Barclays personal reserve credit card

[Pimpernel]

Hello,

I dropped in at Barclays today to apply for a personal reserve. It would just be a 'safety net', to avoid being charged hefty fees if I get overdrawn. This happened to me once back in February, because of a misunderstanding with BT: I went overdrawn by �8, spotted it the next day, but still had to pay a �30 penalty... The penalty for making use of one's personal reserve is only �22.

The adviser told me my credit score wasn't good enough to get a personal reserve (might be the case, I've moved houseshares several times in the past 18 months), but then he went on to try and get me to apply to a 'creditbuilder' credit card, the Barclaycard!!!

He said using a credit card would improve my credit score, because it would show that I could meet payments!!!
I already have five standing orders: my rent, my landline phone, the internet, and two regular savers. I thought that was evidence enough that I could pay bills on time!

Furthermore, I think it would be stupid of me to use a credit card for shopping (even if I repay the full balance every month and am not charged interest) when I can withdraw monies from my instant access savings account. I've never had a credit card and I know how to budget without one. And I'm really concerned about credit card fraud.

Has anyone else had this problem? I would like to apply for a mortgage in 2009/2010 (I have a deposit, I live in houseshares in order to keep my outgoings to a minimum and I save regularly), and now I'm concerned I might not be able to get one.

Any advice much appreciated.

[Ethel]

Paying your essential bills on time is nothing to do with your credit rating and will not help it in any way.

A potential creditor needs to see you can be responsible with debt and with no credit history it will be difficult.

You are very wrong, in my opinion, about not using credit cards for shopping. I use Tesco credit card for everything and pay it in full each month. No cost whatsover to me, and every three months I get vouchers to spend in store - on average �300 per year, for no effort at all. Furthermore, if I buy an item that costs �100 or more with my credit card and something goes wrong, the credit card company is equally liable, so even if the company who sold me the goods or services has gone bust I still get legal redress.

There are lots of credit cards that have cash back and other incentives.

Additionally you will get a better interest rate with your savings account if you are not making frequent withdrawals.

If your credit score isn't good enough for a 'personal reserve' with Barclays it is likely it won't be good enough for a mortgage.

Shop around for a credit card with the best deals for you and pay it off each month - without fail. You will be able to manage it online and see how much you owe regularly, so there should be no nasty surprises.

You are just as likely to get mugged for your cash after you've made your withdrawals as you are to be a victim of credit card fraud if you are sensible.

[moomintroll1]

I entirely agree with Ethel's answer.

As long as you are careful to pay the balance off in full each month (you may be able to set up a direct debit so that this happens without fail), the credit card will help you build up a credit rating by proving you can meet the terms of a credit agreement, will give you additional protections on large purchases, and will usually have additional benefits like cashback or a reward points system, all without costing you anything.

Shop around for a card which gives a reward you will find valuable. If your credit rating is not that good at the moment, some offers may not be available to you, and you should be careful not to make too many applications at around the same time, as this can temporarily damage your credit rating.

Acting now to improve your credit rating should make it easier to access better deals and rates when you come to apply for a mortgage in the future.

Also, very importantly from a credit point of view, especially if you move around a lot: make sure you are on the electoral register. Write to the local council as soon as you move in somewhere - don't wait for the annual canvas forms in September/October. This will greatly improve your credit rating by providing a verifiable trace of your addresses.

[Pimpernel]

Thanks for your answers!

I might find the use for a Tesco credit card, since I do a lot of my shopping there and I enjoy accumulating Clubcard points!

It still seems a bit dodgy to me. Most of the people I know who are in debt got in debt because of credit card purchases (non essential purchases like going out, holidays etc.), not because of their mortgage or their university fees.

I'm a little aghast, because I thought there was a credit crunch going on, and while I've managed to grab good rates for my two regular savers, my instant access now pays rubbish!

Anyway, I'll look into those credit card things!

Thanks again!

[Pimpernel]

Have just looked at a credit card's Terms & Conditions.

It says 'card purchase: no fees apply'. I presume that's for when I use the card to shop at Tesco, or to shop online, say, at Amazon.

They also mention 'cash transactions' and 'cheque transactions', which charge a minimum fee of 3 pounds. What are those?

Sorry for the daft questions!