When Do You Know It’s Time to Get a Credit Card?

Getting a credit card is one of the biggest financial decisions you will make upon reaching adulthood. Although it’s not necessarily a requirement, having a credit card can be beneficial in some situations. However, you should remember that credit cards are not for everyone. Whether you are a first-time user or an existing credit card holder, here are the questions you need to ask yourself before making up your mind about getting a new plastic card.

Are You Ready?

Getting your first card is not all about reaching the legal age of 18. If you are under 21 years old and don’t earn substantial income on your own, you may be required to have a cosigner. Furthermore, being eligible is different from being mature enough. Having a credit card entails a huge responsibility, so even if you’re at the legal age and you have a job, it doesn’t mean that you are ready to have a credit card.


Can You Afford it?

It’s not just enough to be earning a steady source of income, but you need to be able to meet the credit card repayments. Moreover, you have to afford the repayments without struggling on your basic necessities, because a simple out-of-budget expense can make you miss your due dates and leave you with revolving interests. This is why your credit card issuer will not only inquire about your salary during your application, but also about your other financial obligations such as the mortgage or rent.

Do You Already Have the Credit Cards that You Need?

The number of credit card that you should have varies from person to person, so it’s hard to assign a specific number. There are those who can handle multiple cards while some are struggling with one card. If you have existing credit cards now, assess yourself if you are capable of handling one more.


Have You Learned from Past Credit Mistakes?

If you just recently went overboard on your debts, chances are you’ll encounter the same problem again. Getting a new credit card must be given careful thought. Not only will it be tough to qualify for a new one because of your past payment problems, but you sure don’t want to watch history repeating itself. Before you do apply for a new one, make sure you have realized the root of the problem and you have done all efforts to correct it, otherwise getting a new card should be postponed for at least a few months.

However, if you feel confident that you’re ready to try again, you can test drive for about three to six months and evaluate your performance monthly. If you’ve become responsible on your purchases and have paid your balances timely, then it’s probably okay to start again.

What are the credit card terms?

The best cards are those with the lowest interest rates, no annual fees, or best rewards. If you’re looking at a particular card, make sure you compare it with others in the same category. In addition, some rewards cards can be expensive or have certain requirements, so be sure to read the credit card disclosure very carefully.

Loan Options for the Unemployed

There comes a time in your life when you should depart from your current job. Whether unemployment was a choice or not, you’ll probably experience money difficulties without the paycheck. Here are some borrowing options available if you suddenly lost your job.

Home Equity Loans

This type of loan has a revolving balance similar to a credit card. If you have a substantial amount in your home equity, you can borrow against it. Home equity loans are quite flexible because borrowers can stretch their installments for 5 to 25 years.


Borrowing Against Your Life Insurance

If you have a permanent life insurance, your policy will have a cash-value feature that is separate from your death benefits account. You have the option to withdraw or borrow the amount in your cash-value. Make sure though that you inquire about the costs and consequences of doing this.

Credit Card Cash Advances

There’s probably no quicker way to raise cash than to swipe your credit card in an ATM. However, cash advances have very high interest rates, so you better be careful.



Borrowing from pawnshops is another easy way an unemployed person can raise cash. You have to bring a valuable item for it to be appraised, and you will be offered a loan at usually about half the price of the item. Although this may seem a lot less, the benefits with pawnbrokers is that it won’t affect your credit score even if you default.

Loan with Cosigners

Asking the help of someone, such as a good friend or relative with good credit rating can help you secure a loan. It also increases your chances of borrowing a larger amount, however, you need to declare other sources of income if you’re unemployed.

Logbook loans

Similar to car title loans in the US, logbook loans are a type of secured loans wherein you have to submit your car’s V5 document or “logbook” to a lender as collateral against the loan. Logbook loans require no credit checks, so anyone, even those with bad credit can successfully apply. Although the interest rates are high, they are not as high as payday loans and the payment terms are quite flexible.

Payday Loans

Payday loans are short-term loans which you are bound to settle on the next payday. However, if you don’t have a paycheck to show, many payday loan companies will let you borrow as long as you can show you some proof of income going into your account such as proof of unemployment, disability, or alimony. They are even more expensive than logbook loans and requires to be paid immediately, so consider this only when the need for money is urgent.

