What is the wisest way to use your Credit Card?

Credit cards can lead people into debt. They can take a long time to pay back and they can lead to a spiral of debt. However, there are advantages of having credit cards and ways to use them so that you can benefit from them. It is worth learning more about them and thinking about whether you can change the way that you use them to your benefit.

When you pay for things using a credit card the money does not have to be paid back immediately. You can wait until your bill comes in before you have to pay anything back. This can take up to six weeks and you will be expected to make a payment each month. The bill will show you what you have to pay and how much interest you will be charged if you do not pay back the full amount. If you pay back everything there will be no interest charge for that billing period but if you pay back less, then you will pay interest. The bill will have a minimum repayment amount which they will insist that you pay and you can choose to pay that amount or more.

If you do not repay the bill in full each month, then you will be charged interest. Interest on credit cards is quite high and it is best to avoid it if you can. Many people set up a direct debit so that their credit card is paid off in full each month. This is a great idea because it means that you should never be charged any interest for using it.

You may wonder what the point is of having a credit card if you are going to pay it off each month in full, but there are actually many advantages. Firstly, as explained above you will not have to pay for things immediately, but you can wait until the bill comes in. This means that you effectively get weeks of interest free credit on items that you buy with it and you may even be able to get interest on the money that you would otherwise have spent. It can help with budgeting if you pay the card off when you get paid, you will know what money you have left to spend for the rest of the month.

When you are buying things online you will need some sort of card to pay. A credit card is more secure than a debit card in some ways. Firstly there is an insurance aspect so if you buy things which are not good and cannot get a refund, you may be able to get a refund through the card. A credit card also offers more security than a debit card. This is because if the card is stolen or the number is taken and it is used by someone else, the money does not immediately come out of your bank account, like it would if they were doing it with a credit card. If you keep a check on the transactions and see things going through, ten you will be able to make sure that they were all purchases that you made.

However, there are some people that can easily get into trouble with a credit card. They may have a tendency to spend on it because the credit is available to them. This is not the case for everyone, but some people do find it difficult to control their spending and so if you think that this will be the case for you, then it is best not to get a credit card at all. If you start spending more than you can afford to pay back, then you could end up with debts piling up and this is not a good situation to be in.

So, although there are great advantages to having a credit card and ways to use it to make sure that you benefit financially, you need to be careful. If you think that there is a risk that you will get into trouble by spending more than you can afford to repay or that it could lead to you getting into debt problems then it is probably best to avoid them in the first place.

Is it Better to Save up or get a Loan?

There are advantages and disadvantages of getting a loan compared to saving up to buy something. It is worth thinking hard about them before you do borrow money. There are many reasons why one may be better than the other for you personally and it is worth thinking through the possibilities and consequences before making your decision.

The first thing to consider is the cost. Borrowing money will cost you money whereas saving money could earn you some money. With exception of rare interest free loans, all loans will cost you money. You will have to pay interest on that loan as well as possibly having to pay fees as well to set it up. You may also have to pay charges if you miss repayments or cannot make a full repayment for some reason. This cost can be quite high and it is worth calculating or estimating what it might be so that you can see how much more you will pay for the item if you borrow money to pay for it. Imagine that the item was that price when it was for sale, would you still have considered buying it? If you save up for the item and put the money into a savings account as you save, you will get some interest paid to you. It may not be a great deal of money but it will be something.

It is also worth thinking about repaying the loan. You will normally have to repay a set amount each month for a certain term. This will mean that you will have to find that money each month to pay out. Think about whether you think that you will be able to afford it. Make sure that you look at how much you pay out now and how much money you have coming in and see whether there is enough left over to make the necessary repayments. If there is not then you will need to think about how you will adjust so that you can afford it.

An alternative to borrowing the money is to save up for the item instead. This will mean that you will need to put some money aside each month and then once you have enough you can buy it. This can be very similar to loan repayments in that you will be committing a certain amount each month. However, it will not cost you any money and if you are short of money one month, you could just save less and save more in a month when you have more money, so it is much more flexible.

As well as costs there are other consequences of borrowing money. Some people will start to borrow more and more money and that will mean that they could get into serious debt problems. This may not happen to everyone of course, but it is a risk that some people will not be willing to take. There is also the stress of being in debt. Some people do not like owing money and find it very stressful when they do owe it to anyone. That stress may make them regret getting the loan. If you have never borrowed money then try to imagine whether you might feel like this, if you have borrowed before then you should be able to think about how you felt about borrowing in the past.

You need to think about whether you need the item immediately or whether you are prepared to wait for it. This can be quite a difficult decision to make. You need to think about how much the item is worth to you and whether you think that you would rather get it quickly and pay extra for it as a result or whether you would rather wait and save up for it. You may worry that it will sell out if you do not get it straight away or that you will no longer need it or want it. It may be something that you need for an emergency. On the other hand it could be something which is in good supply and that you can wait for. This is a very personal decision, you will need to think about the cost of the item and whether you think it is worth paying extra to get hold of it straight away or whether you would rather wait and save up and spend less on it.

How Much Should Parents Give Children Towards their Student Loan?

Student loan news seems to be around every few weeks lately. With students just returning to university there is a constant reminder for parents that they may have to think about financing their children while they are studying. It can be hard for parents, as these days students have to borrow money to pay for their course and their living expenses whereas most parents would have had a grant to cover their fees and possibly one towards living expenses as well.

What many parents do not realise is that student loans are means tested. Although all students will be able to borrow enough to cover their course fees, they will get different amounts towards rent and living expenses depending on their household income. It is therefore expected that better off parents give their children money towards this. Knowing how much to give can be difficult and it will obviously depend on how much spare money there is available to give them as well.

One way of looking at it is to look at how much a student on a low income gets (including any grants they may be able to get) and give that much money. Then they would have the same amount of money as everyone else. However, this may not be enough or it may be too much and they may waste it. It could depend on what part of the country they are living in, what sort of accommodation they are in, how much transport costs from their accommodation to the university as well as from where they are to home. They may have a part-time job which could help towards the fees or be able to get a bursary or other help.

Some parents choose to have a different approach. They choose to pay for the accommodation and then let their child use their loan to pay for fees and then cover food and other expenses. They then know that they have a decent place to stay and they should have enough money left to cover the rest of their expenses.

Some parents even choose to pay for the course fees as well so that their children can be free of debt. However, this is likely to be an unwise move in a majority of cases. This is because most students do not repay the whole of their loan and so if they borrow money the amount paid will be less than if it is paid outright. If the parent then paid the loan repayments, they would still be paying for the course, but they would be likely to end up paying less in most cases. Only those students who are high earners from the time they graduate and continue to be for the next thirty years will have to pay back the full amount, due to the fact that the repayments are means tested and only have to be repaid by those earning over a certain amount of money.

Parents will always try to do the best for their children but financially this is not always easy. Paying for a university course is not cheap and most parents would not be able to save up for this, particularly those on low incomes with more than one child. The student loan scheme does seem reasonable at the moment though as it seems fair to all students, benefitting those on lower incomes more than those on high incomes. This means that it should allow everyone to study, whatever their background and future earning potential. So parents who are higher earners may need to give their children more money to have the same money as other students, but they could choose to make those children get a part-time job to pay towards it instead. The easiest way for parents to help is to let children live at home with them while they are studying at a local university and not charge them rent and everyone will save money that way. Some people feel this will not give them the ‘full experience’ and although they will not experience living away from home, there will be plenty of time for them to do that when they are older and they will not have to experience having hardly any money to live off for three years.