If you have a store card then it is a good idea to think carefully about how you are going to repay it. You will have different repayment options and it is good to think about these as well as working out how you will afford to repay it.
It is worth being aware that there are different options for repaying your store card. You will find that you get a statement every month and you will have to repay a minimum amount. This will be enough to cover the interest and charges on the card and a small amount of what you owe. You have to pay at least this amount but you can pay more. If you repay everything that you owe on the card then there will normally be no charges and certainly no interest to pay. Therefore paying off everything you owe can be the best option and you can set up an automatic payment to do this if you wish to. However, you may prefer to repay just the minimum or a bit more than this. It is your choice, but it is worth making sure that you are aware of the costs of this and how these costs could add up if you decide to take this option.
Benefits of Tracking Spending
It can be well worth making sure that you track how much money you are spending on your store card. This is because it will allow you to be able to ensure that you are able to repay it. If you keep spending on it and do not know how much you are spending then it could mean that your debt will accumulate and you will not be in control. You could end up finding that you will not be able to repay it. If you want to repay it in full each month then you will need to make sure that you will be able to afford it. So, if you note down what you are spending then you will be able to more easily check whether you can afford to repay the card. Even if you decide that you are not going to repay it in full, you still need to think about that debt and whether you will be able to manage it as well as the amount of interest that you will be being charged.
Ways to Guarantee you can Repay
As well as tracking what you are spending, you need to think about ways to ensure that you will be able to afford to repay the card. It can be a good idea to put together a household budget. Work out how much you have coming in each month and how much you have to spend on necessities, tax, insurance, rent, bills etc and then calculate what is left. This is the amount that you can afford to spend on your card but you need to allow for the fact that you might want to buy things form other shops as well. It could therefore be wise to set yourself a budget for your card spending. Then either note down how much you are spending or check the balance from time to time and that will enable you to make sure that you stay in control of what you are spending. You will then have no reason to worry about whether you will be able to repay the card when you need to. You may even be wise to think about cutting back elsewhere or thinking of ways to earn a bit more money, so that you are confident that you will definitely have enough.
There are many financial decisions that we need to make and they can be really important. They can influence out credit report, how much money we have and our stress levels. They can be crucial in our relationships as well and so it is really important to make sure that we make the right decisions so that we can manage things as well as we can. Therefore, when we are asking ourselves questions like whether to repay our overdraft or not, then we need to give it a great deal of thought. It is important to consider the advantages and disadvantages so that we can decide whether it is the right decision for us or not and also think about the longer-term impact that it might have.
It is a good idea to work out how much it will cost for you to do this with your overdraft. You will find that the overdraft cost is a percentage, which refers to how much interest would be charged if you kept the debt for the year. So to then work out how much it will be per month, week or day you will have to do some calculations. It is a good idea to work out how much it will be, because then you will be able to decide whether you think that it is worth it. You will be paying each day for owing the money and you will need to decide whether this is something that you think is worth it or not. You need to calculate the cost so that you can decide whether you are happy to pay that charge for holding the loan. If you do not think that it is good value then you should be trying to get it paid off.
It is also worth knowing that it will show up on your credit record. You may not worry too much about this, but it could be important. If you want to borrow a larger loan, perhaps a mortgage, for example, your credit record will be looked at in detail. If it is seen that you are holding an overdraft and not repaying it, then it will be frowned upon. Lenders want to look and see that they will be able to trust you and they will not like the fact that you have this unpaid loan and so it is a good idea to make sure that you are aware of this and consider this. Also, others will look at your credit report too, insurers and landlords, for example and it could lead to you having to pay more for your insurance because you are seen as a risk or you may even be turned down for a home. So, it is really important that you think of the consequences of this.
It can be stressful owing money. Even if you think that you are okay with it, it could get on top of you after a while. You could worry about the money needing to be paid or it could be the consequences of owing it that are a problem. It is worth thinking about whether this could have an impact on you. Of course, the extent of the impact will also depend on how much money you actually owe and what income you have and things like this, so it is worth having a think about your personal circumstances and what things are likely to happen in the future so that you can decide on how it will impact you. Try to consider a worse case scenario to ensure that you make the right decision.
When we have an overdraft, we are given a certain limit. This is how much money we are allowed to borrow using the overdraft. The amount that we are given will vary. It could change depending on the bank that we have our account with and also with our own credit record. However, at times, we may have an opportunity to increase our overdraft limit. This could be because the bank we have our current account with is offering us the opportunity to do this or it could be because we have found an alternative account which offers a larger one. Either way, it is wise to think about whether it is a good idea to increase ethe overdraft limit or whether you should keep it as it is.
Consider why you want it bigger
It is good to start by thinking about the reason why you want the overdraft to be larger. Think about whether it is a good or bad reason. If you are worried that you might have an emergency and need more money, then it could be a good idea. If you want to borrow more money so that you can help pay for necessities then perhaps it is okay, but if you are looking for extra money to pay for luxuries then it is a good idea to no have one. This is because you need to think about the cost of the overdraft. Often it can be as much as 40% interest on the overdraft and therefore you need to think about whether that cost is worth it.
Can you afford a bigger one?
