods on credit cards and savings accounts, so I know when action needs to be taken on each.

The savings end doesn't incur any additional admin time when playing with the credit cards as the accounts would exist anyway. Obviously there is additional time spent in setting up and managing the cards; the former isn't usually too bad as companies invariably want the process to be straightforward to draw you in. Management doesn't really take much extra time - all spending is summarised and sorted month-end (as it would be with or without the credit cards); my spreadsheet telling me (broadly) how much I've spent on what, where my money is and what my humble net-worth is at the end of it all.

Really the management of the cards on a monthly basis consists of paying off the minimum (done automatically by DD) and ensuring I remain within the credit limit; which granted is harder to check with the current Barclaycards as incomprehensibly they've binned online banking for new customers and since I don't do apps has to be checked via a phone call. I do have a rough rolling mental total and am getting paper statements though, while the limit remains well into the distance currently.

Finally, I consider the risks acceptable as I only need to be careful with spending when I approach the credit limit, while I'm well aware of the dates everything needs paying off and have manged with no issues to this point with prevous cards.

At the reward end, yes the returns are relatively modest, however so is my income and as stated up-thread some fag-packet calcs suggest I could net about an additional 3% annually on my pre-tax wages which I consider a reasonable trade-off although appreciate this this is a subjective situation and that others in more favourable financial circumstances might not concern themselves with.

On top of it all this is driven by a certain amount of bloody mindedness - I hate the way cheap debt has distorted the economy and warped social values. I'm extremely wary of indulging credit the way most now apparently seem to consider normal (spending beyond ones means on unnecessary luxuries, constant consumptive churn of disposible rubbish, gambling on credit-fuelled asset bubbles that price legit buyers out of the market..). So, if I can play the system for a little personal gain in my own petty little way, I'm all for it.

 

[SpokeyDokey]

Thanks - that's usually my go-to for a quick squiz at financial products



Thanks - that was my assumption, which is why I was somewhat taken aback to have one card offer me around twice what the two previous ones had; especially when one of the former ones was still in use.



Thanks - an excellent summary that echoes my own findings and experiences.

I agree totally that it basically boils down to return versus time cost / grief of admin and risk of getting stung for interest / fees should one exceed the credit limit or fail to pay off the debt once the promo period ends.

As for the former, thankfully my finances are one area of life that I do have some contol and order. All accounts are summarised in a spreadsheet with relevant details including the end of promo periods on credit cards and savings accounts, so I know when action needs to be taken on each.

The savings end doesn't incur any additional admin time when playing with the credit cards as the accounts would exist anyway. Obviously there is additional time spent in setting up and managing the cards; the former isn't usually too bad as companies invariably want the process to be straightforward to draw you in. Management doesn't really take much extra time - all spending is summarised and sorted month-end (as it would be with or without the credit cards); my spreadsheet telling me (broadly) how much I've spent on what, where my money is and what my humble net-worth is at the end of it all.

Really the management of the cards on a monthly basis consists of paying off the minimum (done automatically by DD) and ensuring I remain within the credit limit; which granted is harder to check with the current Barclaycards as incomprehensibly they've binned online banking for new customers and since I don't do apps has to be checked via a phone call. I do have a rough rolling mental total and am getting paper statements though, while the limit remains well into the distance currently.

Finally, I consider the risks acceptable as I only need to be careful with spending when I approach the credit limit, while I'm well aware of the dates everything needs paying off and have manged with no issues to this point with prevous cards.

At the reward end, yes the returns are relatively modest, however so is my income and as stated up-thread some fag-packet calcs suggest I could net about an additional 3% annually on my pre-tax wages which I consider a reasonable trade-off although appreciate this this is a subjective situation and that others in more favourable financial circumstances might not concern themselves with.

On top of it all this is driven by a certain amount of bloody mindedness - I hate the way cheap debt has distorted the economy and warped social values. I'm extremely wary of indulging credit the way most now apparently seem to consider normal (spending beyond ones means on unnecessary luxuries, constant consumptive churn of disposible rubbish, gambling on credit-fuelled asset bubbles that price legit buyers out of the market..). So, if I can play the system for a little personal gain in my own petty little way, I'm all for it.

