Is it Worth Getting a Cashback Credit Card?

A cashback credit card can sound like a really good idea. It can work well for some people as well, but it is worth finding out more about how they work and thinking whether they are the right thing for you to have. We are all different in our attitude towards spending and money and therefore different cards suit different people. It is good to consider which type of credit card will be the best one for you.

Cashback credit cards can work in different ways but they will generally give you a percentage back of the money that you a have spent on the card. This will only be a small account and it will normally be credited to your credit card for you to spend on it. They are done to encourage people to spend more on their credit cards as the more that people spend, the more lenders can charge in interest on outstanding balances. Some cards will be different having vouchers or points rewards and you need to compare them to see which might be the best for you. Consider whether you would use the vouchers or whether cash might be the better option for you.

If you are the sort of person that will pay all of your credit card outstanding balance off every month, then this sort of card could be ideal for you. With no charges at the end of each month, as you pay off everything, you will gain the cashback each time. It is therefore worth taking a look at the different options and comparing the different types of cashback cards. You do need to be wary though.

Cashback cards need to make their money back somewhere. The way that they normally do this is by charging higher interest rates on outstanding monthly balances. Therefore anyone that is paying interest on their credit card is effectively paying towards the cashback that is being paid out. It is wise to compare the interest rates and if you feel that the interest on cashback cards is significantly higher and think that you will not always be able to pay off the outstanding balance in full, then it could be wise to avoid them. Think about the future as well as now as you may be okay now paying off the full balance but if you think this will not last then consider whether you want to risk it. It is really easy for credit card debt to accumulate as there is no pressure to pay off more than the minimum balance. This means that if you just make a small payment then the debt will stay on the card. By having a card with a high interest rate, it will be harder to pay off the debt as you will be paying more in interest payments and so will have less left over to repay the balance as well.

Another potential problem with a cashback credit card is the temptation to spend too much on them so that you earn more cashback. It is wise to use the card for all purchases so that you can get cashback on as much as possible. However, buying more than you need is not good because it means that you will spend more money that you need to. You may find that you end up spending more money that you can afford or buying things that you do not actually need or want. Your cashback is likely to be around 1% of what you spend or less and so spending more money in order to get it is not good as you will only get a tiny bit back of what you are spending in total.
It is good to put purchases on the card that you would normally buy anyway, but avoid buying more than you would normally need just because you can get cashback on it. You should never try to justify a £100 spend, for example because of 1% cashback – that is only £1. If you think that there is a risk that if you get a credit card like this it may mean that you use it as an excuse for spending extra money, then it could be wise not to have one.

So a cashback credit card can be really good if you pay off your full outstanding credit card balance each month. As the interest rates tend to be high, then they will not be suitable for anyone that does not manage to do this. It is also worth making sure that you are not tempted to spend more than you can afford on the card just because you can justify it because of the cashback. The cash back will be a very low percentage and not enough to support excess spending.

15 Mar 2017

How to Ensure you Pay Back Your Payday Loan on Time

A payday loan is a loan where you can get a few hundred pounds to be paid back within a few weeks. The idea is that you set up a direct debit to pay back what you borrowed plus interest on the day you get paid so that the money is there to cover the repayment required. However, there are still some people that manage to not have enough money to pay and therefore end up paying charges for not making the repayment in time. The charges for late repayments on payday loans are really high. There is the risk that they will start charging at a higher interest rate and charge a fee on top. You need to make sure you are aware of how much this will be before you sign up to one. It is therefore really important to make sure that you will be able to pay it back.

The fact that there is a direct debit set up may make you think that this will mean that you will easily pay it back on time. There will be no need to remember to make the repayment as it will just happen automatically and the money leave your account. However, if there is not enough money left in the account to make the payment, you will not be able to make it. Therefore you need to make sure that you know exactly when the payment will be going out and that you will have enough money in the account on that day in order to cover the payment.

Before you take out the loan it is important to think about whether you will be able to manage the repayment. Consider how much it will be and whether you will have enough money in your bank on the day it goes out to cover it all. If you are not sure whether there will be enough, then it is wise to not take out the loan. You can look at your finances to see though. Take a look at a bank statement and see how much you are paid and what direct debits go out and other expenses on that day. You will then be able to get an idea of whether you would have enough money left to cover the cost of a payday loan. Make sure that you know how much you will have to repay as this will not just be the balance of the loan but there will also be charges as well. Then consider whether there will be enough left in the account to pay it. Probably the biggest reason for there not being enough would be there being an overdraft which gets paid back by the pay packet and therefore leaves not enough for the loan repayment.