This interest may not seem a lot when it gets added on monthly, but you need to think about how much it will cost you in total. Is it money that you can actually afford to pay out? Consider how much you pay for things and whether you really want that much money to be going towards just paying the bank when you could have it for spending. It is also worth thinking about how you will feel about having a larger overdraft and whether you feel that you will be able to cope with the thought that you owe that money. Some people get really stressed when they owe money and if this is the case for you, then owing more money could be something that you want to avoid.
Will it Actually Benefit you?
It is also worth thinking about whether the overdraft will actually really benefit you. Consider what you are going to be using it for and whether it is worthwhile. Think about the cost that it will be and whether you think it will give you good value for money. It is good to also think about whether you might just use it as a way to spend more money than you have without any real thought for how you are going to manage that. Remember that you will need to repay it, it is not money that you are entitled to and you will be charged for using it. You need to think carefully about the consequences of this.
It might seem like quite a small decision, but you actually should think very carefully about this. It could mean that you will end up with lots of debt to repay and it could leave you feeling stressed. You need to carefully weigh up the pros and cons and make sure that you are really sure about doing it and that you feel it will be the best thing for you to do right now.
Credit cards are an interesting form of a loan because you can choose when to use them and how much you can spend. They can be very convenient but they are also relatively expensive. It is therefore worth thinking hard about the best ways to use it.
Credit cards are often used by people to make online purchases. This is because they are more secure than other forms of payment. You will not need to give any bank details and the credit card will also have fraud protection on it. You also have insurance so if the item that you are buying does not turn up or is faulty and the seller will not help you, you will be able to get your money back from the credit card issuer instead. Therefore, you can get peace of mind when you use a card in this way.
You can withdraw cash with a credit card at any cash machine. However, it is worth being aware that this can be very expensive. You will normally get a warning on the cash machine that there will be a charge on the withdrawal. However, you may also find that there will also be interest charged on the withdrawal immediately so you will have to pay high fees for that as well. The costs will vary between cards and it is well worth being aware of how much it is likely to cost you so that you know whether it is worth doing. It is probably something that you should only do in emergencies really, due to the high cost of it.
Credit cards can be a secure way to spend money abroad. You will find that most places will accept them and it will mean that you will not need to worry about local currency. However, this can also be a very expensive thing to do. You may have to start paying interest right away on foreign purchases and the exchange rate may not be very favourable either. It can be better to get a prepaid card to use when abroad. These can be used just like a credit card but you put money on them before you go. They will not charge interest and the exchange rate can tend to be pretty reasonable. It can be worth researching your options carefully.
Credit cards are really designed just for making general purchases. They can be very handy because you will be able to buy things and then you will not need to pay for them right away. You can repay just a minimum amount which will cover the interest and a small amount of what you owe and then not pay for your goods until you are ready. Alternatively, you can just wait until you get the statement and pay for them then and not have to pay any interest. It can be much quicker in shops if you use a card rather than cash and as you do not need to pay for the items right away it can mean that you have a bit of a delay without worrying about this. Many people set up their card repayment to take place just after they have been paid and then they will know that they have the money available for them to repay the cards then. However, if you do want to repay the card in full each month, you will need to make sure that you carefully track what you are spending to make sure that you will have enough money available to do this.
It can be a good idea to compare a store card with a credit card. This is because they tend to be very similar in the way that they work but there are also some differences that you should consider as well.
Both a credit card and a store card will give you some interest free credit. You will be able to use the card to pay for things and will not be charged any interest on what you have bought until a certain date. You will get a statement through which will tell you how much you need to pay and by when, in order to pay no interest at all.
Both cards will allow you to delay repaying everything that you owe. You will need to repay a minimum amount of money and this will cover the interest and perhaps a little of the balance as well. However, with both cards, if you just pay this much each month, you will take a long time to repay the card.
With a store card you will only be able to use it in a particular store or set of stores. This means that you will not be able to use it for most things that you buy, but just from specific retailers. With a credit card you will be able to use it in most stores.
The interest rate can vary but it is often the case that a store card will be more expensive than a credit card. However, you will need to keep a check on the rates to be sure.
A store card may have rewards for the store – perhaps discounts, preview sale access or things like this. Some credit cards will also offer rewards as well such as air miles or cash back.
It is worth comparing these things and think about what will work for you. You might prefer the flexibility of a credit card, that you can use it in lots of stores but you may rather have discounts in the stores that you really like. You may also want to go for the cheapest card and so you will need to compare them to find this out.
Some people might choose to have a store card and a credit card. This is something which will mean that you can take advantage of both. However, there is a risk with this that because you have more credit available to you, that you could end up spending more money than you can afford to repay. If you like to repay in full, then you might need to make sure that you keep a note of what you are spending on each card to ensure that you will be able to afford to repay. It is always wise to use online banking to keep regularly looking at how much you owe to make sure that you can afford to repay it, but if you have lots of cards, this can become more time consuming and trickier to remember to do.
Some people may also find that if they have a store card which has a discount, that they use it as an excuse to spend lots of money in their favourite shop. They should not do this because they will end up spending more than they can afford or buying more things than they actually need. Therefore, it is a good idea to think hard about whether this is something that you want to risk or whether you think that it is not something that will happen to you.
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