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Mortgage application - pay off credit card or leave savings untouched.

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    #32
    staples7
    Registered Users Posts: 794 ✭✭✭staples7


    SarahMollie wrote: »
    Quick question - is that just your balance ie you're not yet due to repay it (i would always have some spending on my CC) or is it money that you've deferred paying over a number of months?

    If its day to day spending and you're clearing it on time, thats fine. No one is suggesting that you need a zero balance on your CC in order to apply for a mortgage.

    Its just paying interest on a CC whilst having money sitting in savings, is basically just giving money away, so this may not be viewed favorably.

    However as you said, I don't think anyone should be losing sleep over €600!


    I always pay more than the monthly amount due, Its just more of habit than anything else to have a a few hundred on the cc. Silly I know.


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    #33
    SarahMollie
    Closed Accounts Posts: 2,843 ✭✭✭SarahMollie


    staples7 wrote: »
    I always pay more than the monthly amount due, Its just more of habit than anything else to have a a few hundred on the cc. Silly I know.

    You said it :)

    Probably best to just try get out of that habit if you can, just to save yourself a few €€€.


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    #34
    wench
    Registered Users Posts: 1,648 ✭✭✭wench


    staples7 wrote: »
    I always pay more than the monthly amount due, Its just more of habit than anything else to have a a few hundred on the cc. Silly I know.
    Definitely a habit worth breaking.
    When you don't pay in full you lose the benefit of interest free days, and pay interest on all purchases from the day they were made.


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    #35
    Butters1979
    Registered Users Posts: 1,164 ✭✭✭Butters1979


    loveisdivine wrote: »
    I take on board the advice about how to use credit cards. We will definitely be using them more wisely in the future, if we need to use them at all.

    I'm hoping the fact that we save more than we need too each month and that we have at least a 20% deposit when we technically only need 10% as first time buyers, will outweigh the negative :)

    Absolutely. The bank will be much more interested in your repayment affordability and how much of a deposit you have (as this means they have less money tied up in a house than it could be sold for if something goes wrong). €600 is not enough for a blanket no.

    Remember it's all about the banks risk, you're not going cap in hand, they're set to make almost a euro off every euro you borrow. If they see you as low risk, they'll be happy to take your money.


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    #36
    Santy2015
    Registered Users Posts: 1,065 ✭✭✭Santy2015


    I was told having some kind of balance on a credit card is good, but saying that I pay mine off in full every month.


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    #37
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    Don't you have a direct debit set up on the credit cards?


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    #38
    SarahMollie
    Closed Accounts Posts: 2,843 ✭✭✭SarahMollie


    Santy2015 wrote: »
    I was told having some kind of balance on a credit card is good, but saying that I pay mine off in full every month.

    Yeah having a balance which you pay off every month is ideal. Shows you can handle having the money available but not get into trouble with it. Its when you're carrying the balance over into the next payment period and beyond and paying for the privilege, then its just costing you money.


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    #39
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    gaius c wrote: »
    Don't you have a direct debit set up on the credit cards?

    I'm sure like most people its set to the minimum payment and additional transfers are done manually. Could land your current account in bother if it suddenly got emptied paying off a credit card in full!!


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    #40
    SarahMollie
    Closed Accounts Posts: 2,843 ✭✭✭SarahMollie


    Asa Damp Maid wrote: »
    I'm sure like most people its set to the minimum payment and additional transfers are done manually. Could land your current account in bother if it suddenly got emptied paying off a credit card in full!!
    gaius c wrote: »
    Don't you have a direct debit set up on the credit cards?

    I have mine set up to pay in full, but apparently lots of people don't do this. I always leave a bit of money in my current ac so I won't get any shocks.


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    #41
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    SarahMollie wrote: »
    I have mine set up to pay in full, but apparently lots of people don't do this. I always leave a bit of money in my current ac so I won't get any shocks.

