Credit Cards

Should you Put Christmas on a Credit Card?

When you have an expensive occasion, such as Christmas coming up, it can be tempting to think that the best way is to pay for everything on a credit card and then pay it back later. This can allow you to be able to afford things more easily so that you can buy more gifts and spend more on each person. It can feel really good knowing that you can buy lots of things and make lots of people happy giving them all sorts of gifts. Many people feel that Christmas is about giving the best gifts so that you can make other people happy. However, most people would not want you to be stressed or get into debt just so that they can have a gift.

However, paying for things on a credit card is not always a very good idea. This is because of the cost of the credit card. If you pay off the full balance when it is due, then it should not cost you anything. This means that you can delay paying for items until the bill arrives which could mean that you get paid again and have enough money to cover the cost. This is a great way to help you to afford things and means that you will be able to pay for them after you get paid. Many people use a credit card like this all of the time, by using it for all purchases during a month and then paying it off at the end of the month when they have more funds to be able to do so. You can set up a direct debit to do this and you should even be able to tell the credit card company which date you wish to pay it on so that you can guarantee that you have the funds available to do so.

However, if you borrow money on a credit card and do not pay it back then this is when the trouble can start. Whether you choose not to pay off the bill or you intend to but find that you do not have enough money to be able to do so, the charges will start to be added on. You will find that once the payment date passes there will be an interest charge added on and then a minimum payment, which covers that interest will be taken from your bank. Then each month, if you do not pay it off, you will be charged more interest. That interest can add up really quickly and you could find that you will soon have paid so much in interest, that you would never had bought the items had you realised that they would have cost you so much. As there is no obligation to pay off the card, just the minimum amount which covers the interest, it is very easy to leave the credit card bill outstanding for a long time. You could find that you will get to the following Christmas and still not have paid it off.

A much better way is to start saving up early. Instead of having to whittle away a debt slowly after Christmas, but some money aside each month before Christmas. Then you will have a pot of money to use to buy your gifts from. Hopefully it will be enough and your friends and family will appreciate the gifts as much and you will enjoy it even more because there will not be a big bill waiting for you to pay afterwards. So the first priority should always be to pay off any debts you have as these are expensive Once you have done this then you can start saving up towards Christmas so that you can more easily afford it.

So buying Christmas on a credit card can be a good idea as long as you are sure that you will be able to pay it off at the end of the month. If you are completely sure that you will be able to achieve this, then spend on the card and set up a direct debit to pay off the full balance when it is due. However, if you have any doubts then you need to be a lot more careful. Any chance that you will not be able to pay off the full balance means that you risk having to start paying the interest. You may think that the interest will not matter, but if you keep letting payments slip then the interest can really add up. The debt can hang over your head and it can just sit there unpaid for months and months and be a cause of stress for you. Imagine how those people that received your gifts would feel if they knew that you were stressed over paying back the money that you used to buy their gifts. They would not want you to go through that and would rather you had not spent so much or perhaps bought them anything.

Overdrafts

Should we be concerned about Overdraft Charges?

Most people that have a current account will have the option of applying for an overdraft and some may already have the overdraft set up when they are set up with the account. Those without an overdraft option tend to be those people with a poor credit record. These overdrafts can seem like a great thing because it means that you will be able to get some extra money when you need it. However, it is worth thinking hard before you do this.

Overdrafts come with high charges and these are something that you should try to avoid if you can. It is worth noting exactly how high the charges are as well as many people do not think about them when they use the overdraft facility. If you use an unauthorised overdraft you can find that the charges can be the highest you will pay for any type of borrowing including payday loans. Your terms and conditions for your current account will have details of how much the charges are. Your bank statements should tell you how much your authorised overdraft is. If you are not sure of either of these then you can ask your bank to find out. It is worth knowing so that you can be sure of how much any borrowing could cost you.

The problem with an overdraft is that the charges are daily. So every day that you are overdrawn will incur a charge. There may also be a fee for going overdrawn as well. So until you have some income or can transfer some money to cover the charge you will find that the charges will be building up. This could mean that you will end up having to pay a really large amount in charges for being overdrawn.

The charges will be less for an authorised overdraft than an unauthorised overdraft. This means that it is wise to try to get the biggest authorised overdraft you can, if you think that you will be getting overdrawn, in order to minimise the amount that you will have to pay. Of course, it is far better to try to avoid getting overdrawn at all so that you can avoid those charges altogether.

