It's a tough one Ally.

The opportunity being that the interest rate is irrelevant if the balance is fully repaid each month, and it's a chance to demonstrate positive use of credit of course.

The risk being the very high cost if you don't or can't, and everything that can come along with that.

I guess some people will say that balance of opportunity and risk is fine, as a means to an end, provided that you move on to something more mainstream when you can.

I guess others will conclude that the costs and risks aren't worth it.

Hi SkintAlly,

I wouldn't beat yourself up too much about applying for the credit card. It's an individual choice for everyone to make when they are finished with the Trust Deed.

I think used in the right circumstances and as long as the balance is paid off every month then like TDA has advised the interest rate is irrelevant.

If you use it in the right way then it's the first step I guess to rebuilding your credit rating. The risk is letting it get out of control and ending up back in the debt cycle again.

I use my credit card for online purchases through EBay and Amazon, any large purchases where I want to be covered by the credit card in case anything goes wrong and also for my work travel expenses. For that reason I find it really handy and useful. When I've made the purchases I will transfer the funds from my current account to my credit card via the app and it's the same when I'm reimbursed my travel expenses. If your careful it can be a useful think to have.

I took out a cashplus credit card with mastercard, the apr is almost 40% I think but I never have to pay it as I just use it once or twice a month for small purchases and then pay off completely. I'm hoping this will help to build up my credit file (once I finally get my file cleared up of defaults still showing that should have cleared over 3yrs ago on discharge).

Hi folks thanks for the advice, I think as you say, if used properly, this should only work to my advantage in the short term. One thing I did wonder, do you think it could be beneficial to perhaps pay a balance back over a few months. Obviously this would incur high interest, but at the same time it would show an ability to work towards paying things off over time as opposed to just clearing a balance each month. It's not often that high value items can be paid for in one go. The way I had planned to use the card was to match the credit limit in a savings account before using it. This way I'd always be covered. That and the fact I don't want to ever have to use the thing other than for simulating usage on my credit file.

Ally

Hi SkintAlley

I also applied for an Aquacard. The interest is not quite as high but still very high.

Similar to David I use it for online purchases and something that is a larger purchase (although have not done that yet).

I cleared it off each month almost every month and paid the majority off the other. I started with £600 and it has was increased to £900 within three months for good paying record. With this type of card it does not make sense to pay only the minimum and run with a high balance.

My main reason was to build up a good record of using credit so that when the Trust Deed drops off at the end of this year my credit file will show a record with this (and a Next card) of good performance.
Whether that helps remains to be seen - but that is the logic behind it.

As David says, it is also a protection when buying certain things.

Remember - it is in your control. You can always cut it up and pay it off if you don't like how it is working out for you.

I got one to help build up my credit file putting on and clearing each month small amounts, also to use for car hire abroad after my trust deed ended, as hire companies in the main don't take switch cards.

Hi Ally.

I can't see any advantage to paying back a balance over a number of months. You'll just end up paying a lot more more something than you need to.

If this is a process you want to undertake, we'd suggest a single modest monthly purchase on the card which is promptly repaid in full. A positive mark on your credit report every month at zero cost.