How Many Credit Cards Should You Have?

Most people these days have at least one credit card if not more. Credit cards can be useful for all sorts of reasons. They are good for shopping online, purchases are insured so if they never arrive you can make a claim through the credit card issuer, some offer cashback or other benefits, they are a good way of borrowing money and they can be great to rely on in an emergency. Some people have more than one because they have used all the credit available on one and get another or because they use different cards for different things.

Credit cards can be very convenient and a good way to pay for things as well as to get really easy credit. Once you have the card you do not have to keep applying for a loan as it is there for you to use whenever you want it. It means that when you do not have enough spare cash or you want to keep some cash in your account, you can just use the credit card instead.

However, the convenience of the credit card can be part of the risk of having one. The fact that it is so easy to spend money means that you can end up spending more than you can afford to pay back. The more cards that you have, the more likely this is to happen and you could end up with a lot of debt. Credit cards do not ask for regular repayments, they just ask for a minimum monthly payment which could only cover the interest rate charges. This means that you will not be forced to pay back any of the money that is owed. Then next month they will do the same thing so you pay them the charges and nothing else. If you add up how much you are paying charges it can be really high and far more than the convenience of using the card is really worth.

The amount of cards that you have is not necessarily an issue here, but it really depends what you do with them. If you spend carefully and make sure that you pay off the full balance each month, then it does not really matter, although it may be easier to keep an eye on what you are spending with just one card. If you do have several cards then think about whether you do need them all. You may have low credit limits on them and so need them all so that you can get the amount that you need, you may use them for different purposes. However, you may be able to get everything that you need from just one card and if this is the case it may mean that you will be able to get rid of some and just have the one. If you have extra cards, it means that you will have access to more money and it could mean that you will be tempted to get in debt.

The safest thing to do with all credit cards is to set up a direct debit to pay off the full balance each month. This means that you will never have to pay any interest charges to the card issuer. It can be a very good way of managing your money if you put on purchases on the card through the month and do not have to pay for them until the end. You will effectively get interest free credit on those items for that time and you can be earning interest on the money that you would otherwise have spent on them. There is a risk with doing this though as if you have a month when you cannot pay off the balance for some reason, you will then have an unpaid debt which will be charged interest. However, this is less risky than other sorts of debt as there is no collateral so you cannot lose your home or car if you do not make the repayments.

So really you need to think yourself about how many credit cards you should have and in fact whether you should have one at all. You will know whether you think that you can trust yourself to use it wisely and make sure that you will always have enough money to pay it off. It may be best to not have one so that you are not tempted to get into debt. However, you could find that it is a really convenient way to borrow money for free in the short term and also as a backup should you run out of money at all. Just make sure that you do think about it before getting one or more and if you already have one or more consider whether you should keep them or not.

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How to Increase Your Chance of Getting a Personal Loan

Many people borrow money for a variety of reasons. However, some will find it much easier to borrow than others. There are a number of different reasons for this. There are some things though, that you will be able to improve that will give you a better chance of being approved for a loan.

You will need to show that you are capable of making the repayments on the loan. Therefore have a think about how much you think you can afford to repay and see what the repayments are going to be on the amount that you want to borrow. If you think that you will be able to easily afford them, then you will probably have a better chance of getting the loan. This is because your income is taken into consideration as well as any other loans that you have. If you are earning enough and not spending too much, so that you can afford the repayments, this implies that those checking your credit report would also be able to see this.

It is good if you can show that you are reliable with regards to making payments. This means that you pay your rent or mortgage, bills and loan repayments on time. A lender wants to be assured that you can show the ability to budget well and therefore can be trusted to make the repayments. If you always pay everything on time, then this will be great, but if not, then it could be wise to start doing so. If you have not already, set up direct debits so that bill payments come out automatically, this will make it easier to remember to pay them. It may help if you change the payment dates to just after your pay day. Make sure that you can balance the books each month by making sure that these bills are paid and that you have bought all of the essentials that you need before you start buying luxuries. This means pay your rent or mortgage, utilities and loan repayments first and then make sure there is enough to cover food and transport before you start buying treats such as alcohol, night out, clothing and things like that.

