United Kingdom consumers have borrowed over £3 trillion pounds of debt - a trillion pounds is a multiplication of one billion billions.
It is therefore, unsurprising to see that the majority of people hold credit cards.
Whilst it is considered to be most convenient form of borrowing - it can have devastating effects if used recklessly.
We have put together some best practices tips and tricks to aid you in selection of a credit card.
The first rule is before you apply for credit - why do you need to borrow? In the good old days when you visited your bank manager to borrow money that was their first question so it pays to justify the need for a credit card.
Remember cash is always king so first consideration should be to pay for goods and services with cash or debit card.
Credit cards come with very hefty interest rates typically ranging from 18% to 40%+ annually - that is very expensive particularly if you can not pay off in one go when bill comes.
So do you really need a card or could you be better off applying for a loan say at 10% rate? Certain lenders have special offers such as 0% interest rate for 12 months on purchases or balance transfers.
If you are looking to purchasing a big ticket item such as High Definition TV then this may be perfect to get 0% card and then pay off in equal installments over course of 12 months.
Let us assume that TV costs £600 then you could pay £50 a month towards your credit card bill and that will clear you debt.
Always use direct debit to make this payment because certain lenders dictate that if you miss a single payment then you will be charged interest rate at a high rate for example 18% a year.
Remember, the rate you will attract will depend on your circumstances and your credit score therefore, it is worthwhile checking your credit worthiness with a credit referencing agency before you apply for that tempting credit card.
Check if there is a free trial offer and make most of it.
If you get refused credit then perhaps reconsider your priorities, do you really need that big ticket item or could live without it? Remember, each time you apply for a credit card or a loan then your credit file is affected so don not keep applying for credit consistently otherwise you will not do your credit file any favours.
Always live within your means and never spend more than what you can afford to pay back.
If you feel that you need to review your borrowing, take advice from an independent financial advisor or a debt management specialist.
Borrowing more to pay off existing debts is not always the best strategy and you can explore other options such as a debt plan to pay off your credit cards.
It is therefore, unsurprising to see that the majority of people hold credit cards.
Whilst it is considered to be most convenient form of borrowing - it can have devastating effects if used recklessly.
We have put together some best practices tips and tricks to aid you in selection of a credit card.
The first rule is before you apply for credit - why do you need to borrow? In the good old days when you visited your bank manager to borrow money that was their first question so it pays to justify the need for a credit card.
Remember cash is always king so first consideration should be to pay for goods and services with cash or debit card.
Credit cards come with very hefty interest rates typically ranging from 18% to 40%+ annually - that is very expensive particularly if you can not pay off in one go when bill comes.
So do you really need a card or could you be better off applying for a loan say at 10% rate? Certain lenders have special offers such as 0% interest rate for 12 months on purchases or balance transfers.
If you are looking to purchasing a big ticket item such as High Definition TV then this may be perfect to get 0% card and then pay off in equal installments over course of 12 months.
Let us assume that TV costs £600 then you could pay £50 a month towards your credit card bill and that will clear you debt.
Always use direct debit to make this payment because certain lenders dictate that if you miss a single payment then you will be charged interest rate at a high rate for example 18% a year.
Remember, the rate you will attract will depend on your circumstances and your credit score therefore, it is worthwhile checking your credit worthiness with a credit referencing agency before you apply for that tempting credit card.
Check if there is a free trial offer and make most of it.
If you get refused credit then perhaps reconsider your priorities, do you really need that big ticket item or could live without it? Remember, each time you apply for a credit card or a loan then your credit file is affected so don not keep applying for credit consistently otherwise you will not do your credit file any favours.
Always live within your means and never spend more than what you can afford to pay back.
If you feel that you need to review your borrowing, take advice from an independent financial advisor or a debt management specialist.
Borrowing more to pay off existing debts is not always the best strategy and you can explore other options such as a debt plan to pay off your credit cards.
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