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Archive for December, 2010

Can I get debt advice even if I’m not struggling?

December 22nd, 2010
Not all debt advice is for people with serious problems. Sometimes, some of us simply need advice on the best way to manage our debts – even if we’re dealing with the monthly payments well enough, there might be a better, cheaper, faster way of repaying the money.

The thing to remember about debt is that any debt can be a risk if it’s not watched carefully. Even if you think you’re managing now, a sudden change in your circumstances could make things a lot more difficult.

That can’t always be avoided, but it makes sense to get some debt advice and make sure you’re dealing with your debts in the best possible way to minimise the risk of problems in the future.

Debt advice for less serious debts

These days, the majority of us carry more than one debt, whether it’s mortgages, credit cards, overdrafts or personal loans. And it’s also true that most of us will manage those debts just fine.

However, to make the most of your finances you should try to make sure you’re repaying those debts in a safe, cost-effective way.

For example, it’s surprising how many people with multiple debts don’t keep to a budget. Even if your financial situation is very comfortable, it’s always worth ensuring you put enough aside for your essential costs before you spend money on non-essentials – just in case something unexpected crops up.

On another note, you could be paying more than necessary for your debts. For example, credit cards have one of the highest average interest rates of any type of credit – yet if you repay your balance on time every time, you’ll never pay any interest at all. It’s well worth getting some debt advice and finding out which kind of credit is most appropriate for you.

Similarly, if you have a number of high-interest debts, you might be able to save money by consolidating them with a debt consolidation loan with a lower rate.

Different approaches will work better or worse for different people, so you should speak to a debt adviser if you have any doubts about how you’re dealing with your debts.

For more information and advice on staying out of debt, contact www.dacscotland.co.uk

UK

Are Charge Cards Nothing But Hype?

December 6th, 2010

AMEX Black CardThe following post was written by Mike from CreditCardForum.com, which is a social media site for the discussion of credit card reviews. When it comes to credit cards, he has two primary goals: (1) to give people the knowledge they need to use them responsibly, and (2) to expose the truth about credit cards since the banks aren’t always forthcoming in explaining things.

During the recession, banks didn’t want to give credit to anyone. But now that the economy has [slightly] improved, they’re back with TV commercials and the whole nine yards, to try and convince you to apply for a new card that you probably don’t even need. One of the things they’re really pushing now is the charge card… but are they actually worth the cost?

Difference between charge card and credit card?
Some people use these terms interchangeably but they are actually two different things. A charge card requires you to pay your balance in full each month. Meanwhile a credit card allows you to carry a balance as long as you make the minimum payment.

Of course the advantage of a charge card is that it prevents you from getting in over your head, since you won’t have the option to rack up debt. But unfortunately, charge cards have annual fees since they can’t make money off the interest.

So when are they worth the fee and when should you avoid them? Here are 3 things to consider…

(1) They’re usually geared towards frequent travelers
I’m sure you’ve seen the commercials lately for the American Express Premier Rewards Gold card which – according to AmEx – is “simply brilliant.” Now I’m not denying that claim, but I don’t think this card would make sense for most people.

For starters, it’s a $175 annual fee and largely what you’re paying for with that is travel benefits. If you don’t travel frequently, it’s probably not worth it. Not even the “3-2-1” rewards program will make up for the annual fee, unless you spend a lot of money!

(2) Business charge cards are geared towards big spenders
I noticed a commercial for the AmEx Plum Card (which is for businesses only) on CNBC the other day. It’s a card that’s actually been out since 2007 but they stopped marketing it during the recession. The commercial plays up the benefits big time, but the truth of the matter is that it will only make sense for businesses that charge a lot (like $5,000 to $10,000+ per month) because the AmEx Plum Card’s annual fee is $185.  Business charge cards from American Express Open can be a good match for businesses that travel extensively.  For a small business that’s a lot, considering that business debit cards can usually be attained for free.

(3) For many the best card is ironically the cheapest one
You would think the best highly advertised Premier Reward Gold card would be the best value, but ironically, AmEx’s $25 annual fee Zync card appears to make the most sense for the average person in my opinion. The Zync card has the Membership Rewards program and other AmEx benefits like purchase protection and extended warranty, but its annual fee is $70 less than the Green Card, $100 less than Gold, and $150 less than Premier Rewards Gold.

