Is it Worth Repaying my Credit Cards in Full?

Credit Cards

A majority of people will repay their credit cards in full each month. However, there are some people that do not and some which sometimes do and sometimes do not. It is a good idea to have a careful think about whether you should be paying them off in full or not. There are advantages and disadvantages to doing both and you should have a think about them so that you can decide whether it is something that you feel that you should do.

Advantages of Repaying Credit Card in Full

When you have outstanding credit card debt you will be charged interest on it. Once you have had your monthly statement and you have chosen not to repay the full amount that you owe, you will be charged interest on the remaining balance. This means that you will be paying a fee for not repaying the card in full. Credit card interest tends to be relatively high compared to some other types of borrowing and so you need to be sure that you are wise to be borrowing this money and that there is not a better way to get it. It is good to find out exactly how much you will be charged and consider whether you think that this is worthwhile.

If you do not repay all of your credit card then you will have less money available to spend on it the next month because you will have a credit limit and only be able to spend a certain amount of money up to that limit. The more you spend and have outstanding on the card, the less of the credit limit you will have left and this will mean that you could struggle to manage if you are looking to buy something expensive and you do not have the money. Therefore, if you repay it all, you will have access to more money.

Disadvantages of Repaying Credit Card in Full

If you repay the credit card in full each month it means that you will not have to money of your own available for other things. It could leave you short of money for paying all of your bills and other necessities. Although you will be able to buy some things on your card such as in shops, you may not be able to make bill payments and if you need cash it can be expensive to withdraw on a credit card as you start getting charged interest right away when you use one to make a cash withdrawal.

So, you can see that there are different sides to be thought about when it comes to deciding whether you should think about repaying your credit card in full. If you feel that you want to save the money and not pay interest then it is best to repay it each month in full. You can set that up to happen automatically and then you will not even have to remember to do it. However, you will need to think about whether this is something that you will be able to afford. It can be wise to make sure that you keep a check on your balance and spending so that you only spend an amount that you can afford to repay. This means that you will not risk getting into trouble when the bill is repaid in full. It also means that you will then have your full credit limit available to spend the following month and if you need something extra expensive then you will have the means available to buy it, which can be very reassuring and help you to feel secure too.

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Best Ways to Save up for a Mortgage Deposit

Mortgages

If you are thinking of taking out a mortgage then you will need to think about the fact that you will normally need a deposit. This will be a significant sum of money, potentially 5-10% of the value of the mortgage and this means that you will need to work hard to get it. There are lots of different techniques for saving but when you need to save a big chunk like this, you will really need to concentrate hard and make sure that you are saving up properly and making sure that you are focussed on it. There are some things that you can do which should help you.

Set up an Account

It is a good idea to set up a savings account to put the money into. Then you will be able to keep it separate from all of your other money and you will be able to watch it grow and know that you should not spend it unless you really have to. You should compare the different savings accounts so that you find one that pays a decent amount of interest as well because that will add to the money that you have and will help it to grow. Even if it is just a small amount, it is free money so whey not take advantage of it?

Save Regularly

It is a good idea to set up a transfer to take place each month after you are paid to put some money into that savings account. By doing this it means that you will remember that you need to make the payments and you will be sure to make them. You will need to set the amount at a realistic level so that you will still be able to afford all of the things that you have to buy as well. However, you will also need to think about saving a significant amount so that you are able to save up quickly enough. If you only save a tiny amount it could be a very long time before you will be able to buy a home. Therefore, it can also be worth calculating how much you might want to save each month in order to buy a house in the timescale that you are planning. You may have to change some things that you are doing so that you will be able to afford to do this.

Cut Down Spending

It is a good idea to think about the amount of money that you are spending and whether you cut down in some areas. There are two ways that you can approach this. You can start by looking for cheaper items, so still buying everything that you normally buy, but paying less for them. So, comparing prices to see whether you are paying more than necessary is worthwhile. It is a good idea to think about everything you pay for, so even insurance, utilities and things like this as well as the items that you buy in shops. You will soon get used to comparing prices on things when you are shopping and you could find that you will start to spend a lot less. You can also reduce the amount of things that you are buying as well. If you think carefully about everything you are buying you may find that you will buy less. It is worth asking yourself whether you really need the items that you are buying and this should help you to cut down on the amount. It can feel hard doing this but stay focussed on the reason why and that you will soon be living in a lovely house that you are buying as a result.

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Are Overdrafts Worthwhile?

Overdrafts

Most people have an overdraft facility available for them to use with their current account. Some people use them a lot, but there are other people that hardly use them at all. It is a good idea to think about whether you think that an overdraft is something that you should be using. Whether or no you have one currently and whether or not you use it, it is a good idea to think about the advantages and disadvantages of using an overdraft and this should help you to decide whether it is a good idea for you to use one or not.

Cost

Overdrafts have quite recently had a bit of an overhaul and not the lenders are only allowed to charge a percentage interest and no additional fees. Similar to payday loans for bad credit. This has led lenders to set their interest rates at between 35% and 40%. This is relatively high compared to some other types of borrowing and so you will need to consider this when you are thinking about using one. It is a good idea to check out how much it will be by asking your bank and then looking at other borrowing options such as personal loans and credit cards, to see how it compares. Then, if you are considering borrowing some money, you will have an idea as to whether this is a good way to borrow or whether there are better alternatives available for you.

Convenience

It is good to bear in mind as well, that it can take time to organise loans. With the overdraft, once it is arranged and available, it will just be there for when you need it. If you decide to take out a personal loan, for example, your bank could take a while to get the money that you need, to you and therefore it may not be a very good option for you. It all depends on how quickly you need the money as to whether you will need something that takes no time to arrange.

