How to Choose the Best Credit Cards

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There are lots of different credit cards available for us to choose from and this means that it can be rather confusing knowing which ones to choose. They may seem really similar but it is a good idea to think about the small differences between them because it could make quite a significant difference to you.

Interest Rate

The interest rate will vary between the different credit cards. For those people that will not pay their credit card in full this will be really important. Every time you leave an outstanding balance, you will be charged interest and if you can keep this interest as low as possible, it means that you will be paying less as a result. Interest rates will vary between card issuers and they will also change at times because they are variable. Often these changes will be in line with changes made by the Bank of England to the base rate but they may also change at other times as well, so it is a good idea to make sure that you monitor this and make sure that you swap credit card issuers if the rate become too uncompetitive.

Late Repayment Charges

You will also find that the card issuers will vary in how much they charge for late repayment fees. These are charged if you do not pay the minimum balance on time and although many people do not get charged these, it can be worth noting how much they are. This could just act as a deterrent and if you have a direct debit set up to cover the payment, then it should not make a difference anyway as it will be paid automatically. However, you will find that if you do not manage your money very well, even if you have a direct debit set up, you could find that you will be unable to pay it, if there is no money available in your current account to be able to do so. So do make sure, that you are budgeting properly and making sure that you are able to make those payments when they are due.

Rewards

There are some credit cards which will offer people rewards for using them. These will include things like air miles, vouchers and cash and they can be very tempting. It is worth being very careful with these though. If you are confident that you will always repay the card in full each month and only use it to buy items that you need or really want, then a reward card can be beneficial. However, it can be tricky for people that do not repay the card in full. This is because the interest rate is likely to be higher on these cards as the card issuer will need to make more money in order to pay for the rewards. This means that it could be better not to use these types of cards unless you repay in full each month. You may also find that because there is a reward which will increase if you use the card more, that you can start to use it as an excuse for spending lots of money on the card. This could mean that you will buy lots more items than you can afford and it could lead you to not being able to repay the card in full and then having to pay interest on the card. So, you need to be very careful and think about how you think it might impact your behaviour and whether you are likely to use the rewards as an excuse to spend more or whether you will just take advantage of it as you spend as normal.

Should I Use Budgeting to Repay a Loan?

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If you want to repay a loan, then you may be looking for a method to help you to do it. Obviously, you will need to find some money so that you can make those repayments and unless you have savings available to do it with, you will need to come up with an alternative method. It is therefore worth considering budgeting as it has advantages that can help you.

Allows you to Stay in Control of your Spending

By setting a budget it means that you will allocate some money towards different things. It means that it avoids the temptation to overspend. Obviously, there are some things where we will pay out the same amount each month, such as rent or insurance and then we cannot overspend. However, there are things that we will spend different amounts on such as food, gifts, entertainment, travel etc. So, by setting a budget for these things, it means that we can be careful and make sure that we do not spend too much money on them. Then we will be able to see what is left that we can use to repay the loan with or we can budget an amount each month so that we always pay off the same amount. Without budgeting, there may just not be anything left each month to make a loan repayment or it might be the case that you make the repayment and then find due to that, there Is not enough money left to buy everything else that you need, therefore by budgeting you will be sure that this will not happen. Therefore, it can be really useful to make sure that you are careful with spending and by setting a budget this will make it easier for you to make sure that you are not spending too much money in some areas and not leaving enough to be able to repay the loan.

Identifies How Much You Can Afford to Pay Off

By looking carefully at your budget, you will be able to work out how much money you will be able to afford to repay off the loan each month. It will ensure that you will be able to repay the loan in an affordable way. You will be able to look carefully at the figures and decide how much you will be able to afford and this will allow you to be able to make sure that you repay it without struggling to pay for anything else that you need. It will not take that long either, especially if you have already set a budget. Even if you have not you will just need to find out how much you generally pay out for different things and work out how much you will have left and allocate some of that money for repaying a loan. It is wise to make sure that you allocate money for essentials first and then think about loan repayments before then considering what spending you will want to do on non-essentials.

So, you can see that by budgeting it will help you to be able to repay a loan in a more manageable way. You will be able to identify the items that you need to pay for and how much money you need for them and then once you know what is left, you will be able to use those figures to be able to work out what you can afford to repay. It can be a much more organized way to go about things and will mean that you will be able to feel confident that you will be able to afford the loan repayments without struggling to pay for anything else.

Is it Worth Using Overdrafts?

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There are lots of different types of loans and they can be similar in some ways and different in others. An overdraft stands out as being quite different to other loans though. This is because it is associated with a current account, has no formal repayment schedule and does not need to be applied for, once on is arranged. It can therefore be worth thinking about whether it is worth using them.

Advantages of Overdrafts

Once you have arranged an overdraft, the money will always be there for you to use. This means that if you have an emergency and suddenly need money, you will know that it is there for you if you need it. It can be reassuring knowing it is available. Also, knowing that you can have the money instantly can be great as well because you will be able to use it if you have an emergency without worrying about how long it might take to arrange a loan. You will also not have any pressure to repay quickly because the loan will just repay when money is paid into the account. It is therefore very easy to repay and you can do it at your leisure.

Disadvantages of Overdrafts

Having money accessible to you all of the time can be very tempting. Some people will even feel like this is money which is theirs to spend and that they can treat themselves to things. They forget that it is not theirs and that they will need to repay it at some point and that they will be charged interest on it while that have it. Interest rates on overdrafts tend to be 35% – 40% and so they are relatively high compared to some other types of borrowing.

