If you use PayPal though, you’d be covered there. I haven’t used it (making a claim) but I think coverage is roughly (identically?) the same as credit card.
S
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Not really as yes you are covered but it’s at their discretion. So they can refuse you for any reason they like. With a Credit Card your right to redress is enshrined in law.
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And whilst they usually make good on any issues, resolving them with PayPal can sometimes be a very frustrating exercise involving multiple calls.
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I don’t think they will do that, given that their approach is to only offer a current account with a maketplace offering financial services from other providers (and that Section 75 purchase clause only applies to purchases above £100 I believe, anything less is covered by best-effort chargebacks, where your bank and the merchant’s bank cooperate).
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I’ve been using Monzo for a while now and it’s completely helped me with my budgeting. However, recently I’ve been using my card less and less. The reason for this is because I have an AMEX which protects my purchases and I get points too.
I would definitely like to see a Monzo Credit Card at some point in the future. The ability to categorise each purchase AND have protection would be a win win situation.
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Well, no then.
So I really like my Monzo account and how I can see exactly what is happening with my money in real time, but now that I’ve graduated from university, got a full time job etc, I’ve been told by multiple people how important it is to build a credit rating. The purpose of this would be for a mortgage or some big purchase in the future. I’m under the impression that the main way to do this is by getting a credit card.
I have no interest in borrowing money right now, and whilst I see the benefits in having one for a car hire deposit, and maybe certain purchases for protection, I don’t really want to use one on a daily basis where I can’t monitor my spending so easily. I think the points/rewards schemes are cool, but I’d choose to have the Monzo interface with no rewards, over a credit card system with small rewards.
My main questions are: Can I build my credit rating in other ways than a credit card? Or is one small direct debit from a credit card enough to build a good rating? I’m considering getting a Tesco credit card, seems as that’s where I mainly shop and refuel, which means I’d probably end up using my credit card there for the points, meaning my spending would end up split between two accounts and that’s not what I want… So maybe I should just avoid that temptation and keep everything in Monzo, doing the minimum required to build a credit rating!
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Or is one small direct debit from a credit card enough to build a good rating?
Yep definitely. That’s what I’m doing, got a card from Capital One (which is actually quite nice, the app is decent and the web interface is awesome considering it’s a legacy bank) and I just use it for like half the credit limit every month, and it gets paid off in full via either direct debit or Faster Payments so I pay zero interest.
I would be against a Tesco or any kind of store-branded card just for the privacy aspect of it, unless you actually want to take part in their loyalty scheme and share your shopping patterns.
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Things like mobile phone contracts help as well.
The credit card is a usual way. Do 1 shop a week with it and pay the full amount at the end of the month
Good impartial advice www.moneyadviceservice.org.uk/en/articles/how-to-improve-your-credit-rating/amp
And disagreeing with the above I’d say if you shop at Tesco get their card as you’re already giving over your info for club card points
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Things like mobile phone contracts help as well.
Utilities and phone contracts do help, however I would advise against locking yourself into phone contracts considering those companies always end up screwing something up in one way or another, and this is where being able to jump ship really helps.
I recommend just getting a SIM-only 30-day rolling contract or even a pay and go.
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Thanks for the advice guys. I’m sorted with a business phone so that’s not a payment I’m worrying about at the moment, and all bills are covered by my landlord… the only direct debit I have right now is a gym membership so hopefully that’s enough!
I might check out that Capital One card and read into the credit rating a bit more.
Tesco do already get my shopping habits from my clubcard I suppose.
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If you’re renting your home then credit ladder is one option.
Another good way is buy the more expensive things you want on finance plans such as buy now pay later, which only incurs a relatively small fixed amount of interest. You can pay it off early and lenders will see that you can be responsible with larger amounts.
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Some good advice in the posts above. I know this isn’t a perfect solution but have you thought of creating a pot for credit card expenditure? It requires self discipline but if you could get into the habit of transferring however much you spend on the credit card into that pot you’d still be tracking expenditure…
(What we really need is a great Monzo-like credit card - no, not you Tandem 
- or for an existing player unaffiliated with the big banks to see the opportunity to integrate deeply with Monzo via the marketplace and with transactions etc viewable in app on Monzo…)
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You don’t need to wait until the end of the month to make payments to your credit card. You can, for instance, do a shop at Tesco that costs £21.37, pay by credit card, and then immediately transfer £21.37 from Monzo to the credit card. It’s a bit of a hassle and doesn’t look as good in your Monzo feed, but would allow you to see all your spending in one place and make a few purchases a month on credit
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Included hire car CDW (saves a fortune if you hire cars regularly), travel insurance for me and all of my supplementary card holders, hotel frequent stayer status (free breakfast and upgrades), unlimited lounge access, points, cashback, the BA 241 voucher. Very occasional use of section 75.
No one will actually see what you’re buying every month, lenders will just want to see that someone has trusted you with a credit card limit, and you don’t abuse that trust by spending well within it, and managing your debt effectively.
Just get a credit card and put a tank’s worth of petrol (or all your petrol every month) through it. Set a direct debit up to always pay the full amount, and as long as you only buy fuel on the card, you can tell Monzo to classify that payment as fuel.
I’d disagree with @jzw95 actually, you should wait until you get your credit card statement before paying the amount off. It’s only at this point that your spend amount is given to the Credit Reference Agencies, which is what will build your credit history other lenders will see (ie. they’ll see you spending, say, £150 a month and being responsible by paying it off too) and it’s this behaviour which ‘builds’ your credit history for the future. If you spend on a credit card and immediately pay it off, when your monthly statement is generated it’ll apparently show a zero balance, which won’t have the ‘credit building’ effect you desire.
Building a good credit history is important, and those who’ve never even had an overdraft have demonstrably had difficulties when they’ve come to apply for a mortgage, as lenders have no history upon which to base their assessment of how you manage credit.
Couple of tips for success:
Don’t spend right up to your credit limit.
Always pay on time, and lenders will look more favourably if you always pay more than the minimum amount.
Don’t get carried away and think you have a load of free money to spend, you’ve always got to pay it back! Only use the card on something you’d be paying for from your current account anyway.
And finally, ignore completely the score the Credit Reference Agencies will show you. They make it up, and no one else ever sees it.
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This is really important. If you want a credit card to build a credit “rating” you need to use it as a credit card, ie not pay off every purchase in itself.
American express actually also has a half decent app and instant notifications, if you are into that sort of thing. And the rewards are really quite good through them. (Although you may struggle to get one, if you never had credit before…)
Barclaycard sort of autocatgorises purchases, but it’s far from perfect.
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Always repay in full! Otherwise you are charged through your nose in interest. (obviously, there are exceptions to every always, it you get the idea…)
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Yes. In general ALWAYS pay in full whilst you get to grips with how a credit card works.
My point was, don’t be afraid to use a credit card to your advantage once you feel confident. Used sensibly, they are powerful budgeting tools, but you should always try to work out if borrowing for a holiday, and, say, paying it off over a couple of months, within your established budget is the most effective way to spend for you.
If you do budget over a couple of months, remember to pay more than the minimum, because only paying the minimum can look disorganised to other lenders. It doesn’t have to be much, your file only shows if you’ve paid the minimum or not, so £1 over the minimum is fine.
I guess this is a more advanced tip, but something to keep in mind if your aim is to establish a good credit record.
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Just read about this and thought might be of use. Build credit without getting into debt to do it https://www.loqbox.co.uk
mirror write up https://www.mirror.co.uk/money/meet-loqbox--new-way-12333209
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