Best Ways to Take Advantage of Credit Cards

Many people have credit cards but we do vary in the way that we use them. They can be extremely useful but for some people they can also be very expensive. There is no need for them to be extremely costly though and there are things that you can do which will make sure that you use them to you advantage.

Advantages of Credit cards

Credit cards are more convenient than carrying cash and that is why many people prefer them. They also have insurance with them which means that if you make a large purchase and it is not satisfactory, they will refund you. This will happen if you contact the retailer and cannot get compensated by them, you can then go to the credit card company. This is one reason why many people prefer using them when they are shopping online. They will feel protected so if they order something and it does not arrive or is not as described and they cannot get a refund from the seller, they will be able to go to the card issuer for help with it. People will often feel more secure using a credit card online rather than other ways of paying such as a debit card or BACS as it is more secure. Again, there is the protection from the card issuer with regards to fraud and so you should get compensated for any money that is stolen as a result of your card details being intercepted.

Some credit cards also have a cashback or other reward scheme. This means that you will get something back when you use the card. They will often give more back if you spend more on the card and so it can be a way of getting rewarded for using that particular card.

Another big advantage to using a credit cards is that you do not have to pay for the items right away. This works by you getting interest free credit for up to six weeks on purchases. You will then have to pay for the items when you get your monthly statement. You will have two options, to repay the card in full at no charge or to repay just a minimum amount which will include and interest charge and then leave the rest of the balance outstanding.

How to use them well

It can be tempting to spend on the card and then not repay it in full so that you can enjoy delaying paying for things. This can allow you to buy more things than you would normally be able to afford and you will be able to get them right away. However, it is really easy to forget about the cost of doing this. As the interest is paid monthly it is hard to see how much you are paying in total over the time that you leave the balance unpaid. It is therefore much better to repay the balance each month. This is really simple to set up using a direct debit and then there will be no chance that you will then forget to pay it and be charged. Of course, you will need to make sure that you have the money available to repay it. Therefore, it can be best to keep a close track of how much you are spending to make sure that you spend within your means and therefore that you will have enough money to repay it. You will also be wise to set up the direct debit date so that it is just after you get paid and you will then be able to be more likely to have the money available to spend.

What to avoid

If you have a cashback card then it is important to avoid overspending. This can also easily be done even without cashback, but the cashback can make it more likely. This is because you may get more cash if you spend more on the card or more rewards if it is a reward card. This might tempt you to use the card more than you normally would. This is okay if you are using it to buy things that you would normally use cash to buy, that you would have bought anyway. However, if you start buying extra things just because you feel you will get more rewards or cashback then this is a problem. This is because the reward will just be a very tiny proportion of what you are spending and you will be paying out a lot more than you get back. So just try to use the card as normal and see any rewards and cashback as a bonus rather than trying to find extra things to buy. Do not use it as an excuse to buy things that you do not really need.

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Should you Borrow Money Regularly?

Many of us will borrow money for all sorts of things. Buying a home is probably one of the biggest purchases many people will make and most people will borrow money to be able to do this. There are also many people that borrow money to go to university, buy a car and things like this. However, there are also people who borrow money regularly. It might be that they frequently spend on their credit card and do not repay it all in full each month or they get overdrawn or use other types of loans regularly. Is this something that we should do?

Consider the cost

When we borrow money, we will spend money on interest and possibly on other fees as well. This means that there is a cost for us to have the loan. These costs will vary depending on who we take the loan out with. There will be differences in the interest rate between different lenders such as Emu.co.uk and differences in the way that they charge. They will have standard charges for all customers but if you fail to repay the loan on time then there will be charges on top of this. There may also be other charges as well. You will be charged, for example, if you miss a repayment or make a late repayment and the amount that you are charged will also vary between lenders.

In some circumstances this will be worth it and for others it may not be. You need to calculate how much the loan will cost you before you decide whether you want to take it out. Think about what you are using the loan for and whether you think that it will be worth it, considering how much you will have to pay. Imagine that you had to pay that much outright for the item and whether you would still buy it if it had been priced at that amount.

Many people will borrow money without thinking about it at all. They might use a credit card or an overdraft and not really think about the fact that they are using them. For example, they may go overdrawn because they have not been keeping a close check on their current account balance and therefore have to pay interest without realising. By keeping a closer track of the balance this could be avoided by not overspending. With a credit card we may use it and assume that we will pay it off in full when the bill comes. However, if we spend too much, we may find that we will not be able to afford to repay the full amount. Again, if the balance is checked carefully then you may be able to avoid overspending and getting into debt.

Think about your credit record

It is also worth thinking about your credit report and whether it will be negatively affected by you getting a loan. You may not be too concerned by this but it depends on what you want to do in the future. If you want to borrow more money, particularly large amounts such as a mortgage, then you credit report will be really important. You will also find that if you want to rent a property your credit record will be important as well, so you need to make sure that you are aware of this if you are likely to be renting something. It might even have an impact on how employable you are if you are looking for a job in certain sectors.

Look at alternatives

It can be worth thinking about what you could do instead of borrowing like this. Perhaps it might be enough to keep a close eye on your bank balance and make sure that you only spend what you can afford. It might be possible to cut back on things that you do not need so that you will not overspend. It may be tricky to do this, partly because it is hard to cut back anyway but also if it is spending on necessities that is costing you too much money. It can be a good idea in this situation to see whether you can earn more money or pay less for what you are buying so that you can stay within your budget.

Borrowing money can be very useful for emergencies or large purchases but borrowing frequently can become difficult to manage. It is therefore worth finding ways to manage your spending so that you can avoid borrowing like this. Then you will be able to use loans to your advantage when you really need them. It is worth thinking about whether you are happy with the way that you borrow money or if you want to change the way that you do things so that you are more in control of your money.

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