    You have no control then though, what if you make a big purchase on the card and then suddenly you have a direct debit which will be trying to empty your current account. Even more so if you use your card for work, you could have say an extra 1k euro on your card from a trip and not have gotten back the expenses yet so suddenly your direct debit could be way more than what's in your account. I also keep my current account as low as possible, card fraud is too common now so I use my credit card for almost all card transactions and on pay day transfer everything that's in my account from the previous month into savings. I got done for nearly a 1000 euro in fraud a while back and only reason they didn't get more was I keep a lowish balance in my account (I got the money back of course but I dont like giving free money to fraudsters).

    I much rather having full control, I do the same for bills, rent etc I rather manually paying things so I keep full control over everything.


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    #42
    SarahMollie
    Closed Accounts Posts: 2,843 ✭✭✭SarahMollie


    Asa Damp Maid wrote: »
    You have no control then though, what if you make a big purchase on the card and then suddenly you have a direct debit which will be trying to empty your current account. Even more so if you use your card for work, you could have say an extra 1k euro on your card from a trip and not have gotten back the expenses yet so suddenly your direct debit could be way more than what's in your account. I also keep my current account as low as possible, card fraud is too common now so I use my credit card for almost all card transactions and on pay day transfer everything that's in my account from the previous month into savings. I got done for nearly a 1000 euro in fraud a while back and only reason they didn't get more was I keep a lowish balance in my account (I got the money back of course but I dont like giving free money to fraudsters).

    I much rather having full control, I do the same for bills, rent etc I rather manually paying things so I keep full control over everything.


    The limit on my CC is not enough to empty my current account.
    I have a corporate credit card for anything to do with work.

    Anything bigger than that, like a car or something, I'd likely just be making a withdrawal from my savings for anyhow.

    The only loan I have (or have ever had) is my mortgage so that keeps it simple. I live within my means, for me a credit card is just a convenience, but I won't spend unless I have the money to cover it.


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    #43
    Gumbo
    Moderators, Society & Culture Moderators Posts: 39,416 Mod ✭✭✭✭Gumbo


    You have 38k in savings.
    You owe €600 to a CC and are considering paying it off over a couple of months.

    Just pay it off now. Reduce your savings this month to pay the CC and get rid of it.

    It will make no difference to the mortgage application.
    We went through the process in 2015 and the biggest problem with CC is the limit. They had a heartbattack when they found out we had a 25k limit on our cards between us!


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    #44
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    SarahMollie wrote: »
    The limit on my CC is not enough to empty my current account.

    Mine actually has a very low limit also, too low in fact I need to get it increased as its awkward for work related stuff.

    Anyway back on topic, for the op I think it makes very little difference but if they feel that it could effect them just pay it off by saving a little less for one month. There was another good suggestion and that was pay it off and then use the card for day to day stuff. This way the balance gets cleared and interest wont be paid but savings aren't reduced. It will take a couple of cycles of this to actually clear for real but this process means the balance is actually cleared from month to month.


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    #45
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    Asa Damp Maid wrote: »
    You have no control then though, what if you make a big purchase on the card and then suddenly you have a direct debit which will be trying to empty your current account. Even more so if you use your card for work, you could have say an extra 1k euro on your card from a trip and not have gotten back the expenses yet so suddenly your direct debit could be way more than what's in your account. I also keep my current account as low as possible, card fraud is too common now so I use my credit card for almost all card transactions and on pay day transfer everything that's in my account from the previous month into savings. I got done for nearly a 1000 euro in fraud a while back and only reason they didn't get more was I keep a lowish balance in my account (I got the money back of course but I dont like giving free money to fraudsters).

    I much rather having full control, I do the same for bills, rent etc I rather manually paying things so I keep full control over everything.

    That's a fair point actually. Could you not get advances on expenses? That's what I did when I was in the US for 3 months.

    When it happens to me, I just transfer from savings into the current account a day or two before the DD is due.


