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Credit Cards
Debts
Leaving Home
First Time Buyers
ISAs
Your money in tough times.
Ever wondered where all your money goes?

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Wednesday, 3 March 2010

Paying your benefits or salary onto prepaid cards
Some prepaid card providers have been advertising the benefits of having your salary or state benefits paid onto them. But the charges can be high - make sure you understand the costs and the alternatives.

Managing your borrowing

Do you know how banks and credit card companies work? Would you like to know what credit scoring and APR really mean? More important, do you understand why you need to know about them?

These articles will help you:

  • work out the cost of borrowing money, including explaining the jargon often used by banks and credit card companies
  • understand how you will be assessed when you apply to borrow money
  • know where to get help if you are having problems paying back your debts

Quick intro

When you are looking to borrow money, understanding interest rates and charges is important as it will help you to choose the best deal. Understanding terms like Annual Percentage Rate (APR) will enable you to assess and compare what's on offer and choose the right deal for you. Young people and students benefit from understanding how banking works.

How will you be assessed?
Before lending you any money, all banks, building societies and credit card companies will want to do some checks on you. This is called credit scoring. Understanding how credit scoring works may help you to improve your credit rating. This may be particularly useful if you are having difficulties getting credit, as young people and students may do.

What is APR?
APR stands for the Annual Percentage Rate of charge. You can use it to compare different credit and loan offers. The APR includes important factors such as:

  • the interest rate you must pay;
  • how you repay the loan;
  • the length of the loan agreement (or term);
  • frequency and timing of instalment payments;
  • and amount of each payment;
  • and certain fees associated with the loan
All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Generally, the lower the APR the better the deal for you, so if you are thinking about borrowing, shop around. Bank and credit card company rates can vary quite widely.

Borrowing wisely
Just because lenders encourage you to borrow money, it doesn't mean that you have to. Only borrow what you think you need and can afford to pay back. However, if you do find that you start to have problems with your debt, getting help sooner rather than later is important. For example, debt-counselling services can help you talk to the people you owe money to.

Many young people and students can struggle to manage their finances. Have a look at Budgeting for some tips on managing your spending.

Find out more

We've put together a short list of resources you may find useful. This is a cross-section to start you off, but you may want to do some more research. Some of these resources are on other websites, so you need to be aware that the FSA is not responsible for content you find on these websites.

Users can rate articles with between one and five stars; this is not an FSA rating. But we have marked the articles 1-3, based on how detailed they are. If you are looking for a very quick introduction, look for level 1; if you are ready to find out more, go for a 3.

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Articles

Moneymadeclear > Dealing with debt
Direct.gov.uk - Credit cards and debt
A very useful article on credit cards and debt plus tips on how to avoid problems.
Thesite.org.uk - Boost your credit rating
If you are having trouble getting credit here are some tips on how to boost your credit rating. Some of the tips are particularly relevant for young people and students.
CCCS.co.uk - Consumer Credit Counselling Service
Worried about debt? The Consumer Credit Counselling Service can provide free confidential advice and support.

Tools and Calculators

Moneymadeclear.fsa.gov.uk - Debt test
MONEYmadeclear logo
Loans, credit cards, mortgage payments, bills - should you be worried about what you owe? Our debt test will help you find out how likely you are to have problems with your borrowing over the next year or so.
Thisismoney.co.uk - Credit card reality check
thisismoney logo
This calculator will show you just how long it's going to take you to clear your credit card balance.