Filed under: Business Finance — admin @ 2:46 pm
Credit has been around for decades and although the means of gaining credit has changed over the years the idea behind it hasn’t. If you see an item that you don’t have the ready cash for, you can buy it on credit and pay for it later in agreed instalments. Interest is charged for allowing you to buy now and pay later. Capital One have produced a video that will guide you through all the different kinds of credit available.
A bank overdraft is very simple kind of credit. You bank determines a pre-set amount that you can spend up to once you have no money left in your account. This is then paid back in pre-arranged instalments or one lump sum. Charges are applicable for this kind of credit and the fees will be displayed in your bank.
Published for Capital One
Filed under: Business Advice — admin @ 9:05 pm
Advertising Feature
Since the launch of the first credit card in 1966, the credit card market in the UK has boomed. There are now dozens of providers offering hundreds of different cards, each suitable for different kinds of customer. The way you use your credit card will determine the type of card that’s best for your needs. Read our top tips for finding a card that is right for you:
‘I’m going to pay off the balance in full every month’: In this case, as most credit card providers offer interest free purchases if you pay your balance in full and on time each month, interest rate charges on purchases shouldn’t occur because you will be paying off the balance straight away. Look for cards that have extra incentives such as loyalty points, cash back or discounts on particular products or services, and start being rewarded for using your card.
‘I won’t be paying off the debt every month’: The interest rate is key here, and the lower the better. Borrowers should try to pay as much of the debt off as possible every month and certainly more than the minimum payment. Even if you are reducing the balance, it’s well worth ensuring you are on the lowest possible rate. It’s not uncommon for some card companies to change their rates, so keep an eye on what you are paying
‘I already have a sizeable sum on my credit card and I’m paying interest on it’: Many credit card providers offer a balance transfer deal where you can transfer an existing balance to a new card and not pay any interest for a specified period of time. There’s usually a fee to do this, typically 3-4% of the balance you are transferring, but this could be significantly cheaper than continuing to pay interest on the balance, helping you to pay back the debt quicker and more cheaply.
You should check with the new provider how payments you make to your card are allocated. Since January 2011, all credit card providers are required to allocate payments to balances attracting the highest interest rate first, helping customers to pay off debt quicker.
‘I’m getting the card for one big purchase’: Some credit cards will offer an interest-free period on new purchases for a certain length of time, which means that if you are making a large purchase you will have the opportunity to repay the debt at no cost over a few months. However, if you don’t think you’ll pay off the debt in full by the end of the interest-free period, then the interest rate after the incentive period ends will become important.
‘I’m a frequent traveller’: If you regularly carry out transactions abroad, look for a card that has an incentive to reduce the costs associated with using your card abroad. Many credit cards levy a foreign exchange fee for transactions made overseas. Some charge cash advance fees too, so it will cost you even more if you use a cash machine in a different country. There are some, however that don’t charge a fee for either – although the interest rate for cash withdrawals may be higher – and some, even if they do have an annual fee, will also provide you and your family with worldwide travel insurance.
