Is it Worth Getting a Credit Card?

A credit card is something that many people have. However, there are some people that are concerned about them and feel that they should not get them. It is right to give it some thought and be cautious. If you understand how you can use them to your advantage then this can really help, but you need to make sure that you will be able to be sensible with the card. Only you will know whether you can trust yourself and some of us find it much easier than others to be responsible with money. This could be due to a number of reasons and it is not someone’s fault if they are not that responsible but if they can identify that trait in themselves then they can make sure that they make the right decisions.

Advantages of credit cards

Credit cards give you a certain amount of freedom when you are shopping. It makes payment easier and quicker but also you will get interest free credit on most purchases until your statement arrives. This means that you effectively can buy now and pay later with the card, which can help you to manage if you do not have any money left and are waiting to be paid and need to buy things. The card issuer will allow you to repay everything that you spent and have no interest charge at all and a majority of people who have credit cards do this. However, you can also delay repaying all of what you owe and just pay a minimum amount or more, without having to repay the full amount that you owe.

Credit cards also offer some insurance and security, particularly for online purchases. If you order something and it does not turn up or it isn’t what you expected and the seller will not refund, then you can claim back through the credit card company. You will also find it difficult to buy online without a credit card, although it is possible. You can use debit cards but these are less secure as they will not insure purchases in the same way and may not have such good anti-fraud departments.

Disadvantages of credit cards

There are also some disadvantages with credit cards. As you only have to repay a small minimum each month, it means that you can potentially stay in debt for a very long time. If you just repay the minimum then it can just cover the interest and a tiny bit more so it can take a very long time to repay and if you keep spending on the card, you may end up not repaying it for even longer. The interest on credit cards tends to be on the high side, compared with some other types of borrowing.

Having a credit card can also tempt us to buy more than we otherwise would. If you rely on cash or a debit card, then you can only buy up to the value of the money you have in your bank account. You may have an overdraft but generally this will be small anyway. By using a credit card, you will still be able to buy the things that you want and it is easy to forget about the cost of the interest on the card and that you will need to think about repaying it in the future. So, you might buy extra things, because you can, perhaps things that you do not really need or things that you would normally feel were too expensive. Some people even see the balance on the credit card as money that is theirs to spend and so feel they should spend it all and do not really think about paying it back. They have the idea that because it is their money then that is not something they need to think about and they do not focus on the interest or the cost.

It is therefore up to you to think about whether you feel that a credit card would be a good choice for you. Consider whether you would be able to take advantage of it, pay it all off when the statement arrives and enjoy the advantages that it brings. Alternatively, you may feel that you will be likely to overspend with it, just repay the minimum and end up with expensive debt. The decision is obviously yours, but you need to think about whether it would suit you or not. It might sound like a fun thing to have, but think about the risk that you might be in debt long term and the effect that might also have on your credit record. It may not be worth it. It is good to think about what sort of person you are and whether you would use the card to your advantage or whether it would be a very expensive and risky thing to get.

How Can I Repay my Massive Overdraft?

If you have a large overdraft then you may feel almost out of control and not really know how to tackle it. This is not surprising, but there are things that you can do. You may have to take things slowly but it is good to have a methodical approach and a calm attitude if possible. There are a number of steps you could take.

Set out your goals

It is wise to start with setting yourself some goals. Obviously, you will want to clear your overdraft, but it might eb easier to break it down into smaller parts – so clear it a few hundred pounds at a time. Setting dates to aim for can be handy too, which you may need to adjust if things do not go as planned. Be realistic so that you do not get too stressed with the pressure that you could put on yourself, but make sure that you are pushing yourself so that you are not only doing the very minimum. You will know what you can cope with. It can be wise to put your goals in writing and maybe even put them somewhere prominent so that you have a constant reminder to not only help you to focus on the goal but to also make sure that you remember why you are doing it.

Check your finances

You need to know exactly what financial position you are in. This will involve taking a look at everything not just your current account and your overdraft. Get a good idea about how much money you normally have paid in to your account and how much you have to pay out for things like loans and such. Find out what you pay out for and why you are going overdrawn. It might simply be that your essentials are dearer than your income, but it could be that you are spending too much money in certain areas where you can cut down or that you are paying too much for things that you could get cheaper. Seeing where you are at and then looking to see where you can improve the problem can be a really big step in the right direction.

Cut Spending

Cutting spending can feel like a really big burden and almost a punishment. However, it is worth remembering that you might be able to spend less but not go without. This is because you may be paying too much money for something and so changing to a cheaper provider, supplier or retailer could mean that you will save without even having to make very radical changes in the types of things that you are buying. It does mean though that you will need to compare prices on everything that you buy. This can seem tedious and will take time, especially at first, but once you get used to it, it will become a habit. You will also start to notice how much money you are saving and this can be a good motivation to keep up with it.

You might find that this will not be enough. It could be that you feel you should be trying to save even more money than you are using the above methods. It could be that you need to actually buy less items as well. This could mean that you will need to cut down the amount of things that you are buying as well. This can be more difficult as you may find that you feel like you are depriving yourself of things that you like and want. However, if you want to get out of debt then it is very likely that this is something that you will need to do. You do not have to cut back on everything, but you should be able to prioritise. You might prefer to go without some things and not others and this will allow you to choose what to buy and what not to.

Increase earnings

You may also need to find some ways to increase your earnings. This might be because cutting your spending is not enough to help you to get out of debt or because you want to get out of debt more quickly. Some people will find this easier than others it can very much depend on what sort of work do already, what commitments you have and what employable skills you have. You can however, pick from a lot of options. You may be able to find some online work, for example, or some freelance jobs. There are very easy ways to earn, such as answering questionnaires, to graphic design, programming and writing. Even if you are just doing little bits and pieces here and there it can make a difference and you may find that small jobs lead to larger ones as well. If you are focussing on work, it will be harder to spend money as well.