Borrow Directly from Family or Friends

There’s no better way to borrow than from a friend or family member, who can even help you out without charging you interests. However, this also can be dangerous since a relationship is at risk. The last thing you want in a period of unemployment is destroyed relationships.

How to Use and Not to Use Your Credit Cards?

Contrary to what many people would like to believe, credit cards are fun to use. They are convenient, and have perks to enjoy as you continue to use them. As long as you manage and control your usage accordingly, a credit card is a useful privilege to have. These are the things you should and not do with your credit cards.

Avoid carrying a balance

This is the number one rule to remember in order to keep yourself debt-free. As long as you pay for your purchases in full and on time every month, you’ll never have to worry about interests and other charges. You can register online to keep track of your purchases and to be updated when your statement is due. You can also set up automated payments to make sure you never miss out on your due dates.

Keep your old cards

If debt starts building up and you feel the need to close some cards, you should remember never to close your oldest cards. Since these cards have the longest credit history, cancelling them can shorten your average age of credit and ruin your credit score.

Use the right kind of cards

There are many different types of cards made for specific purposes. If you have multiple of them, make sure you know which one to use each time. For example, if you’re planning to go out of the country, choose the one that offers the cheapest foreign transaction fees or one which has none at all.


Take advantage of sign-up bonuses

Many banks are more than willing to offer huge sign-up bonuses to attract new customers with good credit, and you don’t have to do anything at all, especially if you have sparkling credit. All you need is to wait patiently for the best perks and apply only for those with exceptional sign-up offers.

Do not use it for everyday purchases

It’s fine to use credit when you have the cash as long as you buy only within the amount of cash you have and you pay for the transaction immediately. However, the problem comes when it’s time to part ways with the money inside your wallet and you become unwilling to let go. Furthermore, you’ll know the problem is worse when you used credit for basic purchases such as the groceries because you didn’t have the cash.


Do not use it when you don’t have the cash

It’s simple logic. If you don’t have the cash to pay for your purchase, you can’t afford it. Treating your credit card as an extension of your wallet is one of the first signs that you are headed for credit trouble.

Do not make cash advances using your credit card

This is probably one of the biggest mistakes you can ever do with your credit card. This is one of the fastest ways to raise cash, but also the one with the highest interest rates. If you’re not careful, cash advances can put you in debt.

How to Cut Debt in Your Daily Expenses?

One of the basic rules when you’re trimming down extra debt is to keep your expenses below your monthly income. Because majority of one’s expenses goes to basic necessities such as food and groceries, this is sometimes easier said than done. Still, here are a few tips that can help you cut costs on your daily expenses and reduce debt.


Cook your own food

While it’s not wrong to treat yourself out every once in a while, making it a habit can be dangerous not only to your health but to your budget as well. Cooking your own meals on the other hand is healthier, cheaper, and does offer more variety.

Plan your meals ahead

Planning your meals ahead not only helps you save money, but also aids you in preparing a healthy meal that your family would surely love. In addition, if you plan your meals before hitting the stores, you are sure to buy only what you need and avoid overspending.

Limit grocery trips

This is also linked to meal planning. If you plan your meals ahead and have a list of items ready, you can buy everything that you need in one visit. On the other hand, if you have no plans made during your grocery visit, you might forget some things and you would need to come back, which increases your risk of buying other unplanned items.


Bring cash

We all know how easy it is to grab items when you’re using a plastic card. Shopping with a credit card will tempt you to drop your limits and you can go overboard. If you brought cash, on the other hand, you’ll be extra careful not to exceed your allocated food budget.

Buy in bulk

Bulk buying when on sale can save you a lot of money for items which you already eat and use. This can also help limit your grocery visits as your stock is kept full. However, make sure you only buy those that you actually need and be careful about perishable goods.

Pack your meals at work

There are three benefits with packing your meals at work. First, you are sure never to go hungry as you have your food ready with you. Second, you don’t have to worry about how the food is prepared, and you can bring whatever suits your taste. Third, this is far cheaper than ordering your meals or eating out. You may also want to skip your morning coffee shop rituals, at least until you’re back at your feet and your debt problem is settled.

Throw parties at home

If weekend parties are a commitment that you cannot give up entirely, why not throw a party at your place instead? No one said that you have to isolate yourself from your friends when you’re cost-cutting. Instead of watching movies at theaters or going to the bar, preparing your own popcorn and drinks would give you a better price for enjoyment.