It is wise to check your credit report to make sure that all of the details on it are correct. You can do this for free and it will have no influence on your credit rating. It is worth doing so and making sure that you have nothing there which is incorrect. For example it may say that you owe money which you have paid off and so you will want to make sure that is corrected. Make sure that everything is up to date and you will have better chance of getting the loan approved. You can also see whether there are any areas flagged up which may make it harder to get a loan. This could perhaps be that you do not earn enough, have too many outstanding debts or something like that. Once you know if there is anything like this and what it is, you will be able to try to improve it.

It could be better to apply to a lender that you have used before. Whether you have used them for borrowing or some other financial need, it will mean that they know you. They will have some customer records of you and they will know what you were like as a customer. Assuming that you were a good customer, this could very much be in your favour. If you currently have financial products with them, this could be even more of an advantage. You may know staff there, if you bank in a branch and maybe able to discuss the loan with them which could increase your chances of getting it approved.

Before you apply for a specific loan, see whether there are any criteria as to what they are looking for in a borrower. Consider how much the repayments will be and whether you feel that you would fit their criteria and be able to manage the repayments. It is worth noting that if you apply for a loan, you may get offered a higher interest rate if the lender thinks that you are more of a risk. Therefore make sure that you check this and if you are not offered the best rate, ask why. This could help you to know whether you should be considering making some changes and what they should be.

Another way to be more likely to be approved for a loan is not to have much debt. So if you are thinking of applying and you already owe money then there is a lower chance that you will be lent some. If you want to borrow, it is unlikely that you have the resources available to pay off the debt you have, but it is worth thinking about whether you really need to borrow more or if you can do without and work on paying off the debt that you have first.

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How often Should You Switch Credit Cards?

Switching credit cards is something that we can often be advised to do. This could be for a variety of reasons, but is it something that we should consider doing often?

One main reason for switching anything is the cost. If you are on a 0% credit card, for example, it could be worth switching to another 0% card once the interest free period ends, to continue taking advantage of this free debt. Of course, there will be fees for switching and you will need to calculate whether these are worth paying or if you would be better off with a different option. Even if you are not using a 0% card you may compare the rates regularly and switch cards if you feel that you can get a better deal elsewhere. This can save a lot of money, but it will take time to do the research and so you need to consider how much your time is worth. It can depend on how much you owe on your card as to how much money you will save.

Some people do worry that if you keep applying for credit, as you do when you apply for a new credit card, it will have a negative impact on your credit record which could make it more difficult to borrow in the future. This is something that is worth thinking about, but it is worth noting that it is only if you get turned down for credit and you keep applying a lot in a short period that it may cause lenders to think that you are desperate for money and therefore maybe not someone they want to lend to. If you make all of your debt repayments and pay your rent or mortgage and bills all on time then this will show that you are capable of making payments and therefore unlikely to be in financial difficulty. There are other factors too which affect your credit record such as how much you earn and how secure your job is, so it does not all depend on how often you switch credit cards.

It is wise though to be really sure when you are switching cards. Make sure that you know how much you will pay to switch. You may have to pay fees and if you transfer the balance there is always a fee and you may even be charged higher interest of transferred balances than any new spending you do on the card Check the terms carefully and if you do not want to read the terms and conditions, telephone the customer services and ask them to clarify exactly what you would be charged in that situation so that you have a full understanding before you switch. Even for those that are used to this terminology, it can easy to miss a small point that could mean that you end up paying out more than you expected.

Although switching credit cards could be a good way to save money and transferring between 0% interest cards could even make you money, it is wise to be careful with this sort of debt. Credit card debt is one of the most expensive and as there is no necessity to pay off more than the minimum balance, then it can be easy to let the costs pile up. Although switching can save money, which means that the debt will not pile up so quickly, it is still wise to think hard about how you will pay it back as well. You may have a plan in place and once you can no longer switch to another 0% card have savings ready to pay it off. However, it can be easy to not plan for repayment and it is really important.

If you have 0% interest then it is wise to save up the money needed to pay off the balance. Then if you cannot switch to another 0% card you will be able to pay it off and not go onto an expensive rate. Try to put some money aside regularly and it should build up so that you will have a lump sum to pay it off. You could work out when the free period expires and therefore how much you will have to save each month in order to pay it off and budget accordingly so you know that you have enough.
If you do not have a zero interest card then you should pay any spare money you have straight onto the card. This will mean that when the interest is calculated, there will be less money outstanding and therefore you will pay less. You can pay chunks off whenever you like so it is wise to use any savings you have and any spare money to do this so that you can eliminate the debt as soon as possible.

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