There are store cards and credit cards available to us and it can be a bit confusing knowing what the differences are and which might be the best for us to take out.
Who Issues Them
A store card is issued by a specific store. It will be overseen for them by a bank, but it will be the store that you have to apply to if you want a card. With a credit card you will have to apply directly to a blank or building society to get one. This will mean that you will have a choice either between different banks and building societies or different shops. It is an important choice to make because there will be differences between them.
Where you Can Use Them
If you have a credit card, you will find that you will be bale to use them in most places that accept credit cards. There are a few types of credit cards, such as American Express which is not accepted everywhere, but most of them will be. With a store card you will only be able to use it in the store that the card was issued from and perhaps any other stores that are also owned by the same company. This means that you will need to think about what you are going to be using the card for. If you only intend to use it in one particular place, then a store card could work out well for you. So if you want more flexibility then it can be a good idea to get a credit card rather than a store card.
Costs will vary between cards. The interest rates will be different and it will be wise to compare them. They will also change once you get the card and so it is a good idea to make sure that you keep up with this so that if you are paying interest on the card, you make sure that you are not paying more than necessary for the interest.
When you have a store card you might get benefits such as discounts in the store. This can be very useful if you shop in the stall a lot. However, you could find that you will also be able to get rewards with some credit cards as well. You will therefore need to compare the cards to find out whether you will be better off using a store card and using the benefits it gives you in the shop that it is associate with or whether you would rather a reward credit card which could give you cashback or air miles or things like this.
So, it ends up being quite a personal decision. Whether you want a store card that you can only spend in one place or a credit card with more flexibility. You will need to compare the costs and rewards when deciding. Some people will have both so that they can enjoy the advantages of both. While this can be a good idea, it does mean that you will have the opportunity to get into a lot more debt. You will need to think about the risks of this and whether you feel that you are willing to take this risk or whether you think that it would be better if you just got one card. You will know whether you are likely to be sensible with a card or whether you should just take out one as there is a risk that you could spend more than you can afford. iN fact, you may even decide that perhaps you should not take out a card at all.
If you have a lot of debt, then you may wonder how you will manage to pay them all off. There are things that you can try that should help you and you should be able to manage them. However, it could take a while to do so.
Keep Making Required Payments
It is really important to start by making all of the required payments that you need to. You will find that you will normally have to make a certain amount of payments each month and if you do not keep up with these you will get charged money. You want to avoid this and so it is important to keep up with these. Often these will repay some of the money that you owe anyway and so by just doing this you could end up repaying a lot of your debt. However, it might be the case that you are struggling to do this anyway or that you would like to repay your debts more quickly. There are things that you can do which should be able to help with this.
Try to Earn More
If you want more money to be able to pay off your debts then you may have to try to earn more. If most of your money is already spent on other things, then this will really be the only option available to you, It is therefore a good idea to think about what you might be able to do to get more money Most people will just think of conventional things such as working more hours in your job, trying to get a pay rise or taking on a second job. Although these will work, they are not easy and there might be some options which will be better. For example, you might find that you will be able to sell some things that you own and no longer need and this will help to raise some money. It might be that you will be able to rent out some space in your home, a room to a lodger or an attic for storage space or even a driveway for parking. You might be able to monetise your hobby by selling things that you make. You may be able to find some online work as well. There are lots of different opportunities for making some extra money. Outside of traditional work, the other options may not pay a great deal of money. However, they will pay some and they may be easier and more fun which could help you as you may already find your current job pretty tricky.
Try to Spend Less
It can also be wise to see whether you can cut down on what you are spending. It is something which might be easier for some of us than others, but we should all be able to do something. Firstly, it is wise to make sure that you check that you are not paying more than necessary for things that you are buying. We all buy lots of different things but we do not always check the prices to see whether we can find the items cheaper elsewhere. Therefore, it can be a good idea to give this a try. Look at everything you buy, not just groceries or things that you buy in shops, but also things you pay for by f=direct debit or standing order such as insurance and electricity to see whether you can switch to cheaper alternatives. Doing this might seem like hard work but it is actually a really easy way to save money without having to buy less. However, if you do cut back on some of the things that you buy, you will be able to spend even less money so it is a good idea to think carefully when buying things as to whether you really need those items or not. This will help you to be able to spend less money and then you will have more towards paying off your debts.
Debt can generally be split into good and bad but there can be some confusion as to what the difference is. This is not helped by the fact that some people will try to tell you that all debt is bad whereas others will say there is never any harm in it. It is good to establish the difference so that you are clear with what the principles are and then you can make easier decisions when you are deciding whether to borrow money.
What is Good Debt?
Good debt is when you borrow money same day that will help your financial future. For example, if you use a mortgage to buy a home, then you will not have to pay rent once you own the house and the home should increase in value while you are living in it. Another example would be a student loan where you will be using the money to pay for a course that will help you to get a better paid job as a result. So anything where the loan is going to help you to improve your financial situation as a result of what you spend the money on.
There may also be emergency situations where the consequences of not borrowing the money could be far worse than the consequences of borrowing. For example, if you cannot pay your rent and could be evicted you may have no other choice but to borrow the money.
With good debt you also need to have made sure that you have the right type of loan for what you are borrowing for. So, a loan which will give you the right amount of money and not too much and that will give you good value money. It is important to compare loan types to make sure that you are using the best one. You will also need to compare lenders to make sure that you are not paying too much. There will be quite a difference in prices between lenders and you will need to make sure that you check to see which one will give you the best value for money. Of course, the cheapest will not always be the best, but the most expensive may not be either.
