Don’t fear your bank account anymore...
Here’s a quick reminder of what we’ve been through and how we can help you some more:
- Make sure you have the best graduate account and don’t hesitate to change if you don’t
- Prepare a detailed budget of your income and expenditures
- Keep on top of you finances on a regular basis
- Act now if you’re in debt and prepare for the future
- Arrange a call back from a specialist with debtburn or arrange a meeting with your bank
Credit overview
Overdraft
Your bank allows you to temporarily take extra money out of your current account. If you do this without asking the bank first, they often hit you with extra charges. You are usually expected to pay this money back quickly, and the interest charges can be very expensive.
Credit card/store card
A relatively expensive way to borrow money. You get a card to pay for goods and services and the card provider sends you a monthly bill. You then either clear all or some of the balance, or make the minimum payment. Credit cards can be useful to take on holiday as many also provide short-term insurance for your purchases.
Unsecured loan
Useful if you need to raise a fairly large sum of money. You have to shop around for the best rates, and be absolutely certain that you can afford the monthly repayments. If you don't pay up, you can be taken to court, or they might send the debt collectors around. The newer flexible loans may sound like a great idea, but watch out, you could end up paying more interest.
H-P
Hire-purchase agreements (H-P) mean that you're partly paying off a loan, and partly renting the item. They can take a very long time to pay off, and are often extremely poor value for money. You can end up paying much more than the actual purchase price. H-P is often offered on musical equipment or cars.
Secured loan
Your personal property is the 'security' for this type of loan. Although you may get a good rate of interest, if you can't keep up the payments, your property can be repossessed by whomever you owe the money to. A mortgage is a common example of a secured loan, where you can end up homeless if you default on the repayments.
Pawnbroking
You give your possessions to the pawnbroker, and they lend you a small amount of money for a few days. You then have to pay the money back to retrieve your goods; otherwise the pawnbroker gets to keep the items.