Lessons learnt

I mentioned in my last post that with the arrival of my new shiny, I now have a lot of credit available. I've just totted this up (including overdrafts) and I could, if I so desired, go on a spending spree up to £18,150!! Obviously, I won't. Ha

It is a relief though to have come so far from a few years ago when my credit file wasn't great (from a couple of late payments on credit cards), so that I couldn't get the example APRs or even be approved for some credit cards. I remember in early 2010, being turned down for consolidation loans. Best thing that ever happened though. I have learnt that credit cards are not the baddies, it is how you use them that counts. Over the last few years my credit score has been improving, and if I had taken out a loan I would have been locked into a set amount of (sizeable) interest to pay. By not having taken a loan, as my credit rating has improved, I've been able to use 0% deals to my advantage, and for the whole of the last year I've paid zero interest on my credit cards. Small balance transfer fees are nothing in comparison to the interest I would have paid.

The other good thing about having been turned down for a consolidation loan is that I have had to learn to manage my money better and get to grips with best ways out of debt etc. I have consolidated before, and not learnt any lessons. In fact, I was looking through some old bank statements yesterday and to my horror spotted that almost straight after taking a consolidation loan in 2008 (the one I'm still paying off) I was back spending on the credit cards. 

Looking back through those old bank statements shows me how much I've progressed with my mentality towards money - looking at them now I can see just how ridiculously extravagant I was.  £60+ here and there on supermarket shops (for 1 person!) really is far too much - I never spend more than about £10-15 a time on food shops now. 

This is how I'm now using credit cards:

• My new shiny to pay off credit card 2 as the 0% was ending and I hadn't paid it off (slapped wrist)
• My now empty old credit card 2 (going to hang onto for now as a potential option in case I need a card for further balance transfers)
• Credit card 1 - at 0% until May 2013, which I used to consolidate all my credit card debt onto, and have been paying off monthly ever since
• Cashback credit card - I earn 3% on all purchases and use this only for petrol, to save me having to find money upfront for travel expenses for work.  I pay it off in full every month when I get paid my expenses back.

My new shiny has a 3 month window for balance transfers with only a 1% fee (yipee) so I think I will transfer my credit card 1 balance early in February onto that card as this'll give me 13 months at 0%, just enough to have it all paid off in time.