The good thing here is that you have a grip on your financial situation.

Many (most) people do not have a clue.

A strange situation when modern life revolves around the acquisition of money and its expenditure.

Personally, we became reasonably well-off once we realised that we simply were not managing our money properly despite a high income level, some 25 years back.

Took me until I was 44 years old to realise this - dumb or what!

A seismic shift was when realisation sunk in that money was not simply something to spend, but something that could/should also be used to create income producing wealth.

This significantly changed our domestic 'money strategy'.

Good luck with your own efforts...

 

[kynikos]

...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?

Not really, for example: I've just booked a holiday and have the money for it, however...

It took me, quite literally, less than 15 minutes to apply for and open accounts with Chase - it's that quick. An interest free to January 2027, no fee credit card I'm using to pay for the holiday with an equal amount into a savings account at 4.75% p.a. They even let me pay the credit card by DD from the savings account. A diary note to repay the o/s balance at the appropriate date and I'm done. In the meantime the savings account will pay ~£500 in interest - well a bit less as rates are due to fall!

That's a pretty good return in my book.

 

[wafter]

The good thing here is that you have a grip on your financial situation.

Many (most) people do not have a clue.

A strange situation when modern life revolves around the acquisition of money and its expenditure.

Personally, we became reasonably well-off once we realised that we simply were not managing our money properly despite a high income level, some 25 years back.

Took me until I was 44 years old to realise this - dumb or what!

A seismic shift was when realisation sunk in that money was not simply something to spend, but something that could/should also be used to create income producing wealth.

This significantly changed our domestic 'money strategy'.

Good luck with your own efforts...

Thanks and yes - one of the few bits of my life I feel I have some control over; predominently driven by anxiety over future security as I'm well aware of the trajectory the world is taking and don't feel in a great position to weather it.

Sadly I don't think the financial situation of most is like that by accident - our economy revolves around spending yet there's little impetus to educate people to understand how to do this wisely / manage their money responsibly. Further, marketing has warped social values to promote shallow consumption and legislation leaves the door wide open to allow debt-peddlers and unscrupulous sellers to exploit people's insecurities and ignorance for profit.

It shocks me how sketchy some people's attitude is towards money.. as evidenced by the amount of people rolling around in debt-fuelled new cars for example. I remember a friend of a friend bought a newish but utterly mediocre car on PCP and it cost her something like £400/month.. Potentially 20-25% of her take home pay on something she's probably not really that interested in / that will bring her limited pleasure and no better utility than something bought outright for a couple of grand. One day's work every week spent servicing that unnecessary debt - which would be more enriching, rolling round in that ill-afforded display of conspicuous consumption or having a free day every week to do what you want?

I have other friends who spend money like water - as soon as it's there, it's gone - and any unforseen bumps in the road lead to panic and potentially the use of debt on unfavourable terms to get by.

While I absolutely don't doubt that life is legitimately getting harder for most with falling real-term wages and high inflation on necessary goods, it seems that many people still choose to waste their money on absolutely unnecessary consumer trinkets.

Our consumptive economy became unsustainable decades ago and now only hobbles on thanks to increasing amounts of debt. I wonder how much the all-important economy god would suffer if overnight everyone suddently started making sound financial decisions...


Great work in sorting your own situation - that must have felt like a proper Eureka moment

I think I've probably gone the opposite way to you to an extent. I've always tried to accumulate funds for financial security, however a growing understanding of how worthless our paper money is / how even when accumulating interest you're treading water at best / more likely still losing out to inflation / debasement has made me question the validity of this position. In addition now that I've finally moved it feels more legitimate to spend money on actually enjoying life rather than squirreling it away for the benefit of some nebulous future situation.

All that said I try to remain very frugal and my outgoings are typically, thankfully very small by the standards of most..