Is it Worth Getting a Logbook Loan?

The immensely popular logbook loan has been a constant source of debates regarding its value. While many criticized its sky-high rates, there are those who believed that it was worth the interests. As to whether or not logbook loan is a good borrowing option depends on its importance to the borrower.

Also known as the V5 loan, logbook loan involves using the V5 document or “logbook” of the car as collateral against the loan. What made logbook loans popular- and at the same time controversial- is that it doesn\’t require a credit check, which means it is mostly geared for those who have bad credit and won’t be traditionally approved a loan someplace else. Those who are self-employed, who have bad or insufficient credit history, and even those who have filed bankruptcy in the past can secure a logbook loan without difficulty

Happy blonde babe is given keys to car
Happy blonde babe is given keys to car

One good thing about a logbook loan is that approvals are instant and you can take your money home within the same day of application. Because there are no credit checks required, the process is quick and simple. In addition, logbook loans have minimal requirements which are easy to accomplish. It is something that even those with good credit can take benefit from, especially if you’re such in a hurry to borrow that you need to bypass all the lengthy loan processes.


Another strong point with logbook loans is that you can keep your vehicle even while under the loan. This is particularly important if you are not willing to surrender your car and access other forms of transportation for the time being. Furthermore, this can be useful if you want to borrow money to pay for the repairs or maintenance of the car itself.

However, with logbook loan comes the risk of losing your vehicle. A type of secured loan, this gives the lender the right to repossess your vehicle if you failed to make the repayments, and this can be done even without a court order. There’s also a limit to the amount you can borrow, which is usually only up to 50% of your vehicle’s value. So if you lose your vehicle for far less than what it’s worth, you’ll definitely end up regretting it.

Logbook loans are also known for its notorious interest rates. Some companies have rates as high as over 400% APR. Although the payment schemes are flexible and you can shorten or prolong the term based on your payment capacity, this can still be very expensive in the long run. However, if you really, really need a small amount of money which you can pay in a short span of time, logbook loan might be a good option so long as you can pay for it quickly.

In conclusion, there’s no one way of telling whether logbook loan is good value for your money or not. It is entirely up to the individual’s situation and the effects of the loan to judge whether it was worth the risk.

The Pros and Cons of Borrowing from Friends and Family

If you’re having trouble getting a loan through traditional means, i.e. if you have bad credit, one of the options you have is to run to your family and friends for help. Especially if you need the money bad and quick, they can hardly say no if only they have the cash that you need. However, there are two sides to borrowing from your loved ones.


The Loan Is Interest-Free

In most cases, people close to you will be willing to lend you the money without charging any interest for it. If your finances are on the rocks, this will help you attend to immediate needs without sinking deeper in debt.

The Repayment Terms are Quite Flexible

Your loved ones will generally be more lenient and understanding than banks and other lenders. If you don’t have the money yet, they would happily give you an extension and allow you to pay them when you’re already back on your feet. This way you can prioritise other more urgent and expensive obligations that are continuously pulling you down.


They Won’t Normally Credit Check You

If you’ve messed with the credit you had before, chances are you will be refused a loan from banks right off the bat. If you looked for other options, you’ll definitely have to pay a very high price. If you borrow from people you know, they will most definitely help you out – as long as they have the capacity to do so – without any outrageous interests or questions asked.

You Can Get More than Just the Financial Support

Lastly, when you borrow from your loved ones, they will generally be very generous about it, not just in terms of financial support, but moral support as well. Aside from lending you the money, they will try their best to help you succeed in whatever it is you’re planning to do. You will feel that your success is their success, and your failure is their failure, so they will do everything in their power to assist you in all ways possible.



It is Often Uncomfortable

When you borrow money from people close to you, you often feel overly indebted to them, like you feel burdened to repay them in all ways possible aside from making the financial payment itself. It may also raise self-esteem issues, such as the feeling of not being self-sufficient and depending on others for financial support.

When you deal with actual businesses, on the other hand, the only worry is about meeting the payments. Harbouring these kinds of feelings may cause unnecessary mental and emotional stress.

You Are Obliged to Keep Them Informed and Involved

When you borrow from friends or relatives, you generally would want them to feel that the money went to a good cause. There’s also a feeling of having them a part of everything that’s going on with the money. If you used the loan for a business venture, perhaps, there’s this added pressure to inform them of your progress. In some cases, you may also feel obliged to let them be a part of it, so you may sometimes feel powerless with regards to decision-making.

