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Finance

4 Reasons To Avoid Credit Cards When You’re Skint

4 Reasons To Avoid Credit Cards When You're Skint

It’s nearing the end of the month and your bank balance is looking bare. It’s so low that you can’t afford a drink and a packet of peanuts in your local establishment. Yes, you’re officially skint.

People say they are broke and have no money, but they don’t mean it. Their balance might be low, but they’re in no danger of missing the rent or mortgage payments. However, you’re struggling and want to turn to your credit card to help you through.

It’s a bad idea for several reasons. Continue reading to learn more about them.

There’s No Buffer

Paying with a piece of plastic can be a wise move as it gives you breathing space before the full amount is due. But, when you’re boracic, you don’t experience the full benefit of credit since your funds usually run out at the end of the month. And, that’s when your credit card statement is due, too. By switching from a debit account to a credit account, all you do is increase the chances of missing payments, which leads to high-interest rates and more debt, as well as a low credit score. To use credit wisely, you must plan to get the breathing space you need.

The Limit Is Dangerous

A credit card has a maximum limit. In the UK, the average is between £3,000 and £4,000, which is very high. Not only is it large, but it’s dangerous as you might be tempted into spending more than you can pay back. At least you have the option to top-up your finances with small amounts that are more straightforward to clear with payday loans. After all, £50 is a lot simpler to manage than £150 or £200. Therefore, it could be healthier to consider other credit options instead of continually leaning on your credit card.

Creditors Are Flexible

Creditors have bad reputations. Most people assume they want their money at all costs, but this isn’t the case. They do want you to pay back the amount you owe, which is why they often set up payment plans for customers who struggle. From their perspective, they’re more likely to get their money back if the repayments are lower. From yours, it’s much easier to meet deadlines when the figures aren’t as big. Plus, agreeing to a payment plan provides peace of mind and stops you from stressing.

It Becomes The Norm

Once you do it and it doesn’t end in tears, you’ll continue to do it month after month. It might never be a problem, yet the odds are higher that you’ll fall foul of credit card companies sooner rather than later. Using credit cards means you don’t have a budget and find it tough to practise self-control. By cutting them out of your routine, you’ll be less likely to receive penalty notices. Also, you won’t see it as normal and should be able to drop the habit.

There are many reasons to avoid credit cards when you’re skint, but the main one is that there are alternatives.

Finance

TOP 10 TIPS TO HELP COLLEGE STUDENTS ESTABLISH GOOD CREDIT

TOP 10 TIPS TO HELP COLLEGE STUDENTS ESTABLISH GOOD CREDIT

***Collaborative post***

With mounting student loan debt and limited part time job availability, many college students and recent college graduates are finding it difficult to get a leg up in the financial world without having established credit. Without credit, college students can find it incredibly difficult to perform basic tasks such as renting an apartment and buying a car. The best way to avoid these scenarios is to establish your credit as early as possible. Consider the following important tips to gain established credit while in college, so you can avoid complications in the future.

1. Become an Authorized User of a Parent’s Credit Card Account

To establish your credit before you qualify for your own credit card, look into becoming an authorized user of one of your parent’s credit card accounts to build your credit while having your spending monitored. If your parent has good credit, this usually helps to boost your credit score as well.

2. Get Your Own Credit Card

Once you have established your credit by becoming an authorized user on your parent’s account, you can usually upgrade to your own independent credit card. You will have to meet the specific requirements of the credit card company, which will include providing proof of income. In recent years, credit card companies tend to be stricter about offering credit cards to college students, so having the experience and established credit through your parent’s credit card will certainly put you at an advantage.

3. No Two Credit Cards Are Alike

If you have already decided that you are ready for your own credit card, you will want to make sure to research and compare all of the credit card companies available to choose which is the best plan for you. Consider factors such as interest rates, annual fees, credit limits, and billing policies to determine which company offers the best deal.

4. Prepare with Retail Cards

If you feel like you aren’t quite ready for a credit card yet, a good alternative to build up your credit and prepare for monthly bills, interest rates, and other aspects of owning a credit card is to take advantage of retail cards. Many retail stores today offer retail credit cards to shoppers to bring convenience to their shopping experience. The qualifications for these cards are typically more lenient than those for bank credit cards, so using these cards before applying for a credit card is a good way to prepare yourself while simultaneously building up your credit.

