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© 2017 by Ms Broke in Bristol.

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Managing your finances: Credit Cards and Overdrafts.

September 20, 2016

 

 

Deciding whether to get an overdraft or a credit card is a big decision in itself, but you must learn to use these finance resources effectively, in order to ensure that you don’t fall into negative debt.

Credit cards are a great way to spread the payments of a large purchase over an agreed period of time, helping to ensure a positive cash flow.

 

Your credit score will often determine what deals you are entitled to when it comes to borrowing of any kind, and ensuring you keep a clean credit score will help you qualify for the best deals and best

perks of a credit card.

 

In the same way that a credit card allows an individual to spread payments, an overdraft can relieve the pressure of paying for an expensive item, and can be considered as a short term borrowing

option.

 

The most appropriate finance option will vary depending on the circumstances of the individual, but ensuring you have the means to pay back whatever you owe within the agreed time period is of

paramount importance.

 

When considering an overdraft, it is important for individuals to shop around for the best bank account, offering the lowest interest and fee rates, as such charges can significantly increase the

amount you owe. Further to this, it can also be helpful for individuals to research the duration of their overdraft limit, as unexpected fees can often occur if this term isn’t monitored carefully.

 

It may seem obvious, but in order to avoid fees, individuals should stay within their agreed overdraft limit, or extend this if they feel in danger of reaching this amount, providing they know it can be

afforded. In addition to this, taking charge of your own life administration and ensuring you read and open all bank letters you receive will help you keep track of any changes to your account.

 

Investing in external finance options is commonly seen as a negative, however, taking out credit that you know you can pay back can actually improve your credit score, and let other lenders know you are a reliable individual to lend to.

 

Imogen describes herself as a free spirit, she takes a keen interest in the holistic approach to medical practices and exercises daily through yoga. She works within the financial sector helping those who have been mis-sold PPI. Her life revolves around yoga, her family and her small cat- Mr Tabs.

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