Saturday, March 28, 2009

Tips For Managing Your Credit Cards Wisely

Almost everybody these days has a credit card. Most in fact carry two or more in their wallets. Credit cards are certainly are an important financial tool. They make a convenient way to pay for purchases without cash and a source of emergency funds. One can also use them to build up their credit scores which is important for those wanting to make important large investments such as a first home. Unfortunately many people have found out the hard way that credit cards can be a double edged sword. While they indeed help many establish a good credit rating for others who have not managed their cards wisely they find themselves in financial trouble.

So how can you manage credit cards wisely to boost your credit rating and keep out of trouble and possible bankruptcy? The following tips will help anyone to use their cards to their advantage.

1. If you have the money pay off your entire card balance every month. First of all doing that will keep you from having to pay interest on your balance. Secondly since that is a sign of good financial management the card companies will likely increase the amount of your credit line. Finally it will help boost your all important credit score.

2. If you can't pay off the entire balance then pay more than the minimum payment. If you make just minimum payments every month it will take you decades to pay it off. Paying more than the minimum amount every month will also save you a lot of interest over the long run.

3. Use balance transfer cards. If you have good credit you can use balance transfer credit cards with zero or low interest and save a lot on your interest payments every month. The savings in interest you get by using balance transfers can be plowed back into paying off your debt. If you have poor credit and do not qualify for a balance transfer card you should still shop around for a card with a lower interest rate to use instead of your higher interest cards.

4. Anyone with poor self control with their spending should only use their credit card for emergency purchases such as car repairs. Compulsive shoppers will only get themselves in trouble by using cards. Those individuals should at least limit themselves to one card so they are kept in check somewhat by the limits that the issuing company puts on their cards.

In conclusion it is best to use credit cards as a tool to help increasing your credit score and for paying for unexpected expenses. Remembering all the tips above will help you benefit financially and avoid getting into trouble.

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Friday, March 27, 2009

Variable Rate Mortgages - Should I Have One Now?

Choosing which is the best mortgage for you and your circumstances can sometimes be difficult with so many different options on the market. One of these options is a variable rate mortgage which with the current credit crunch and low bank base rate could be very attractive.

A variable rate mortgage is a type of mortgage that is linked to the bank of England base rate. This variable rate is normally around 1.5% - 3.5% more than the Bank of England's base rate however a variable rate mortgage does not necessarily go up and down in sync with the Bank of England's base rate.

Will a variable rate mortgage work for me?
If you are thinking about looking into a variable rate mortgage here are a few things that you should know -
If the Bank of England's base rate falls so could your mortgage repayments, this is good news at it means that you will be paying less each month for your mortgage. However you must be warned that should the Bank of England's base rate go up, so will your repayments. Borrowers should also take note that lenders do not always alter their base rate as significantly as the Bank of England does, so any reduction in repayments may not be as dramatic as you may expect.

You are able to change mortgage lender at any time and avoid paying a penalty for doing so. For many people this is a real plus point as many mortgage lenders will make you pay a fee to switch mortgages.

If you are looking to plan a budget for your household expenses it could prove to be difficult with a variable rate mortgage as you can never predict how much your monthly repayments will be.

What's the future for the variable rate?
With the Bank base rate at an all time low a variable rate mortgages is clearly an attractive proposition.

With the global recession it is clear that interest rates will have to remain low for some time to come. This makes a variable rate very beneficial in the short term, and here is the problem for all the people looking for a new mortgage. Whilst it is very attractive to have a variable rate at some point in the next 12 months there will be a recovery in the economy.

When the recovery starts one thing is clear, interest rates will rise and even before they do the rumours of a rate rise will push fixed rate prices up. Over night the 3.99% five year fixed your bank could offer you today could be 2% higher.

So the simple answer is, if you can afford to take the gamble of a variable rate mortgage take it, for all of us you need to budget each month a long term fixed rate now may be more expensive then a variable rate, what price do you put on peace of mind and stability?

Jason Haines is a Mortgage and Protection Adviosr with Go Direct. For details on the latest mortgage rate options or the , why not visit Go Direct today.

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