3 Financial Sins to Avoid in 2013
Credit cards (Photo credit: Wikipedia)
2013 is likely to be another tough year for the economy which means as individuals we need to try even harder to stay on top of our finances. I’ve come up with 3 deadly financial sins to avoid at all costs throughout 2013:
1. Using Short Term Finance to Pay off Christmas
Christmas has been a time that many of us have forgotten all our financial worries and spent copious amounts of money on gifts, food and drink. While this seemed a good idea at the time, we are now left with what can only be described as a ‘financial hangover’.
The worst thing you can do at this time is to panic and take out short term finance such as payday loans. Payday loans are designed to help you get through to your following payday and help to pay day-to-day expenses such as food bills and small direct debits. Using them for any other purpose than this could land you in further financial trouble.
2. Missing Important Payments
Although 2013 may be another torrid year for the economy and indeed our back pockets, the worst thing you can do is miss payments on important credit commitments such as utilities, loans and credit cards. Not only will this drop you into debt but it will also affect your credit score.
When you miss a payment on a credit commitment the provider will report this to a credit reference agency that holds on the information about your credit history. Having a missed payment on your file will not only reduce your credit score but it will also reduce your chances of being approved for low rate finance in the future.
3. Only paying the minimum on your credit card balance
While paying the minimum on your credit card is better than missing a payment altogether it is far from the best way to manage your debt. Effectively, paying the minimum payment will only ever reduce your credit card debt by a few pounds after the interest has accrued.
Naturally, the best way to get rid of credit card debt is to pay off the balance in full at the end of each month, however if your credit cards have been maxed out and have balances that are running into the thousands then this is simply not realistic.
So a better way of consolidating credit card debt is to transfer it over to a 0% balance transfer card. These work on the basis that you pay no interest on the balance for the allotted time frame (up to 24 months), meaning you need pay it off within this time in order to avoid interest.
Author Bio: This article has been written by Jason Scott on behalf of UK Credit Guarantor Loans. For more up to date information and high quality more saving tips visit the Guarantor Loans Blog
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