You Run the Risk of Ruining What Was Once a Good Relationship

While you certainly wouldn’t want to break that trust that was given to you, things happen. If you find yourself unable to pay back that loan, for instance, if the business fell, you will forever be guilty about the money you borrowed, which can affect your relationship. Your friend or relative will also feel reluctant to help you financially in the future.

How to Stay Away from Loan Sharks?

Loan sharks are unscrupulous money lenders whose goal is to take advantage of people having financial difficulties in order to make money for themselves. They usually target people in low income brackets and those who are desperate for money, particularly those with inferior credit rating.

Typically, loan sharks are easily approachable, in fact, they may even approach you. But it’s never a good idea to borrow from a loan shark, because the repayments are insanely high, and they sometimes even resort to violent activities to collect repayments from you.

The following signs will help you spot a loan shark quickly:

Tell Tale Signs that the Lender is a Loan Shark

  • No license or other necessary paperwork can be presented
  • There’s no credit agreement and your payments are not recorded
  • Your debts are increased without your permission
  • You are not allowed to settle your debts, or you are forced to borrow from them again
  • You are not given information about your debt’s interest date and the outstanding amount that you owe
  • They will take your possessions as security
  • They will resort to verbal or even physical violence if you cannot make your repayments


How to Protect Yourself from Loan Sharks
Avoid Borrowing on a Rush

Loan sharks target those whose need for money is desperate, so don’t make yourself vulnerable. While financial emergencies may occur, you can still find other means to access fast cash during desperate times. Start by building your emergency fund. While you sure would never hope for the need to use it someday, it always pays to have one handy in an instant access account. If you don’t have the cash to spare, make sure you at least have a credit card to take over. While we certainly don’t recommend making cash advances through your plastics, they are way better than dealing with a loan shark.

Improve Your Credit Rating

Loan sharks will always entice you to borrow from them because they don’t perform any credit checks, something that borrowers with poor credit dread. However, you should keep in mind the high price to pay for borrowing from a loan shark, and you definitely won’t be pleased. In fact, the market has significantly expanded to accommodate the needs of those with imperfect credit. Alternative forms of borrowing such as payday and logbook loans have risen to cater to borrowers with special needs. Again, while not the best form of borrowing, they are still a better choice than a loan shark.

Check with the FCA

Loan sharks are not FCA (Financial Conduct Authority) accredited and they work illegally, thus leaving you with very little protection after coming into agreements with them. FCA keeps a record of all the licensed lenders in the country, as well as those whose licenses were revoked or suspended for whatever reason. If a lender is not listed with the FCA, never borrow or make any deals with them.

Is It Worth Paying off Your Mortgage Early?

With this unstable economy, others propose that paying off all your debts is always wise, while some others may argue that your mortgage is a type of debt that could be delayed since the interests are so low and you’ll be better off saving the money instead. Here, we are going to help you weigh your options out.

But first, ask yourself if:

You have other higher-interest debts. Your credit cards and payday loans, for instance, are types of debts that are more expensive to pay off over time, so it would be wise to settle them once and for all. Other types of unsecured debts are typically more expensive than mortgage as well. Make sure to pay these off first before working out on your mortgage reduction.

You are saving money on a pension scheme. If you’re saving up for your retirement, a pension is a good idea because it gives you access to a tax-deferred pot in the future. In cases where the scheme was set up in the workplace, you could also benefit from your employer’s contribution (which is free money by the way). Now if you don’t have a pension pot yet, it’s time to think about getting one before you put your spare cash into mortgage repayments. The earlier you start with a pension scheme, the sooner you can build your retirement money, and watch what the magic of compounding can do to that cash!

Your family can financially manage if you die. If you have a family or other dependents that would suffer financially at the event of your loss, it would be wise to get a life insurance policy to secure their future.


You can get higher returns in savings than the interest rates of your mortgage. Now if you’ve got your family’s future and your own sorted out, it’s time to decide whether putting your money into a savings account would pay you a higher interest rate than what you’re being charged for your mortgage. If that’s the case, it mostly makes sense to save that money and build your wealth.


Other Considerations

Have Some Emergency Money on Hand

Before you think about paying off your mortgage, make sure you have some money in reserve that could keep you sustained for at least three months if something were to happen. Have this money saved in an instant access account.

