KIRSTY APP - Borrowing Keep It Under Control

With a one-off loan, with equal repayments over a set period, you know what commitment you are taking on. The monthly credit card facility, the most commonly used form of credit, needs to be watched more carefully. The charges on any amount overdue, shown on your statement as a monthly interest figure, don't look at all alarming. But many people discover that if they pay off less each month than they have in fact spent since their previous statement, their debt increases month by month. In a frighteningly short time they can drift into the beginnings of serious debt problems.

People are in general now more careful with their credit cards than they used to be, tending to take advantage of the free credit period by paying by the monthly due date. Almost a half of Access and Visa card-holders discipline themselves regularly to do this.

For many people, handling one credit card is manageable, but a bundle of cards can be much more difficult. Provided you are considered basically creditworthy (for example, by having an apparently secure job and a bank account with a cheque guarantee card), you will find many would-be lenders happy to offer you credit. A wallet full of credit and store cards can lead to matters sliding dangerously out of control.

Beware of the automatic raising of the borrowing limit on your credit card; it can seem flattering when a letter to that effect arrives from the card company. Then there are unsolicited offers of more credit cards and higher borrowing limits. The onus is on you to set the limits on what you can handle - it's your money.

Different types of card are being introduced constantly. These include 'smart' cards (with memories), debit cards (you pay for the goods the instant you buy them, the money being taken from your bank account automatically) and new types of charge cards (confirming you as a creditworthy customer).

Your priorities You can assess with confidence how much you can safely set aside for borrowing repayments - and therefore how much you can afford to borrow - if you consider it within a complete personal or family budgeting exercise.

Drifting into a bank overdraft on your current account is far more expensive than many people realize. An agreed overdraft facility, arranged beforehand with your bank, can be among the cheapest forms of credit, but going into the red can result in the bank charging you a much higher rate of interest. Remember too that you will lose out on free banking if you have an overdraft.

Always discuss any possible need for overdraft with your bank first - it will help them to handle your account without embarrassing you, it will add to their confidence in you and it will also save you money.


Borrowing Stop And Think

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