Conclusion?
I’m a huge fan of the charge card concept, because it gives you the benefits of a credit card, but without the temptation to go into debt. However I think it’s important to cut through the hype and review the benefits of all of the charge cards before you choose one. There’s simply no point in paying hundreds of dollars for benefits you will hardly ever use.

Guest Post

Car Insurance and the Battle of the Sexes

December 1st, 2010

A guest post for my United Kingdom readers…

The age old argument of who are the better drivers: men or women, will never go away, but if car insurance costs and government statistics are anything to go by; then there’s only one winner.

Statistically; male drivers are responsible for the vast majority of driving offence convictions in the United Kingdom – in fact they are accountable for 92% of them, while 98% of all dangerous driving convictions can also be attributed to male drivers, so why should women bare the brunt of higher insurance costs as a result?

On average, men pay 71% more than women for their insurance policies; but there are reasons behind this, such as:

• According to the department of transport, men travel on average 4000 miles per year more than women
• 20% of the UK’s young male drivers are uninsured
• Men are more likely to be involved in expensive write offs rather than minor bumps and scrapes
• Male drivers are more likely to make fraudulent claims such as “crash for cash” scams
• Men under 21 are ten times more likely to be involved in a crash than those over 35
• Men under 21 are five times more likely to have an accident than women of the same age group
• Drivers under 25 are responsible for 20% of deaths from car accidents.

In recent years, there has been a rise in the number of specialist car insurance groups who offer cover specifically to women, however just because they offer cover to females this doesn’t mean they are always the best and cheapest options so follow these tips to save on your womens car insurance.

Find the right car for you

Generally, women don’t drive fast, petrol guzzling cars; they tend to opt for the sensible, fuel economical, small cars instead. Pick a car with a low insurance group, sites such as Parkers provide all kinds of information such as insurance groups, fuel consumption and tax bands so you can get a rough idea of what you’ll be looking to pay each year.

Use the competition to your advantage – shop around

As mentioned earlier; female specific insurance companies don’t always offer the best deals, so use comparison sites such as moneysupermarket to find the cheapest & most suitable option.

Comprehensive v TPFT cover

Third party, fire and theft used to be a lot cheaper than comprehensive cover, however now the tables have turned and you can usually get fully comprehensive insurance for a similar price or sometimes even cheaper than TPFT insurance. There are also shorter term policies available (usually 9 or 10 months) offering comprehensive cover in which you can build up your no claims bonus quicker.

Take a look at what extras are included in your policy; sometimes options such as car hire and breakdown cover are thrown in, so removing these can reduce the cost of your cover. Double check everything before you sign up to any insurance policy.

Parking & Security

If you park your car in the street at night, don’t tell your insurance company that you leave it in a locked garage, as should you have to make a claim your policy may be invalid and you may not be able to receive a payout. Always be honest about where you leave your car in the daytime and at night to ensure you are not liable for the full cost of repairs to a car that is stolen or damaged.

Don’t tempt thieves by leaving any valuables on display such as coats, phones, sat navs or laptops – and remember don’t leave them under your seat as this is the first place most thieves will look. If you have used a sat nav, remember to clear any smear marks off your windscreen – an opportunist may break in to your car just to check the glove box if there are marks on your window that indicate you use a sat nav.

Agree on mileage

Women make shorter journeys than men, so are deemed less of a risk to insurers as a result. Work out how many miles you do each year and let your insurer know; but try and keep the figure down. If you go do more miles than expected; call your insurance company and tell them to change your policy so it does not become invalid.

Drive safely!

If you commit a motoring offence that gives you points on your licence, you won’t just pay the fixed penalty – you’ll see your insurance costs rise year on year for the duration that the points are on your licence, so think twice before answering your mobile, speeding or skipping red lights that have just changed; it really isn’t worth the risk.

Insurance companies can charge more for those with points on their licence as they have shown that they are not sensible drivers; so stick to what you were taught when you were a learner driver and watch the cost of your insurance drop.

Guest Post, UK