Check if You Will Be Charged for Mortgage Overpayments

While there are offset or flexible mortgages which allow you to make overpayments without being charged, it may be worth reducing your mortgage balance. However, in some policies, there may be charges involved with paying your mortgage beyond the agreed monthly limit, so this may cost you more that what you would have saved.

To Save or to Pay off Your Loans – Which Should Be Done First?

The general rule of thumb that is proposed by most financial experts is to plan on paying off your debts before you begin saving, because you can rarely find your savings earning higher as compared to the interests that your debts accumulate. Because of this, it just makes sense to free yourself from your present obligations so you can build your savings even faster. Now if you are tackling several debts, aim to settle the most expensive ones first, such as the following:

  • Credit card and store card debts
  • Catalogue shopping
  • Unauthorised drafts
  • Payday loans
  • Home credit or doorstep loans

When Should Saving Begin?

According to experts, you can begin saving once you have accomplished the following:

  • You are successful at paying off your credit card debts monthly
  • You are meeting your mortgage repayments on time
  • The remaining types of debts that you own don’t cost you more in interest than what you would have otherwise earned if you saved that money instead


Building the Habit

It is really important to save regularly, and ideally, you should begin saving for different purposes. For example your retirement savings is different from your holiday savings, car or mortgage savings, and other miscellaneous expenses. It would be wise to set a savings goal for each purpose and determine how much your need to save, and how long it will take you to reach your goals. It would also be easier to set up Direct Debit or a standing order to automatically send a portion of your monthly income to your savings pot. That way, you won’t accidentally forget to save or use the money elsewhere.

Setting Up Your Emergency Fund

You should also prioritise building your emergency fund, to continuously support your expenses in case things go wrong. The minimum amount you should save is equivalent to your three months of living expenses, but aim to hit about six to nine months worth. In some instances though, you may use the money in the pot to settle outstanding debts, in order to clear them more quickly, provided that you have access to other forms of emergency funding such as a credit card. If that’s the case, make sure not to use your cards in other unimportant expenses to avoid running up more debt.

The Perks and Perils of Using a Credit Card

A credit card is one of those things that make life easier, but they can also make life worse, if unused properly. The following are the perks and perils of having, and using your credit card.

Buy now, pay later.

Through a credit card, you can buy something even if you forgot your cash at home or if you have a few days left to receive your pay cheque. This can be very helpful if you have urgent, out-of-pocket expenses that you can surely reimburse in no time.

However, keep in mind that being able to buy something right now through credit is not the same as being able to afford it. The golden rule to not acquire bad debt is to live within your means. Your credit card is not the extension of your wallet, so make sure that you charge only what you can truly afford.

Helps build your credit.

One of the keys to a healthy credit rating is to have the right mix of different types of credit in your history, including both instalment and revolving types of debt. A credit card is the most common type of revolving credit and possibly the easiest to apply. Be careful though, because being late on your credit card bills can do more harm than good on your overall credit standing.

Business man debt consumer works to build up credit score rating report
Business man debt consumer works to build up credit score rating report

Cash back and other rewards.

An exciting perk with using your credit cards is the opportunity to earn rewards from doing so. Most credit card companies entice customers through their rewards program in the form of freebies, cash backs, mileage, etc. If you’re going to buy something with cash, you can easily just use your card and earn you those points.

Visa Plans Largest IPO In U.S. History

It is not any safer than cash.

You may think that by bringing your card instead of cash makes you safer from criminals, but it’s a far cry from reality. In fact, it may even be more dangerous. Why? Because if you lose your cash, you only lose your cash, but if you lose your credit card, you run the risk of someone using this without your permission or worse, steal your identity. While you can report the loss to your issuer, there are cases when cards are stolen unnoticed, which can get you into huge trouble.

High interests.

A credit card can have very high interest rates, especially if you are a new credit cardholder or you have damaged your credit rating in the past. The effects of these interest rates are more pronounced when you make a credit card cash advance, and the worst thing about it is that you are not even given a grace period.

You run the risk of overspending.

This probably is the biggest disadvantage with using a credit card. With all the things that you can purchase through credit (which is basically everything), and with all the special deals and promos, it gets even easier to spend a little here and there, and the next thing you know you already went past your budget. You may not feel its immediate effect, but when your debts exceed your income consistently, you will suffer.