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    #46
    SarahMollie
    Closed Accounts Posts: 2,843 ✭✭✭SarahMollie


    gaius c wrote: »
    That's a fair point actually. Could you not get advances on expenses? That's what I did when I was in the US for 3 months.

    When it happens to me, I just transfer from savings into the current account a day or two before the DD is due.

    Another thing I do is set up my direct debit for the last possible day, therefore I've anything between 8-4 weeks (depending on when in the month I'm spending) before my payment is due.

    This gives plenty of time to reorganise finances behind the scenes if needs be.


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    #47
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    gaius c wrote: »
    That's a fair point actually. Could you not get advances on expenses?

    You can but more often than not its more hassle than its worth, especially if you don't use all the advance it has to be paid back by cheque or bank draft (at your own cost) etc and hassle of going to the bank to organise etc.

    Its easier to just pay and claim back. its not as bad since we don't have to pay for flights and hotels ourselves and claim them, this is done for us now.


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    #48
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    I don't do the travel thing as much anymore but I know the regular folks asked for and got company credit cards.
    As long as you don't use them for personal use (too much paperwork with accounts), they work very well.


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    #49
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    gaius c wrote: »
    I don't do the travel thing as much anymore but I know the regular folks asked for and got company credit cards.
    As long as you don't use them for personal use (too much paperwork with accounts), they work very well.

    One of the joys of working in a public service job, no chance you will ever see a company credit card.


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    #50
    athtrasna
    Closed Accounts Posts: 13,420 ✭✭✭✭athtrasna


    Can we ease off talk on how to use a credit card please. A specific question was asked by the Op. Thanks


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    #51
    Villa05
    Registered Users Posts: 4,621 ✭✭✭Villa05


    If I were a bank and you were giving me lots of money which I pay little or no interest on while I give you money and you pay circa 20% interest I'd be laughing all the way to the bank.

    Seriously it's a no brainer, never, ever have credit card debt when you have 30k + sitting around.


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    #52
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,507 Mod ✭✭✭✭johnnyskeleton


    Asa Damp Maid wrote: »
    That a lot of hassle for the sake of a few euro, messing around getting loans etc for something that gets paid off so quickly and often these things are impulse buys anyway.

    I would only get into short term debt for a purchase that i absolutely needed e.g. home/car repairs, medical expenses. If i wanted to buy a 50" tv but didnt have enough to pay for it straight away, i wouldnt buy it. Id save up instead. Maybe, if i was half way through savig and a good deal came up, it would make financial sense to buy it on credit. But otherwise not.
    I don't see why the bank would have a problem with a credit card balance that fluctuates between cleared and a few hundred euro when you could easily clear it if you wish but instead are saving money.

    They would love it. The CC bank are getting loads of interest of you, and the mortgage bank will see that they can bamboozle you onto the worst rates e.g. 1 ear low fixed then onto standard variable rather than an LTV rate etc.

    But why would you save and borrow at the same time? The interest on the card is far more than the interest youd get on the savings. If you are saying that from a personal or psychological viewpoin then fine, that mght be the way to go. But its bad financial sense.


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    #53
    slowjoe17
    Registered Users Posts: 110 ✭✭slowjoe17


    loveisdivine wrote: »
    Thanks for all the replies. I've decided to pay it off. If the bank don't like it, then I guess we will have to wait an additional 2 months and go back when we have a full 6 months of no debt and not touching savings.

    I think I'd rather do it that way, at least now, I'm debt free and it's one less thing for me to worry about.

    We've never taken out any loans and never missed any payments on credit cards, so that's 1 thing at least.

    The correct thing to do for the sake of your finances is to eliminate the high interest debt.

    If the financial institution takes offence, then count it as a blessing. They are likely to be unpredictably and insanely stupid in other scenarios.

    Considering that a mortgage is financial relationship that can last 25 years (longer than many marriages), dodging a stupid bank is not a bad thing.


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