Good morning! I hope everyone’s weeks going well and you have all made a good start to fixing your finances, as I mentioned in yesterdays post the first week we will be focusing on saving money and trying to cut your expenditure. Which can be done easily by making a few simple changes to your spending habits, today we will be focusing on credit and store cards and more specifically get rid of them!
Day 3 – fix your finances: Ditching your credit and store cards
How many of you have been tempted into getting a store card or credit card? Usually by the initial discount or the enticing bonus they offer you. We have all been there and made that mistake, but it can be one of the most expensive ways to borrow money, so it’s not the best idea. With interest rates typically being between 20-30% APR (£20/£30 on every £100 purchase)
So today I challenge you to take action and to ditch any credit cards and stores cards you may have, It’s obviously not always as easy as that and your likely to fit into 1 of 2 categories:
1 – Got the money else where
You have borrowed money on a store or card credit card for convenience but you still have the capital to pay it off if necessary.
2 – Can’t afford to pay it off
You have borrowed the money because you wanted the product but you couldn’t afford to purchase it out right and don’t have to the capital to pay the debt off.
Which Category are you?
If you fit in to category 1, act now and pay the balance off straight away and if you’re feeling adventurous cut the card up. It makes no sense borrowing money at such a high interest rate when you have the money elsewhere to pay for the product.
If you fit into category 2 I totally understand why you made the purchase and had to borrow the money, but there are cheaper ways of doing it, you have a few options by doing one of the following things:
- If you haven’t already got one, get a student overdraft, no interest is charged until you leave University and you have plenty of time to pay the money back
- Get a credit card with 0% on balance transfers and 0% interest for a substantial period of time and use it to pay the money off you owe. But remember if you go over the initial period you will get charged, so make sure you aim to pay the balance off before then. As we all know there are many comparison websites around, but a good one I have found is Money Supermarket.
- Debt consolidation, this means that if you’re in a sticky situation and have a number of credit and store cards you owe money to you could consider taking out a loan, which are typically lower in interest and will make everything a bit more manageable.
I hope you have found today’s post useful and can help sort out your finances by reducing any interest you have been paying, as Wednesday is normally the weekly poll, I thought it would interesting if we could apply it to todays post, so the question is.. how many store and credits cards do you have? Make sure you get voting quick, as the poll will close later on today!
Keep up the good work and I will see you tomorrow for day 4 of fix your finances and the results from the poll : )
(polls)
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One thing I have seen quite often is applying for a store card with a points or benefits system, and immediately paying off the balance with cash or a debit card. Most store or credit cards will have a grace period in which no interest will be charged, which means that essentially you will be getting discounts and coupons for free.
@Randy Thankyou for commenting, yeah there definetely can be some benefits, its just important you read all the small print and the terms of the card and make sure you pay the balance off before the deadline,so you don’t get charged.