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Why you should think before you pick up the plastic
UK consumers are using credit cards, debit and charge cards more and more; 77 million more purchases were made on cards in the second quarter of the year than in the first three months of 2017. Many view cards as an easy way to pay for items they cannot afford now and pay the money back at a later date, or to tide them over until pay day at the end of the month. Having a good repayment history can actually improve your credit score anyway, so what’s the problem? A downside of using credit, debit and charge cards is that they can make it harder to track your money and keep a hold over your finances.
Spending without realizing
The average credit or debit card user will buy multiple things during the average day and think nothing of it. A quick swipe of the contactless card for a coffee during lunch or a quick drink after work all adds up, but it’s unlikely if you asked a card user to tot up all of their outgoings they’d include purchases such as these. They’ll usually add up their main bills such as rent, bills, and car payments and forget to include their smaller day-to-day payments, which often take multiple days to go through and can trick people into thinking they have more money in their accounts than they actually have.
People who fall into too much debt from excess spending may even fall into bankruptcy and be at risk of losing their homes and assets in order to recuperate what they owe. If this happens to you or someone they know, rest assured that Bell & Co are on hand to provide the right advice for dealing with debt situations for individuals and businesses.
Another reason that cards can make money difficult to track is the issue of surcharges. Missing a payment will leave you with less money than you would’ve done if you’d paid your bill on time and negatively affects your credit rating. You might not even be aware of having surcharges as your card may allow you to pay for items you may not have the cash for anyway, which only makes it even more difficult to track where your money’s gone and figure out what you’ve spent. Horror stories about overdraft charges are rife; many people have bought an item they thought they had the money for, only to discover massive charges on their account the week later that have been building up day-by-day unbeknown to them.
As mentioned, many charges on credit and debit cards often take days to be processed, fooling users into thinking they’ve got more cash on their cards than they have. The only ways to combat this is to either keep a list of outgoings which is stringently updated daily so you know exactly how much you’ve spent, or to check your account as often as possible rather than every couple of days to get the most updated version of your balance before you spend more.