Owning a credit card doesn't have to be synonymous with debt problems. While some people do have a negative view of credit card spending, there's no doubt that having a credit card, if done correctly, is the cheapest way of borrowing money - far more so than taking out a personal loan on the high street.
If you approach applying for a credit card in the right way then owning one can dramatically increase your purchasing power. This should not be confused with being able to supplement your income with credit, especially buying everyday items such as groceries and petrol, and instead should be used for pre-planned, larger purchases.
Perhaps you want to meet the deadline on an early bird season ticket offer for your football team, or maybe your car has packed up and you need to buy a new one sooner rather than later. This is where a credit card comes in handy - if you do a bit of research beforehand, you can secure a deal that offers zero per cent on purchases and balance transfers for up to a year, meaning that borrowing money won't cost you a penny.
If you want a credit card but aren't sure whether one is right for you, it's worth considering whether you have a big purchase on the horizon that you may not be able to afford otherwise. Don't fall in to the trap of having increased purchasing power for the sake of it - if you start buying things you don't really need, you're likely to run into financial difficulties further down the line. If you make late payments or miss payments completely, for example, then you're likely to face a penalty charge in addition to doing nothing to improve your credit score.
This is essentially 'bad' debt, but is debt necessarily a bad thing on the whole? Well, no - many of us wouldn't be where we are without it. The overwhelming majority of students wouldn't be able to afford to go to university without taking out a student loan, while entrepreneurs harbouring ambitions of becoming the next Alan Sugar or Richard Branson wouldn't be able to do so without utilising a business loan.
Most of us are afforded serious financial clout when we purchase our first home, something that generally isn't possible without taking out a mortgage. Debts such as these are a means to an end - while they're not free, you can look forward to reaping the financial rewards further down the line, so long as you secure or remain in a steady job.
Before taking out a credit card, it's important to draw up a budget and a repayment plan. The golden rule is only borrow what you need - borrow more and you'll only have to pay it back later, which means you could be saddled with unnecessary, sometimes expensive, debt. But borrowing a relatively small amount means very little unless you pay it back quickly, as this is a sure fire way of avoiding paying any unnecessary interest.
If you are experiencing debt problems, don't be tempted to borrow your way out of debt by taking out another credit card. If you’re having trouble affording life's essentials, seek advice from elsewhere - there's no need to rely on a credit card. If your household's income is less than £66,000, for example, then you may be entitled to some form of benefit, and an online check only takes a matter of minutes.
Fortunately, it's become easier to keep tabs on spending thanks to the advent of the Internet and online banking. With just a few clicks of the mouse, you can check your credit card balance, set up a repayment plan or apply to have your credit limit increased. And with the overwhelming majority of online retailers accepting credit cards as a form of payment, you'll have a world of products and services at your fingertips, all from the comfort of your own home.
While the Internet has proved a fantastic resource for consumers, its popularity has unfortunately attracted a band of financial criminals. Among their most widely used tricks is the phishing email, which arrives in your inbox pretending to be from your bank and asking you to 'verify' your bank code and password, sometimes even your pin number.
A staggering 59 million of these are sent every single day, and worryingly, one in six of them are opened. It's easy to see why - the majority look pretty professional, and for the unsuspecting there's no reason to assume that anything is unusual. Even if you think the email may be genuine, it's always worth telephoning your bank or visiting its website to make sure. No financial services websites will ask you to confirm your details in an email, so never feel as though you have to.
It's likely that you've received a number of phishing emails already, and more often than not, they'll look as though they're coming from banks that aren't yours. Scammers rely on matching these emails with an account holder's actual bank, and if the person isn't familiar with phishing, then they may well get caught out. If you receive a phishing email, never, ever click on the link at the bottom of the message or confirm any details. If the option is there, report it to your email services provider.
While the pros of online banking and spending far outweigh the cons, it is worth considering just how easy it is to spend money on the Internet. Use your credit card responsibly and think of it as fire - while it's an incredibly useful tool, it may burn you if you get carried away. Be disciplined and only borrow and spend as much as you need. If you repay your debts sooner rather than later and stick to a budget, then you can look forward to paying less interest and ultimately more money, which will give you more financial room for the important things in life.
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