When it comes to credit cards, managing them well is pretty simple: always pay at least the minimum monthly payment (preferably more), on time, and don’t bust your credit limit.
These mantras are important. Not following them usually means any promotional 0% interest periods (such as on purchases or balance transfers) are removed, and you get whacked with a fee, and it may cause a black mark on your credit file.
While we’d always strongly recommend you manage your credit well, we know people make mistakes. But there are a couple of providers that won’t punish you too harshly if you do slip up.
Co-op Bank and Nationwide Building Society have relaxed their rules around promotional periods, meaning you’ll always get the full 0% deal, even if you miss or make a late payment, or go over your credit limit.
While their cards don’t make it to the top of any of our best buys, if you’re worried that you might make errors with your credit, it could be worth considering one of these options, for peace of mind if nothing else.
What usually happens when I miss a payment, pay late or bust my credit limit?
If you miss a credit card payment, or pay late, your lender will report it to the credit reference agencies and you’ll get a mark on your credit file for that month, which will stay there for six years (though the effect will lessen over time).
Go over your credit limit, and your lender could reduce it or impose other penalties. Do this often enough and it may even close your account. Plus, busting your limit can be a marker of poor credit management, which can make it harder to get credit in future.
On top of that, you’ll be hit with a charge for any of these misdemeanours, usually between £10 and £12 each time.
We asked the major credit card lenders and most, including Sainsbury’s Bank, Virgin Money and Lloyds Banking Group (which provides Lloyds, Halifax and Bank of Scotland cards), told us that any promotional 0% interest rate would also be lost.
How are Nationwide and Co-op different?
Nationwide and Co-op will still report mistakes to credit reference agencies, and charge you £12 and £10 respectively if you pay late, but, crucially, they won’t remove promotional rates, which could save you £100s in interest charges.
For example, let’s imagine you’d taken out a 24-month 0% balance transfer card with Co-op Bank and shifted £2,000 to it, but were late on your first monthly repayment. Your 0% rate would remain in place, so you’d have the full two years to clear your balance.
If you’d taken out the same card with another provider, and also missed your first monthly payment, you’d lose your promotional rate. Assuming it reverted to an interest rate of 18.9%, even if you budgeted to pay it off in the same two-year period, you’d pay a total of £384 in interest.
How likely is it I’ll make this sort of error?
While only you can tell if you’re likely to miss a payment, pay late or go over your limit, recent research from Co-op Bank suggests that 20% of Brits with a 0% balance transfer deal in the last five years have lost their promotional rate early – it’s always worth reading the terms of any card you take out carefully, so you’re not stung.
If you know you can manage your credit well and want a card offering a longer promotional period, it’s worth looking through our credit card best buys to see which’ll best suit your needs.
And if you find yourself regularly struggling to pay debts and bills, it’s worth getting specialist debt help.