It is really important to make sure that you outgoings are not so high that you go overdrawn or that you spend too much so that on the day your payment is due, there is not enough money to pay it. Therefore you should keep your spending down between the time that you borrow the money and the time that you repay it. Try to spend as little as possible to make sure that you give yourself the best chance of repaying the loan. It will only be a few weeks until you have to do this. Use up foods from the back of that food cupboard or freezer or buy cheaper food. Try to avoid all unnecessary spending or delay it. If you have high bills due that you are struggling with, telephone the suppliers and see whether they can reduce your payments for a while. Try to reduce car use so that you do not need to fill up on petrol so frequently and think about every penny that you spend and whether it is necessary or if you can delay paying it until the loan is paid off. You may need to change your spending habits and your shopping habits in order to make sure you have enough money. Think hard about whether you can avoid being tempted to spend money, perhaps by avoiding going past the shops that you normally buy from.

It may seem hard being so careful but it is only a short period of time. Once you have made the repayment you will also be shorter of money than normal due to the fees that you are paying and therefore being careful could be worthwhile for a bit longer. In fact it can be a great habit to get into anyway because it means that you will be able to save up some money. This can be great as it means that if you get an occasion where you need emergency money again, you will not need to have a payday loan as you will have some savings to fall back on.

15 Mar 2017

Top Tips for Being Accepted for a Mortgage

Getting a mortgage is something that many people dream about. They like the idea that they can have the freedom of owning their own home with no rent to pay and also have an investment which will gain in value. It also tends to be cheaper to own a home rather than rent one, which can be a big part of the appeal as well. However, to buy a home most people need mortgage and this can be a difficult thing to get.

For most mortgages you will need a deposit. This means that you will have a lump sum of money that you will pay towards the cost of the home that you are buying and the lender will give you the rest. The amount needed can vary but it tends to be around 10% of the value and so the dearer the home you want; the higher the deposit. Saving for the mortgage tends to be most people’s focus when they are thinking about buying a home. Although this is one very important factor and needs to be done, there are other things that can be done as well.

You will need to have a good credit record in order to borrow the money. This will partly be determined by your income but also by your ability to pay things on time. If you have your name on any utility bills, bank accounts or loans, these will be noted on your credit record and if you pay them on time, do not borrow too much and make repayments when needed then this will be noted and work in your favour.

Having a job will make a big difference with regards to your mortgage application. You will need to be able to show that you are capable of making the repayments and therefore will need to be in a permanent job and have been there for at least three months. This will show that you are capable of holding down a job and that you will be able to have enough income to pay the required repayments each month. Obviously the amount that you earn will be relevant as well. It will also be harder to get a mortgage if you are self-employed compared to if you are employed.

Having debts could have a negative impact on your application. You may be saving hard for a deposit, but it could be better to be using that money to repay your debts. Find out form the lender you want to go with or from a financial advisor as to whether you will need to pay off the debt before you will be considered for a mortgage. It will probably depend on how much it is and how long it has been outstanding for as well as what type of debt it is. You are unlikely to be penalised for a student loan, but a large credit card debt could be frowned upon, for example.

The amount of mortgage that you are allowed is determined by the income of the potential home owners. This means that the more you can earn, the better as even if you do not want a big income, if you can show you are well equipped to make the repayments, this will help. Therefore it is a good idea to do what you can in order to maximise your income. This may mean changing jobs, which will then delay you getting a mortgage for three months, but it could mean that you are far more likely to get a mortgage and it will give you longer to save up for a deposit. Alternatively, you could see what you can do to get a pay rise so that you do not have to wait for three months before applying. Find out how the pay rise system works in the company that you work for and see whether there is anything that you can or need to do in order to secure one.

Before you apply for a mortgage it can be wise to find out what the lender is looking for in a successful applicant. Find out, if you can, from their customer services, what checks they do. Then you will be able to make sure that you fulfil their criteria and if you do not, see if you can make improvements so that you do.
For those people in situations where they do not have a permanent job or are nowhere near saving up the required deposit, it could be worth looking at a guarantor mortgage. These are gaining in popularity and you can ask a parent or grandparent to put some security forward, such as a sum of money or their home, as a guarantee so if you miss a mortgage payment they will be responsible for it.

15 Mar 2017
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