Current Accounts

Tips on how to Choose the best Current Account

Choosing a current account can be quite difficult. There are a lot of different ones to choose form and it is fairly easy to switch from one provider to another, much easier than it used to be. This means that they are a lot of people that swap current accounts so that they can get more benefits or a better service than they were getting in the past.

In the days when current accounts all offered interest on balances then many people would take a look to see which looked to be the best using the interest payments as a way to compare them. However, these days, there are very few that actually have interest because the Bank of England base rate is so low. Some do offer interest but there may be a monthly charge for the account and therefore you will have to calculate whether it is worth paying the charge in order to get the interest, you may find it does not make a lot of difference.

It can be worth looking at those current accounts which charge you a monthly fee. They can offer a variety of benefits from free insurance to cashback on purchases. Work out whether the benefits are things that will really help you. Maybe you would have had the insurance anyway and paid more for it, so having it as part of the account makes sense. Make sure that you always calculate how much you will get form the benefits of the account so that you can compare that with the cost and make sure that it is worth you paying that monthly charge.

With no interest being paid on accounts in credit, there are other things that you will have to consider when working out what the best current account is for you. Some people use the overdraft facility of a current account frequently. This is something which you get charged an interest rate for and you might also get a fee. The amount that you can negotiate for an overdraft and the rate/fees that are charged could vary significantly between banks and building societies and so this could be something that you should look at when you are trying to compare them.

Some also have additional benefits. You might find that you can get a better rate with that financial institution on savings accounts or loans if you hold a current account with them. This could be worthwhile, but it is still worth comparing them as you may find that there are still better savings rates to be had elsewhere even if you do not have a current account with that particular financial institution.

Some people feel loyalty to a particular bank and building society. It might be that they have always used them or that they have been particularly good for them. This is good because it means that you are with a company that you trust and feel relaxed with. However, there could be even better ones out there which you are not making the most of. It could be worth comparing just to see what else is available. There may be something which stands out so much that you will be prepared to swap for it.

To see what accounts are available many people will go to a comparison website. These are useful in allowing you to see what might be available and which accounts are more favourable but they do not compare every single current account. Some will not appear on any comparison websites as they can only be approached directly and some comparison websites will only feature a small selection of current accounts as they will only include those that will pay them commission for their leads. So although it can be a useful thing to do, it is a risk as well.

When choosing a current account it is important to think about what features you are looking or from an account. This will enable you to be able to reduce the amount of accounts that you are comparing, as not all will fulfil your criteria. Then you can compare them more easily and should be able to find the best one for you.

Credit Cards

Advantages and Disadvantages of Credit Cards

There are some people that really rely on credit cards and other people that refuse to use them at all. This is because people have different opinions on them and using them. It is worth knowing a bit more about them and how they work so that you can make an informed decision about whether there are a sensible thing for you to use or not.

A credit card will allow you to buy items and then not pay for them for up to six weeks, until you get a bill. When you get your bill you will have the choice of paying back everything that is owed with no charge, or paying off less than the full amount with an interest charge. There will be a minimum amount to pay, which usually covers the interest and just a tiny bit more. The interest on a credit card can be fairly high compared with other types of borrowing, but it is convenient as you do not have to negotiate every time you want to use it and most shops will accept them.

Many people like to use them for online purchases as they add a level of security. Credit card companies tend to insure purchases, so if you buy something online and it does not arrive or is not fit for purpose and the retailer does nothing about it, you can claim through the credit card. The card also does not have a direct link to your bank account so it is more difficult for your bank account to be hacked compared to using a debit card.
Credit cards can also be a very convenient way of getting some interest free credit. If you set up a direct debit to pay off the full balance each month, then you will be able to shop during the month and not pay for the items until you get the bill. This means that in theory you could be getting interest on the money as savings for those weeks. With interest rates so low and current accounts unlikely to offer interest, this may no longer be the case for everyone. It can still be easier though to manage your money, if you spend everything on the card and then arrange for it all to be paid when you get paid at the end of the month.

However, some people manage to get into difficulties when they have a credit card. It can be easy to spend a lot of money on it without keeping track of how much and then when it comes time to pay the bill, there is not enough money to pay it. One way around this is obviously keeping a good track of your spending, perhaps by using online statements or just noting down what you have been buying.

Some people get tempted to spend more than they normally would because of having the credit card. They feel that as they have the money available there to spend it means that they can and so they buy lots of things and think about the consequences of that later. This can get them into trouble if they keep spending money and then find that they do not have enough money to pay it in full. Of course, with a credit card you only have to pay back a minimum amount and so if they do this then they will have to pay interest on the debt. If they continue to not repay more than the minimum amount of debt then they could end up paying a lot of money in interest payments, more than they would have been prepared to when they first bought items on the card. It is worth adding up how much you are paying in interest as that could motivate you into not spending so much on the card or paying off more of the outstanding balance.

Some people get more than one credit card and then spend a lot of money on all of them. This can lead to even more problems as there are lots of bills that need paying and thinking about. It can make repayments more difficult as well because of the mounting interest payments.

Loans

Should you use a Loan to get Extra Money?

Many of us struggle to make ends meet form time to time and so we may all consider whether it is worth getting a loan at these times. There are lots of loans out there but most of us would be able to borrow money in one way or another and so it is a very real choice for a lot of us. It is worth making sure that taking a loan is a good idea though, before you do so.

We borrow money for all sorts of different reasons and it is wise to make sure that we are borrowing in a sensible manner. Whilst borrowing can be extremely useful in some circumstances, it is also possible for us to get into trouble with borrowing. Therefore it is important to have a sensible approach. Being scared of borrowing can be as detrimental as borrowing too much as you can limit your opportunities.

Many people will borrow money to buy a home. This will mean that they will have somewhere to live without having to pay any rent and with the stability of knowing that there is no landlord that can move them on. In the long run it can potentially save a lot of money, because although you will have to pay interest on the mortgage and to maintain the home, mortgage payments tend to be lower than the rent would be on the same sized property and therefore you start saving money right away. Plus once you have paid off the mortgage, although this could take thirty years, you will no longer have to pay anything on a monthly basis. Obviously you will have to pay out if the property needs any maintenance, which you do not have to pay if you rent, but this is still unlikely to be more overall than you would pay out should you be renting. The house will also be likely to increase in value over the years and so if you did sell it you would get back more than you bought it for or you could hand it on to your children so that they can benefit from it once you no longer need it.

This is an example of how getting a loan so that you can have extra money can really benefit you. However, there are times when it can be a problem. This can happen when you borrow more money than you can afford and you cannot make the repayments or if you keep borrowing more and more money on credit cards and only repay the minimum amount so that the debt builds up and up.

So whether you should borrow money is a decision that should not be based on whether you can afford the items that you are considering buying but more on whether you are in the right position to get a loan. You need to consider how having the items that you are buying will benefit you both now and in the future. You also need to think about the repayments and whether you will be able to afford them. Make sure that you find out exactly how much they will be and whether you will be able to afford them along with everything else that you pay out for in a month. If you are not sure, then you can look at your bank statements and add up everything that you spend and everything that you get paid and look at the difference. Also think about whether you normally tend to have some extra money left at the end of the month or whether you struggle to manage each month.

The decision can be difficult as there will be emotion involved as well how much risk you are prepared to take being a factor. Talk it through with others if you are finding it hard to decide as they may be able to see things from a different point of view. Make sure that you consider whether you have savings that you could use instead of borrowing, whether you can wait and save up for the items that you need to buy and whether you can afford the repayments. Think about the difference that will be made if you have those items and whether it is worth it; considering the cost of the loan.