Credit card balances are one of the most expensive forms of debt there is.  In principle, you can avoid the charges by paying off your balance in full, every month (and some people do exactly that) but realistically many people use credit cards because they don’t have the funds available at the time they need to make a purchase and they simply accept the fact that the convenience of credit cards (which make a line of credit available to you to use whenever you want and for whatever purpose you decide) is worth the expense of the interest payments on any balance.  Even if this is the case, it’s still worth learning, or perfecting, credit card self-control to make sure you minimize the amount of money you hand to your lender.

Understand that making the minimum payment on time is not (usually) negotiable

If you are in genuine financial distress, you may be able to negotiate with your lender (you may need to) or if you have a temporary financial issue, then, likewise, you may be able to come to an agreement to secure yourself some breathing space.  In either case, however, you can expect your credit record to take a hit for it and that can impact your ability to get credit at all let alone to get it at a reasonable price.  Simply delaying payments without prior arrangement with your lender is asking for trouble, as a minimum you can expect late-payment fees together with a hit to your credit record and probably at least a phone call from your lender’s credit-control team.

Be clear about the difference between needs and wants

In the real world, when you’re on a tight budget, sometimes, realistically, putting a necessary purchase on the credit card is the only feasible option.  When it comes to discretionary purchases, however, then you have a third option, which is to refrain from making them in the first place, no matter how much of a bargain it is, unless you actually need it, then you are effectively making a choice to pay money to your lender when you don’t have to and in so doing you may be depriving yourself of funds you could use as cash in hand when you actually do have a need for it.  It may feel hard to deprive yourself of something which other people you know have, but then other people you know may be in a different financial situation from you, or they may simply be putting discretionary purchases on a credit card and paying the price for it.

Plan ahead for foreseeable expenses

Most everyday items have a limited life span and therefore you should work on the assumption that they’re going to need replaced when their guarantee runs out.  If you foresee this as being a problem, you may wish to look at extending your warranty, although this does not necessarily have the value some retailers would like you to believe.  You should also include setting aside savings for the replacement of key items as part of your monthly budget and prioritise it ahead of your discretionary spending allowance.  Similar comments apply to being prepared for the more expensive times of the year, such as Christmas.  Set yourself a budget, save for it and stick to it.  The earlier in the year you do this, the longer you will have to set appropriate expectations with your nearest and dearest.

Never withdraw cash on a credit card if you can possibly avoid it

Interest rates on credit card purchases are high, interest rates on cash withdrawals tend to be even higher (and usually trigger a cash-advance fee).  Obviously if you have a real emergency, then you may have no other choice, but outside of this, just do not do it.

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