What is Bad Debt?
If you borrow money for things that will not help your future financial situation then this will be considered to be bad debt. For example, if you borrow money to buy three televisions for your home, to replace ones you have already that are only a month old. This is an extreme example, but it shows how a bad debt can be a luxury item which it is not really necessary for us to own.
You might think you need money for an emergency but make sure that you check. For example, if it is for rent or a bill of some sort, then get in touch with the company you owe money to first and see whether they can help you. They may be able to delay the payment for you or let you pay it a bit late. So, make sure that it really is an emergency situation.
If you take the first loan that you come across, without checking out what loans there are, then this is bad. Loans vary a lot and some will be much more suitable to your needs than others. It is well worth finding out about all loan types so that you will be able to pick the one that you know will be the most suitable for you. Also do not rush into a loan until you have compared the lenders – if you do this it could be bad debt. If you rush then you could end up paying more than you need to or not getting good value for money, perhaps because you will not choose a lender that properly suits your needs.
There are lots of decisions that we need to make when we are choosing a mortgage. One of the main decisions will be between a repayment or an interest only mortgage. There are pros and cons to both and it will depend on your needs as to which will suit you and so it is a good idea to make sure that you know what they are so that you can decide which will be the best for you.
With a repayment mortgage you will pay the interest and some of the balance of the mortgage back each month. This means that each month you will reduce the amount of mortgage that you owe and you will be able to see it reducing over time. This is something that some people really like as they love to see that they are reducing their debt. It also means that you will be guaranteed to repay all of the debt by the end of the mortgage, assuming that you are able to make every single repayment.
Interest Only Mortgage
With an interest only mortgage you will only have to pay the interest to the lender and then it will be at the end of the mortgage term that you will repay the actual sum that you borrowed. With these mortgages you will be expected to invest money each month so that you will have enough to repay the mortgage at the end. This will be part of your contract with the mortgage company and they will check with you that this is happening as well. Potentially, it can be a cheaper way to borrow because your investment could make a great deal of money and even if you invest the extra amount you would otherwise be paying on repaying the mortgage, you could end up gaining a lot. Of course, where you invest the money is really important as you will need to make sure that you get back as much money as possible and keep a check on it to ensure that you will have enough left to pay the balance when your mortgage comes to an end.
You can see that there are some big differences between the two types of mortgage and it is important to address a few things while deciding which will work for you –
Make sure that you are confident that you will have the self-discipline to make investments for the interest-only mortgage and not spend the money. If you are not confident then go for the repayment.
if you are likely to be stressed by owing a huge sum of money and it not going down then have an interest only mortgage will not be wise
if you know a lot about investment then you will know where to put money for an interest-only mortgage, but a financial advisor will be able to help as well.
An interest only could also be good if you make lots from your investment as you could end up repaying early due to accumulating the funds more quickly, but this will depend on how well the particular investment you choose does over the mortgage term of course.
As well as considering which will work for you, it is important to make sure that you compare lenders. There will be small difference between them in the way that the mortgages work and so there may be other differences that you will need to consider. It is well worth looking into hard because you will need to keep that mortgage for a while and you do not want to regret your decision.
Many people decide that after a while with a certain mortgage company they will switch to another one. However, there are some people that will stick with the same lender all of the time. This means that it can be tricky knowing what might be the best idea for you. It is worth considering a number of things and then you will be able to decide whether remortgaging will be the right idea for you.
One of the main reasons that someone would change their mortgage lender is to save money. Mortgages tend to last a long time and even if your lender was the cheapest when you took out your mortgage, it is likely that they will no longer be the cheapest. This is because mortgage lending is a competitive business and so there will always be someone trying to have a better deal to get customers to switch to them. It is therefore well worth checking whether there is a lender that is significantly cheaper than the one that you are currently with. Just be very careful to make sure that you look at any costs associated with switching. You will be aware of the interest rate, but you may have to pay fees to the new lender to cover the cost of setting up the account. You may also need to pay fees to your current lender. Sometimes they will have a significant charge if you switch lenders, so you will need to check that out. If it is really high, it could mean that it will not be worth switching at all as this charge is just too high or an amount that you will not be able to find.
The amount that you have to repay each month and how many repayments that you need to make will vary between lenders. It is important to make sure that the repayment amount is an amount that you will be able to afford. If you switch to a lender with a lower one then this could be extremely helpful. However, you do need to be careful as the rates may change. If you have a variable rate, then you will find that it could go up at any time and is most likely to increase if the Bank of England base rate goes up. This means that it is a wise idea to make sure that you are confident that you will be able to still cover the cost of the repayments even if the rates go up. You may currently be in a fixed rate which protects you from increases so you will need to think about this.
You might have specific requirements that you would like from your lender. It is possible that you would like to be able to bank online, by telephone or in a branch so you need to think about which you would like and whether the lender you are considering will offer that. Good customer service is also something which can be really important to a lot of people. This is something which could particularly impact you if you have any questions or queries or want to make changes to your mortgage. Some people will also want to make sure they use a lender that they have heard of because they feel that they will be able to trust them better. However, it can be better to ask people you know if they can recommend any and also look at reviews to help you to pick. It is worth doing some checks to see what they are like and whether they match your expectations.