Being able to borrow instantly may not be such a good thing as it means that you do not have time to think about it. You might change your mind about borrowing, if you have to work a bit harder to find a loan and this could save you having to pay out so much money with regards to the loan costs. You should also compare different loans types so that you can work out which one will give you the best value for money. It is tricky to do this and you may decide that as it is easier you will just use the overdraft, even though it is likely that this will be more expensive.

The fact that there is no pressure to repay may also be a problem. This is because you could find that you will be more relaxed about it and decide that you will not worry too much about when you get in debt and about how you are going to repay the debt. Although it is good for your health not to get stressed about this sort of thing, it can mean that you will be paying out a lot of money in interest for the overdraft that you have.

So, as you can see there are a lot of things to consider when you are thinking about taking out an overdraft. Think about yourself and what your approach towards it is likely to be. Think about the risk of having one and whether you think that it will be a good thing for you to have or whether you might end up regretting getting one. If you are not sure, then it could be worth thinking about other loans you have had and what you have been like with those as well as thinking about you usual behaviour with money. This should help you to be able to make up your mind.

Does Everyone Use Credit Scoring?

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We will often hear about the importance of credit scoring and it can sometimes be a worry to us that it might cause problems for us if our credit score is not very good. However, it is wise to think hard about whether this will really be a problem and whether it is something that everyone uses.

Employers

You may be worried that you might not be able to secure a job if you do not have a good credit score. You may be concerned that if an employer looks at your credit record that t may put them off employing you. The good things that not all employers will look at it. You will fid that it is only if you are in a job where you could be bribed or one where you are handling money that employers will get worried about your credit score. In most other positions, this will not be something that they will worry about and this will mean that it should not usually impact whether you are likely to be able to get a job or not.

Landlords

You will find that if you want to rent a home then it is very likely that your potential landlord will want to take a look at your credit score. They will be interested in finding out whether you are going to be able to be trusted to make your rent payments on time. There will be some lenders that will be more lenient than others though and so it is possible for even those people that have a poor credit report to be able to secure a rental agreement. It may mean though, that options are reduced and you may not be able to secure the property that you really want, you may have less choice about where you can live.

Lenders

Most lenders will want to have a look at your credit record. They will want to check to see whether they feel that you will be capable of repaying the loan that they are offering to you. They will hope that you will have the capability of making most or all of the repayments on time so that they get the money back that they have lent to you. Most will check to see how well you have managed this in the past and how well you are managing it now. They will look at regular payments as well as loan repayments to see whether you are managing to repay them on time and think about whether they will trust you to do the same with the repayments on their loan.

It is good to note though, that some lenders will be stricter than others. There are some that will be prepared to lend to those who have a worse credit record but they will charge them a higher interest rate. There will be others that will be happy to do this without a credit check like this at all. There are some lenders, such as those that provide payday loans, instalment loans and guarantor loans, that will lend people money even if their credit rating is really bad. They will not even look at it. They will lend small amount to people by way of a payday loan but if they want more money, they will provide them with a guarantor loan as long as they can find someone or is willing to be a guarantor for them.

So, you can see that credit scoring is important but you will find that there are still some things that you can do even if you do not have a good credit score. So, although, you can manage, it can best to try to improve your credit score as much as you can, but you should not panic if it is not in the best state. 

How to Ensure you Can Repay Payday Loans

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It is really important to be confident that you will be able to repay a loan when you take it out. There are lots of different loans and they have different repayment methods and expectations. With a payday loan, you will normally be expected to repay everything that you have borrowed, plus the interest, all in one lump sum payment when you next get paid. This is because the idea is that you borrow money to keep you going until you get paid. Therefore, this can be even trickier to repay than some other types of loans as you have to do it all in one go. However, there are some tricks that you can use, to make sure that it does get repaid more easily.

Find Out What Needs to be Repaid and When

The first thing to do is to be completely sure of how much you will need to repay and when you need to repay it. It can be really tempting to guess as you may know the interest rate or even forget about the charges and just assume you will only have to repay what you have borrowed. You may also try to work out the interest and it can be easy to make a mistake when you do the calculations. It is therefore best to contact the lender and ask them. They will be able to work it out for you and let you know what the sum of money will be.

Calculate if you Can Afford it

Once you know how much it is going to cost you, you will be in a position where you will be able to calculate whether you will be able to afford it. Do not guess though, as it can be tempting to just glance at the figure and assume it will be fine. Look carefully at how much you are due to be paid and whether it will be enough. Hopefully it will be, but you need to bear in mind that you might have other payments leaving your account on the day that you are paid and you will need to have enough for these as well. You will also be likely to have other things to pay for before you get paid again and you will need to allow for the cost of these. If you still think that you will have enough money, then this is great. If not, then you will need to work out whether you can afford to take the loan out and what you might have to do in order to afford it.

Find Ways to Afford it

There are different things that you can try out to help you pay for the loan repayment. It is good to have a think through some ideas and work out which ones you know will work and that you will be prepared to try because you will have to do them if you want to make sure that you can repay the loan on time and avoid the late repayment fees. You might be able to sell things you own and no longer need, find some freelance or temp work or cut back your spending in other areas. It is good to look carefully through each option and think about whether you feel that there is a way that these options could work for you. Consider if you have things you could sell and then see if there is a place you can sell them quickly that will allow you to make enough money in time. The same with earning more money, it will need to the sort of job where you can get paid very quickly. If you think you can cut back spending, you will need to start doing so right away and you will need to be confident that you will be able to manage and that you will not have any unexpected bills come through.