5. Only Use Your Credit Card For Small Expenses

Although you may be on a budget, you can’t expect to build up your credit without actually using your card. Once you have your credit card, don’t get carried away with big expenses on clothes, electronics and restaurant bills. Instead, use it occasionally for small expenses, such as grocery store trips and small household bills that you know you will be able to afford at the end of the month.

6. Pay Off the Entire Balance Each Month

Whether it’s your retail cards or your own personal credit card, it is crucial that you pay off the entire balance each month to avoid paying extra interest and to ensure a good credit score. If you are unable to pay off the balance by the end of the month, you are living beyond your means and should make immediate adjustments to your lifestyle.

7. Pay Off All Additional Bills On Time

Timely payments are another crucial element of establishing good credit. Whether it’s a hospital bill, student loan bill, taxes, or even a small library fee, make sure to pay off all of your debts on time to avoid any late fees, interest hikes and negative effects on your credit.

8. Only Use Student Loans For Educational Purposes

Some college students think it’s okay to take out a little extra on their loans to pay for expenses from entertainment to special items for themselves. Although this may certainly be a tempting prospect for a struggling college student, it is not a financially reasonable decision considering the fact that you will be paying the interest back on these purchases.

9. Never Co-Sign

In general, a co-signer is only required to be at least 21 years of age and have a slightly above average credit score. If you have been following the previous tips, there’s a good chance that you may qualify as a co-signer and your friends and family members may want to take advantage of this. Although you may want to help out your friends, you simply can’t afford to ruin your credit from their mistakes.

10. Try to Limit Yourself to One Credit Card

Although having multiple credit cards may seem like a good way to quickly build up your credit, the reality is that applying for several credit cards reflects negatively on your credit. Not only does it effect your credit negatively, but having multiple credit cards increases the temptation and risk of overspending. Reasonably, a college student should not need more than one credit card.

Thanks to Payless Power a Houston Electricity Company

Finance

The Ultimate Home Saving Cheat Sheet

The Ultimate Home Saving Cheat Sheet

Money saving tips ideas

The idea of being able to afford your own home during your twenties might seem like a million miles away for many of us, and it is something which can be difficult to think about saving for. Saving for a house  is a nightmare and it can be hard to balance paying for our car, phone and rent as well as having money left to save up. However, it can be done if you follow these simple tips.

Increase your credit score

When you come to apply for a mortgage, the lender will look at your credit history and they will want to see if you have a good enough track record to be trusted with the loan. It means that you need to spend time finding out how to increase credit score quickly to make sure you are accepted for your mortgage immediately. If you have any outstanding debts you need to pay these off before applying.

Stop partying

There are a lot of people in their twenties who are reluctant to save for a house because they want to have a fun life. However, if you want to start making your future you need to balance things out. If you go out every weekend with your friends, you can instead think about going out every two weeks or once a month instead. Reduce the money you spend on alcohol and instead put this money into a savings account to go towards your home.

Have a stay-cation

Rather than spending all of your money on a holiday abroad this year, book a last-minute cottage in the countryside and enjoy a week away from work but spending less money than you would abroad. You will notice that you can enjoy your time without worrying about cash, and any extra money you would have spent abroad can go in the savings fund!

eBay it

If you have clutter and random things in your home, the best thing you can do with it is put it up for sale on eBay for some cash. There’s no point simply throwing things away if you can get some money for it instead! Take some time this weekend to clear out your Home and think about what things you could sell on. Remember, you can also sell your old clothes so don’t forget to clear out your closet too!

Budget for food

Food shopping can be a huge cost for us to deal with each day and this can often be the biggest cost we have throughout the year. If you spend far too much on food, you might want to start thinking about cheaper meals and meals which have less ingredients in them. You can use a book like 5 Ingredient Meals by Jamie Oliver or look online and you should find some budget friendly options to try for your family. You can save any money leftover from your food shop and this will soon accumulate to help you buy a house.

***Collaborative post***