What about credit cards?


(Ben Green) #145

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.


#146

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 :wink: - 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…)


(Jolin) #147

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


#148

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.


(Jamie 🏳️‍🌈) #149

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.


#150

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.


#151

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…)


(Jamie 🏳️‍🌈) #152

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.


(#savetheseabass) #153

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


#154

Interesting concept! I’d still think that for those who are able to get a credit card at all, a credit card is still a better tool to build a credit history, because, as @j06 put it, they are a powerful budgeting tool (and you can put your money into actual, interest bearing accounts in the mean time), but it is undoubtedly great that there are alternatives available.

This has me wonder, though: Is the number of people who can’t get any credit due to a lack of history really that large in this country? Even when I first came into the country without any credit or address history, without even a paid job, I was accepted for a credit card almost immediately. The original limit was silly low (£400 I think), but they increased it quite quickly once I got my first paid job. The same applies to my wife a few years later.

Or is it just that people don’t know they need a credit history until it’s too late? In that case Loqbox isn’t going to help either, because, well, if you don’t know you need it, why would you get it?


(#savetheseabass) #155

I love the concept. Ok you’re loosing a years interest (which wouldn’t be much on those amounts) but unlike a credit card I wouldn’t be tempted into the i’ll Just get that and I’m sure i’ll be able to pay it off next month mindset.

History would be a bigger issue for young people, more of who live at home for longer but a big part is rebuilding history after defaults or bankruptcy


#156

Hopefully a Credit Card Jar will be possible at some point: Coin Jar style Personal Finance Management Strategies and Ideas


#157

I know this in old topic but I’m new to the forums and it concerns something I’m interested in.

I too would be happy with a ‘credit’ card that doesn’t offer credit - I always pay mine off in full - but I do want the legal protection that goes with a credit card. Combining that with the security of Monzo’s immediate notifications would be a real winner.

However, I would still be reluctant to give up my cashback. I get 1% on my American Express card and 0.5% on my Barclaycard, earning in excess of £120 a year combined. I’m not interested in other rewards and that would be a lot to turn my back on just for the convenience of having my spending show in the Monzo feed.


(Jorge) #158

¿?

If Monzo ever went for credit cards they’d have to offer credit, not ‘credit’. Otherwise, that’d be a misleading product.

I think you should contact your MP to get a Consumer Debit Act. In that sense, we want Apple Pay, but that doesn’t mean we’ll get it :stuck_out_tongue:

Without getting the business that revolves around credit it is very unlikely that Monzo could match or even offer such cashbacks. As far as I know they’re working on some cashback with Retailer Offers because retailers usually absorb the cost to attract more customers.


(Jorge) #159

Without trying to sound very snappy I think you should checkout products like moneydashboard.com which let you add banking services from other providers and help you categorise spending.


#160

Hi Jorge

No, that doesn’t sound snappy at all - it’s helpful.

Equally, I don’t want to sound like I want Monzo to be something it isn’t. I appreciate it’s a bank offering a current account and it wants to be the best at just that. I’m really just thinking out loud about how Monzo matches my present way of managing my day-to-day spending, how it differs, what I could do differently to take advantage of Monzo and how Monzo might develop in the future.


(Jorge) #161

I think they’re just being very wary of the way they do business and I think that’s a good sign. Tom said that traditional banks just focus on selling more and more mortgages and credit cards and Monzo doesn’t want to be that kind of bank. But they have to make money somehow so they just started doing overdrafts.

They’ll be moving onto the marketplace to make money so I think that credit cards are going to be out of the picture for a very long time. But who knows, they might be able to get a deal with credit card providers to integrate their platform into Monzo so that you can check your amex card balance in the Monzo app (with the spending categories and everything)!


(Peter Shores) #162

Hi I’d love to see a credit card offering either by Monzo or a partner that could integrate into the app that had the same real time update.


(Jonathon) #163

Pretty sure Monzo have said they aren’t going down that route, but I’m sure one will be integrated at some point with the API.


Monzo Credit Card
(Peter Shores) #164

Ah but will it have real time updates- I suspect not unless from Monzo