Author: John Williams

I have always enjoyed writing but I did not think to start with that I would be able to make a job out of it. I feel very lucky that I have been able to though. It means that I am able to work form home and still get paid while I look after my family. I feel very lucky and know that not everyone has the opportunity to do a job like this. Therefore, I make sure that I do it well because I want to keep it. I research hard and write clearly in the hope that I can make sure that everyone can understand what I am writing about!
Credit Cards

Why Repaying a Credit Card in Full is the Best Option

When we have a credit card, we will never have to repay it right away. However, each month we will receive a statement which will say how much was spent and will give us repayment options. There will be the option to repay everything we spent, or a minimum amount of money. Repaying in full is the best option for most people for a several reasons.

Cost

It can be a good idea to consider the cost of not repaying the card. You will find that the statement that you receive will tell you exactly how much interest you will need to pay if you only repay the minimum amount of the card. This might not look like a great deal of money, especially compared to how much you have spent, but think about the fact that if you do repay the card in full, you will not have to pay this money. Also think about the fact that this will add up. If you do not repay more than the minimum balance on the card it can take years to repay it all, assuming that you do not spend any money on it. This means that you will accumulate a lot of expenses over this time and it is a good idea to think about how much that might be and whether you are happy to pay that much money just for keeping that debt. Most people would not want to pay it, if they worked it out properly.

Available Credit

If you do not repay what you owe on a credit card, then you will max it out. This means that you will use up the credit that is available to you and you will not be able to use the card anymore. This means that if you do have an emergency then you will not be able to have the card to fall back on to help you. This could be a problem if you have no savings and need money quickly so it is something worth thinking about. Also if you want to buy something online, then you might prefer to use a credit card because of the security that you get with it compared with other ways of paying for things. Therefore, you may want to leave some credit available on the card for this sort of purchase.

Credit Rating

You may find that if you have a lot of outstanding debt then it will have a negative impact on your credit rating. You may not worry about this, but it could impact you in quite a few ways. You will find that when you want to apply to rent a home then the landlord will look at your credit record and this will determine whether they will be happy to take you on or not. You will also find that most lenders will use it, so if you want to take out another guaranteed payday loan the lender will look at your credit report. You may find that insurers will look at it and even some employers. This means that you will need to think hard about what impression you will be making with the credit report that you have based on your credit card status.

You can therefore see, that although it might be really tempting to not repay your card in full each month, there are a lot of good reasons why this might not be a good idea. It is easy to make sure that you do repay it all as well. You can set up a direct debit so that the card is always repaid in full each month. This means that you will not forget but you will have to make sure that you do not overspend on the card as you will need to be sure that you have enough money to be able to repay it.

Debt

How to Pick the Right Debt

There are lots of different types of debt and if we do decide that we want to borrow money, then we will need to choose between them. It is not always easy to know what the right sort of loan might be, especially if we have not had a loan before or do not know much about them. It can be a good idea to think about how we might go about choosing.

Understand about different loans

It is a good idea to start by having a really good understanding of the different loans that are available. There are lots of loans on the market these days and it can be a good idea to have a good idea of what you have to choose from. You will need to think about things such as overdrafts, credit cards, personal loans, mortgages, payday loans, guarantor loans, instalment loans, and many more! It is a good idea to see if you can find a way to learn about all of them and then you will be able to know what they are all about and what sorts of features they have. Different loans suit different needs and so it is a good idea to think about what you need and then match it up.

Consider What you Need

So thinking about what you need is really important. You will need to consider things like how much you need to borrow and how long for as well as what you want from the lender. It is wise to think about things like how much you need to borrow, how long you want to borrow it for, what expectations you have of the lender and things like that. Consider loans that you have had before and what they were like and what you would like now compared to what you did then. Also, think about any dealing you have had financially and how that has impacted your thoughts with regards to borrowing and lenders. If you are still not very sure, perhaps because you have not borrowed before then chat to people about it or done some online research. Talk to people about what is important to them in a good loan and this could help you to consider whether those things would be good for you. Also talk to them about your reasons for getting a loan to see whether they can make any recommendations with regards to what type of loan might suit your needs the best.

Check Costs and Repayments

It is really important to find out more about the cost of loans. They all cost money, but you will find that some will be more costly than others. Therefore, it is a good idea to do a bit of research into whether there are certain types that are significantly more expensive and perhaps try to find out why. It is good to think in terms of value for money as you want to make sure that you are getting something good for what you are paying. Sometimes, we are prepared to pay a lot more for things because we feel that they are much better and so this is something which is worth bearing in mind. It is also worth checking details of the repayments. You want to make sure that you will be able to manage the repayments. It is important that you do this because if you do not, you will have extra charges to pay and this will not be ideal. You want to ideally make the payments on time and pay the minimum in interest and charges that you can.

Debt

Reasons Why Paying Off Debt Might not Always be Worthwhile

There are many people that will say that you should always repay your debt as soon as possible and that it will be better for you if you do. However, there are some circumstances when it will not actually be better to do this. It is worth being aware of these, so that you know when you should and when you should not be repaying your debt early.

When There is a Huge Early Redemption Fee

With some lenders, you will get penalised for repaying the loan early. This is for two possible reasons. They may have costs associated with you repaying early due to administering it and have to charge you for that and they may have a penalty for doing it to cover the loss in interest that they will get as a result. Some lenders have these and some do not and it varies between types of loans too. There will not be on for an overdraft or credit card but there could be one for a mortgage. It is wise to find out whether your lenders charge them so that you can find out how much they are. You could find that they are quite a significant amount of money. If it is high, then you will need to calculate whether it is worth repaying early or whether it will be better for you to just keep on with the agreed repayments. You will have to add up how much interest you will pay for the remainder of the loan in order to do this.

