Advantages of Owning a Credit Card

There are some people that get very worried about the idea of having a credit card and it is actually not that surprising. It can be easy to get out of control with a card, spend too much on it and then have a lot of debt that you need to pay off. If you have self-discipline and set up a direct debit to pay the card off in full each month, this should not need to be a problem for you. Just keep a check on what you are spending and only spend money that you would normally spend. However, many people find that having a credit card is really useful for them in a number of ways. It is worth considering these when you are thinking about whether to get a card or not.

– Secure online transactions – when you are buying things online, there is a risk that your transaction might be intercepted and that your card details might be stolen. If this happens with a debit card then it might be very difficult for you to get that stolen money back. However, if this happens with a credit card there is more protection and you can often get back the money. This can also apply if you pay for something and do not receive it or if you feel it is not how it was described but you are refused a refund.

– Possibility of cashback – some credit cards offer cashback or similar reward schemes. They are usually set up so that the more you spend each month; the more cash back or rewards you get. The cash back will be credited to the card to spend the following month but with a reward scheme the way that they are awarded will change depending on the specific scheme. These can be great as you get a bit extra for just using the card as you would normally but they can tend to charge higher interest, so only if you intend to pay off the full balance each month should you consider getting one of these, or else you could end up paying out more than you would with a conventional card even allowing for the reward or cashback that you will get.

– Interest free credit – when you have a credit card you can always pay with it right away and then you do not need to pay for the item that you bought with the card until you get the credit card bill. This means that you will not have to pay out anything for at least a few weeks, even longer. This can give you some interest free credit. You do need to be careful though that you do not get tempted to not pay off the bill in full as once you start paying less than the full amount you will have to start paying interest and this will no longer be interest free.

– Quick and convenient – when you are paying ins hops it can be so much quicker and more convenient to use a credit card rather than cash. Sometimes there are tills where you can scan your own shopping which often have shorter queues and some people find them quicker but you have to have a credit card to pay at them. Fiddling around with cash can take time and it means that you always have to be sure that you keep enough cash with you all of the time so that you can afford the things that you need.

– More protection from theft – if your purse is stolen or lost, then any cash that you have in there could just be taken and you will not be able to do anything about getting it back. You have no proof that it had cash in it and so the police and your insurance company will be unlikely to help you. However, if you have a credit card in there, you can tell the bank it has been stolen and they can put a hold on it so that it cannot be used. This means that it can stop too much money being stolen and you should be able to get back any money that has been spent on it as well.

How to Prepare your Finances for a Mortgage

If you are looking to buy your own home and need to take out a mortgage it is wise to make sure that your finances are ready. This is because there will be a big assessment made by the lender and they will look into your finances to make sure that you are capable of repaying the loan. Specifically they will look into the amount that you earn and base the amount that you are lent on that. They will also look at how much disposable income you have to see whether you can afford the repayments. This is the amount of money that you have left each month after paying your bills. You will also be expected to save up a deposit, meaning a lump sum of money that you will pay towards the property when it is bought. If there are two of you buying the house together then it is wise for you both to be aware of getting your finances ready. There are quite a few things that you might need to do to make sure that you are all ready for applying for a mortgage.

– Save up for a deposit- saving up for a deposit can seem like a really daunting thing, but taken step by step it does not need to be too complicated. You need to start by working out how much the deposit will need to be. The lender will normally want you to save up around ten percent of the cost of the property. You will probably have an idea of how much you want to borrow but if not, you will need to calculate how much you can borrow and then see whether you want something of that value or less. The lender will have their own way to calculate how much they will lend for a mortgage but it is normally around 3 x times the borrower’s annual salary. It can be wise just to try to save up as much as you can as the more that you can pay towards your deposit, the less you will potentially have to borrow, which will mean that your mortgage will be significantly cheaper.

– Be in a good job – it is important that when you apply for a mortgage that you have a permanent job that you have held for at least 3-6 months so that you are no longer working in a probation period. The more secure the job is the better as far as the lender is concerned. The salary that you get is such an important part of their calculations as to whether they will lend you money and how much they will lend you. It could be worth considering whether you should try to get a better paid job while you are saving up for your deposit so that you are more likely to be able to borrow money and are able to borrow more.

– Check your credit rating – it is possible to check your credit rating for free. This is something that lenders will do before they offer you money to see whether they feel you are a high risk or not. However, some credit ratings are incorrect and so you should check yours to see if it is correct. It is also worth looking to see whether you are likely to be approved for a loan and whether there is anything that you might be able to do to improve your situation and therefore get the loan approval.

– Make sure that you are not spending too much – as your bank account will be scrutinised by the lender then it is wise to make sure that it is as healthy as possible. Make sure that you do not go overdrawn or try to clear any overdrafts that you have. It is best to have some money left over each month and so you may need to reduce your spending so that you can manage this. It can be worth thinking about how you can spend less money as you may need to do this once you get a mortgage anyway so that you can cover the cost of the repayments. It may be a case of switching to cheaper products or cutting out unnecessary purchases.