Tag Archives: bank overdrafts

Credit cards – in this economy?!

Are credit cards really the best solution in an economy ravaged by debt? That’s a good question and while credit cards might not be suitable for everybody and in every instance there is still a place for them, even in this post-recession, fragile economic state the UK has found itself in.

What benefits are there to having a credit card?

Get stuck in and read our top reasons to own a credit card, other than to lend you money… you may be surprised in what you learn.

1. Credit cards, when used sensibly, can help to repair a damaged credit rating. Even if you get a high-interest credit card, when used in moderation and, as long as you pay off debts monthly, you could see your credit rating sky-rocket!

2. Using balance transfers to pay off other debts could benefit you as, usually, it proves cheaper to pay off debt on a credit card as interest rates tend to be lower.

3. Use credit cards to help spread the costs – especially if you need to buy expensive goods or services but can’t pay-off in one go.

4. Earn cashback with credit cards, as long as you pay off credit card debts on a monthly basis.

5. Get exclusive discounts on certain goods or services with a credit card – many cards offer this service and certainly worth shopping around for to make sure you get the best credit card to suit you.

Whilst all of these are valid reasons to own a credit card Creditwindow understands that not everyone has a great credit score and it can prove difficult to obtain the one you want. As a result we have included a great list of both premium rate and poor credit score cards – check them out and find a credit card to suit your needs.

Preparing For The Post Christmas Financial Depression

Ok, it’s a pretty bleak sounding title but unfortunately, for a lot of people it’s very, very real… especially when it comes to overspending at Christmas.

But I’m not writing an article on how to control your spending at Christmas – you can read all about how to avoid credit card and loan debt at Christmas here. I’m writing this article to examine the ways in which you can prepare yourself for the financial depression that January is likely to bring with it.

A lot of people’s Christmas payday tends to be around mid-December (or early January if you’re unlucky). As a result they end up turning to credit cards and bank overdrafts to help meet the cost of Christmas… inevitable for many, no matter how hard they try not to.

So what can you do to help keep January’s financial depression at bay? It’s a good question if you think about it and not many people have a straight answer. Unfortunately many look at how they can extend their lines of credit – by either trying to increase their credit card limit, extending their bank overdraft or by turning to a payday loan to help them out of financial difficulties.

So a payday loan or extending your credit card limit doesn’t sound too hot, especially after spending so much money over Christmas and is definitely something you should avoid at all costs.

So, on the 1st January why not sit down and write down a list of resolutions? Just make sure you include “controlling my spending and avoiding further debt” as the number 1…

It’s just not that simple is it? Of course it isn’t – you and I would be a fool to think otherwise. Instead why not sit down and write down three lists:

1. A list of existing debts you need to repay and the total amount (include dates they need to be paid by)

2. A list of your usual monthly bills – i.e. mortgage / rent payments and utility costs

3. How much income you have for January and how much you will have left after paying your standard monthly bills

Now – if you total your existing debts with your monthly bills you can see the full extent of your expenditure for the month. If your expenditure exceeds your income then have a think about what debts can wait until the following month – or at least until your next payday.

The most important thing is to pay off your usual monthly bills before anything else. Then take a look at what you have left over. If your finances end up looking a little “sick” then you could either -

Repay the minimum debt on your credit card / bank overdraft or contact your credit card / bank account provider to discuss a repayment plan to avoid your debt being passed to a debt collection agency and a default being put against your name. Trust me – this is something you really do not want as it could ruin your credit score.

Find out how you can avoid getting into credit card or payday loan debt over Christmas by budgeting sensibly.

When it comes to spending a lot of money Christmas tends to be the worst time of year… especially for those of us who simply can’t afford to become overdrawn or risk any further debt.

Whilst the likes of credit cards can make the burden of spending over Christmas slightly lighter, especially since you can repay the balance of your credit limit back over a number of months, it’s worth thinking about your available budget before turning to a credit card or any other form of borrowing, such as a payday loan.

The question you really should ask yourself is:

After household bills and other outgoings are paid – how much money do I have left?

Whilst this might seem like an obvious starting block you’d be surprised at the number of people who don’t consider budgeting before spending at Christmas… this way leads to potential debt.

Budgeting sensibly ensures that the risk of needing to turn to a bank overdraft or credit card is miniscule, however, if you need to borrow some money to help meet the costs of Christmas it’s not necessarily a bad thing, as long as you don’t overspend. It really is about keeping within your budget as much as you can and only turn to a credit card as a last resort.

However, if you are looking for a decent credit card with benefits to help get you through the Christmas period you could consider one of the following:

Premium Platinum Credit Card:

A Credit building Credit Card:

Banks still charging extortionate rates on overdrafts

Recent figures by the Bank of England suggests that customers are being crippled by the highest rate in overdraft charges since records began.

Financial experts throughout the UK have condemned these extortionate charges being imposed on customers who dip into the red on their bank accounts.

The figures released by the Bank of England yesterday shows that overdraft rates reached a whopping 19.09% back in October.

As a result the typical customer is actually being faced with repayments that are 38 times more than the 0.5% base rate set by the Bank of England.

Most shockingly, Lloyds, the bank that British taxpayers had to bail out back in 2008, are charging their customers 19.3% and, on top of this, requiring their customers to pay £5 per month on top of this just for the privilege of having an overdraft facility in place.

Financial expert, Andrew Hagger, commented:

“When an overdraft is unauthorised, you can understand the idea that you are charged when you go further into the red. But to ask to borrow money and then be charged these exorbitant rates is just very difficult to swallow.”

In spite of this there are a number of high street banks such as the Halifax who have realised that the charges they were previously imposing on their customers were ridiculous.

As a result a number of banks have changed the fee to a fixed charge should their customers go over-drawn. For instance, the Halifax are now charging a daily rate of £1 for being overdrawn with permission, or £5 per day on an unauthorised overdraft.

CreditWindow suggests that if you are facing these ridiculous charges on your overdraft now may be the time to switch to a different bank account. Alternatively you could consider dipping into savings or even using a credit card rather than going overdrawn and facing exorbitant charges.

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