Repaying

It is also worth considering how you repay. An overdraft is quite unique in that you will not be asked to repay in instalments or anything like that but it will just be automatically repaid as money goes into your bank account. This means that next time money goes in, it will repay the overdraft first and what is left will be available for you to spend. This can be useful in a way as you do not need to worry about how and when you will find the money. However, it can also be tricky because your money will disappear when you get paid and you may find that there is not enough left to pay for the things that you need, so you may have to go overdrawn again.

So, it can be a case of thinking about whether you feel that the convenience of the overdraft is worth the cost. It can be nice knowing that there is an overdraft available for you to take advantage of and that you will be able to get money in an emergency if you need it. However, it is expensive and it can be annoying if you accidently go overdrawn and have to pay that high interest because you misjudged your spending. Therefore, you will need to always be careful, to track your account balance and make sure that you are happy that there is enough money available to keep on spending. You will need to make sure that you have a way of keeping track of this and if you have online banking then this can be a good way to do so as it is very convenient and you will be able to do it at any time when you are near to your PC or perhaps your mobile device.

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Are Cashback Credit Cards Worthwhile?

Credit Cards

There are some credit cards which will offer the user cashback. These can seem very attractive but it is a good idea to understand how they work and make sure that they will suit you.

How Cashback Cards Work

The cashback credit card will normally offer a small percentage of what you spend on the card, back again. The money is credited to the card and you are able to use it to offset future spending on the card. The percentage tends to be very small – usually less than 1% but it is still some money that you will not have to spend and free money is always worth considering. The more that you spend on the card, the more cashback you will receive.

Interest Rates

It is often the case that a cashback card will have higher interest rates than some more standard cards. The card issuer will need to get back the money that they are paying out in cashback and therefore they will tend to charge higher interest. If you normally pay interest on your credit card then it is wise to be aware of this. You should do some careful calculations to find out how much you will be due to pay in interest based on what you normally have outstanding on your card and work out how much you will get in cashback and then calculate whether you will be better off looking for a card with lower interest rates. It will take a bit of working out and you might be wise to get some help with this, perhaps using the financial advisor at the bank that issues the card as it is likely that they will have different types and will be able to help you work out which will be the best for you.

Who Should Use Them?

So, these cashback cards are really most suited to people who repay their whole outstanding credit card balance when they get their statement. A majority of credit card holders do this and have an automatic payment set up to pay it off when needed so they never need to think about it. However, it is still wise to be wary of this sort of card. This is because it could make it more tempting to use the card because you know that you are getting cashback on it. This is fine if you are keeping a track of your spending, only buying things that you would have bought anyway but just using a card rather than cash or debit card and if you are confident that you will be able to repay it. However, if you think that the cashback on the card will tempt you to spend more money than you can afford because you have an excuse to use the card a lot, then it might be wise to not get this type of card in the first place. It is good to have a think about what might be most suited to you and whether you might find that you spending gets out of control as a result of having this sort of card available for you to use. If you have never had a card before then the decision could be more difficult, but it is a good idea to still think about whether you feel you are likely to use the cashback, as an excuse to spend more money than you were intending to and also whether you are going to be able to repay that money and stay in control of your finances or whether you need to find something with a lower interest rate.

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Where to Find the Best Mortgages

Mortgages

There are lots of mortgages available for us to take out and it can be difficult to know where to find the very best one. It is made even harder by the fact hat there is not just one simple answer for this. This is because we all have different requirements when we are looking for a mortgage and this means that there is not just one specific mortgage that will work for all of us. Therefore, we should think about what we are looking for in a mortgage to start with. The following things might be a good starting point –

  • Cost – most of us will be concerned about the cost of a mortgage. We will not want to pay more than necessary, but we also will want to make sure that we are not getting a poor deal because we are not paying enough. Therefore, we will probably want to look for a mortgage which offers us good value for money.
  • Type of Mortgage – it is important to think about whether you want a fixed rate or variable rate mortgage. Fixed rate mortgages will tie you in for a period of time but you will know what rate you will be paying, it will not change. Variable rates could go up and you will have to be sure you can afford that. You also nee dto decide between repayment, where you repay some each month or interest only, where you only repay the interest and invest money to repay the balance at the end of the term.
  • Repayments – it is really important to make sure that we are able to afford the repayments that we have to make. It is a good idea to therefore find out exactly how much money we need to repay each month from the lender. Then we will be able to work out whether we will be able to afford it. We will need to look back at previous bank statements in order to see how much we normally pay out each month as well to check how much we get paid and that should allow us to calculate whether we can afford the mortgage repayments. It is worth thinking about the fact that there is also a chance that the repayments might go up. If the Bank of England put up the base rate or if your lenders sees fit, they may increase what you have to pay in interest if you are on a variable rate and so you will need to allow for this in your calculations.
  • Customer service – it can be nice if you know that the lender will provide a good level of customer service. When you have a query or question, you need to make sure that you will get a good answer to it. You want to make sure that you can get through easily and that you will get a fast and accurate response. You can find this out before you apply by getting in touch with the customer service department yourself.
  • Lenders reputation – some people will also be interested in finding out more about the lender before taking out a mortgage with them. They might want to have a look at their history, read some reviews, ask people about their experiences or perhaps even use a lender that they have used before. It is a good idea to think about whether these things are important to you or whether anything else will be too.

Once you have established what you are looking for then you will be in position to find the mortgage which will be the best for you as you can see how well they match up to your requirements.

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