When You Can get Better Interest on the Money Elsewhere

There is a possibility, that if you do not repay your loan early, but save the money in an account, you could get a better return on it. This can be quite rare but if you can find a loan with very low interest and a savings account with very high interest then it could be best to save the money instead. Take a look at the rates and see what you can find. You may find that you will need to tie your savings up or put it in a notice account to get really good rates of interest but it is worth looking to see what is available.

When You Will Suffer

If you will have to go without basics to be able to repay your debt then perhaps it might be sensible to not do it. Think about everything that you have to buy and the costs of those things and whether you can really afford to repay extra. It might put a big strain on you to be able to stretch your money like this. Especially if you decide you want it paid off quickly and therefore have to really cut down what you are spending elsewhere. Consider what you and your family or household need as well and think about whether it is going to work for you to do everything that you can to repay the debt quickly.

Usually paying off a debt early is a good thing because you will save money and be free of the burden of the loan. However, it is good to think about whether it really is the right personal decision for you. There are reasons why you might find that it will not work out for you and you need to be sure that it is the right decision both financially and personally. So consider the above factors in light of the advantages so that you can decide what you think will be the right solution for you.

Debt

How to Choose the Right Debt

There are lots of loans that we can choose from and it can sometimes be difficult to know which ones will be the best. There are things that you should think about, with regards to what you are looking for in the loan, which should help you to be able to find the right type of loan.

How Much you Want to Borrow

To start with think about how much you want to borrow. You should try to come up with a figure which exactly covers the item you are intending to buy with the loan. This is because if you borrow more than you need, then you will end up paying out a lot more for the loan in interest than you need to. It might also be more difficult to manage the repayments if they are larger. Therefore, it can be a good idea to think about whether you are borrowing the right amount.

What you are Buying

There are certain loans which are more suitable for specific items. For example, you would only use a mortgage to buy a home. There are also more general loans as well. You will find that you might be restricted at times with what you are allowed to use a loan for. Also, you might find that certain loans will just not suit your need so think about whether you feel this applies to whatever it is that you are buying.

What you Can Afford to Repay

It is a good idea to also find out how much you will be expected to repay. Often loans will have a monthly repayment and you will need to check how much they are because you will want to be sure that you can afford those repayments. If you miss a repayment you will have to pay an extra charge and you do not want to pay more than necessary. Therefore, make sure that you know how much the repayments are going to be. Also, think about whether you will be able to afford that repayment by looking carefully at your bank statements to see whether you normally have enough to cover it. It is also wise to consider what might happen if the interest rate goes up. If you take on a loan with variable interest, the lender will be able to put up the interest rate when they wish to. This could mean that you will have to repay more each month than you originally planned for and so you will need to think about whether this is something that you can afford to do.

How Long you Want the Loan to Last

It is also worth thinking about the length of the loan. Some will last longer than others and you will need to think about how long you want to be repaying it for. It may not matter too much, but it could be that you have something coming up in the future that you want it paid off before it takes place.

How much You are Prepared to Pay

It is also good to think about how much you are prepared to pay for the loan. Find out how much the total cost might be and decide whether you feel that this is an amount of money that you are prepared to pay in order to borrow the money, bearing in mind that that will go up if you miss any repayments and may go up anyway if it is a variable rate and the lender decided to put up the rate. Decide if you feel that the loan will give you good value for money.

Mortgages

Should I Repay my Mortgage Early?

There are many people that do say that we should be repaying our mortgages off early. There are good reasons for doing this, but it is worth checking whether this will be the best decision for you. There are pros and cons and things you should check out before deciding whether this is the right decision for you.

Cost

The cost of a mortgage is mainly the interest on the money that you owe. If you owe more money or money for longer then you will pay more in interest. This is because the interest is a percentage of what you owe. Therefore, if you can reduce the amount that you are borrowing and the time it takes you to repay, you will save interest. The interest rates on mortgages tend to be relatively low compared with other types of borrowing though. Therefore, if you have other loans, it could be worth considering whether it will be better to repay those rather than your mortgage so that you can save even more money. Perhaps when they are repaid you can then see if it is worth repaying the mortgage.

Fees

There are some lenders that will charge a fee if you repay early. This may come as a surprise when many mortgages are flexible and almost encourage early repayment or overpayment. However, they vary a lot and you will need to check the terms and conditions of your mortgage to see whether it will be a good idea for you to repay yours early or not. Some may just have a small admin fee but others may have a large penalty. Contact your lender and find out as if the charge is big, it may mean that it is actually cheaper to keep the mortgage than to repay it early. You will need to calculate how much interest you think that you will pay for the term of the mortgage and see whether that will be significantly more than the charge or fees and decide whether you feel that it is worth repaying it early bearing in mind what you will have to pay for this fee.

How you Will Manage

It is also well worth thinking about whether you will manage these extra payments on the mortgage. Think about what changes you will have to make in order to make them. You may have to find extra work in order to earn more, you might have to spend less and give up buying things that you like. This can be easier for some people than for others. It can also depend on how motivated you are. If you really want to save the interest money and get rid of the mortgage quickly, then this could probably make it easier for you to make the changes required to achieve it. However, if you know it is a good idea but are not that bothered about paying the interest if it means that you can continue as you are, then it is probably best to just stay as you are. You could come to some compromise too. Perhaps remortgage and switch to a cheaper mortgage provider so that you pay less interest. This will mean that you repayments will be lower than you are used to. However, if you pay a bit extra so that they are the same as you are used, you will still be able to repay the mortgage earlier but will not notice any difference. You could also just pop lump sum payments into the mortgage account if you have some spare money and again, you will not notice any difference to your lifestyle as a result. It is worth thinking about what will work for you.