In order to do this it is important to budget during the month to make sure that you have enough money left to manage until you next get paid. You also need to make sure that you keep checking the balance of the account so that you are aware of how much money is in there so you do not go overdrawn by mistake. You can usually get a balance at a cash machine or you may have online banking that you can use as well.

Many people see their overdraft as a place to turn to if they need money. However, because et is so expensive it should really only be used in an emergency when there are no other options. It can be much better to use other forms of borrowing instead. There are many cheaper ways to borrow money which you should consider. A credit card, for example, can allow you to spend money without being charged interest for a certain period of time. If you set up a direct debit to pay off the full balance just after you get paid, then you can use it as a way of getting some free money. Just be careful to make sure that you do have the money to pay the full balance and that you do not use it to spend more money than you can afford.

If you need a lot of money then a personal loan can be a cheaper option. Try to borrow as little as possible though, as the more you borrow, the more expensive the loan will be. You also need to make sure that you are capable of making the repayments. You may find that you have to pay it back over many months or a year and so you will need to be confident that you will be able to come up with that money each month or else you will have extra charges added to it.

So we should definitely be concerned about overdraft charges. They are some of the highest fees for borrowing that there are and so it is really important to know what the charges are for your bank and how much you have been authorised to borrow. Because of the high costs it is wise to try to avoid using an overdraft unless you have to by budgeting well and keeping a close eye on how much money you have in your account. If you do need to borrow then it is worth exploring cheaper options as they will save you money, but you will need to check to make sure that they are cheaper in the long term and that you will have enough money to be able to make the required repayments.

Credit

Is it good to use credit offered by catalogues?

Many people shop using catalogues. These tend to be mainly for clothing, but there are different types of catalogues which sell different things. Many of them offer credit, which means that you can buy items and then pay them back weekly or monthly over time in order to spread the cost. This can seem like a great way to make things more affordable and many people take advantage of being able to do this, but it is worth considering whether it is as good as it sounds.

Some catalogues will charge interest if you pay for items over a series of weeks or months. It is worth doing the maths and working out whether you will end up paying more if you pay for it this way, rather than a lump sum. If it does cost more then think whether you will still be happy having that item if it costs that extra money. In some catalogues they do not charge more for paying in instalments. Although this seems like it will be much better, they may just put all of their prices up in order to cover the costs of the credit. There will also be charges if you do not pay your instalments when they are due. These could be really high and it is worth finding out what these are before you sign up so that you can be prepared. If you think that you might not be able to keep up with the payments, then it is a risk in signing up for them.

When looking at these catalogues it is worth comparing their prices with high street shops. See whether their clothing is cheaper or whether it is more expensive. You may find that the high street offers similar items for less money. You may be able to afford them right away, but it could be the fact that you can pay in instalments that is the reason for using the catalogue. There are ways that you can do this without having to pay the extra. This is by saving up in advance. So instead of paying in instalments, you put some money aside each week or month into a savings account. Then when you have enough you can draw it out and buy the item that you want. You will have to wait, but it will save you money and you will have the pleasure of knowing that you have saved up for it yourself and have not had to borrow money to get it. If you can get into the habit of always saving a bit of money, then if you want to buy something that cannot come out of your weekly or monthly money, then you have that extra to fall back on. It will mean that you will not need to wait for something and you will not have to pay extra for it either.

Another problem with credit in catalogues is that it makes things look more affordable. If you look at items in terms of how much they will cost per week, they can look really cheap and appealing. This means that you will perhaps buy more than you would have otherwise have done. You may treat yourself and then find that you struggle to make the repayments. It is worth thinking about each purchase and whether it really is worth the money. Consider whether you feel the cost of the item is fair, whether it something that you really want and need and whether you really will be able to manage the repayments. Think about what else you could do with the money you will be paying out and whether it really is something that you will be able to afford. Do not feel that you are depriving yourself when you are making these decisions, think that you are making sure that you are getting good value for money with your hard earned cash and are spending it on things that really will make you feel and look good.

It may seem rather boring to worry about possible future charges if you cannot make repayments or how much prices compare to stores that do not offer credit. However, it is important if you want to make sure that you are getting good value for money and that you will be able to avoid charges in the future. Therefore it is good to make sure that you think hard about your purchase. Decide whether you are prepared to pay extra for it, if it is more expensive and whether you are prepared to take the risk of paying by instalments when there is a chance you may not be able to keep up with repayments and be charged extra as a result. Consider the advantages of saving money each week or month instead and then using that to pay for items rather than getting into debt to buy things