Am In So Much Pain. Is It Because I'm A...
Body & Soul0 min ago
Overdraft Or Credit Card
15 Answers
My son has recently found work but sadly only part time. He is very little better off than on JS but I think he feels he should be able to spend a little more!! He has an agreed overdraft but constantly goes over it and pays heavily for doing this.I am a child of the war years and consequently have never been in debt or had an overdraft so I am wondering if he would be better using a credit card.
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Difficult one. Overdraft - he is paying interest from day one and if he goes over it, or the Bank end up returning items unpaid there will be hefty charges adding to his problems.
Credit card - if he pays it off in full there will not be any interest or charges, however if after making the payment it leaves him short of funds for the next month he ends up putting more on the the card and debt ends up spiralling.
Both forms of borrowing should be used for emergencies only, or to buy something needed, but can be completely cleared over 2 to 3 months.
At the end of the day, he really must live on his wages, hard as that may sound.
Credit card - if he pays it off in full there will not be any interest or charges, however if after making the payment it leaves him short of funds for the next month he ends up putting more on the the card and debt ends up spiralling.
Both forms of borrowing should be used for emergencies only, or to buy something needed, but can be completely cleared over 2 to 3 months.
At the end of the day, he really must live on his wages, hard as that may sound.
I don't think you should be asking whether it is better to get into unnecessary debt by one method or another. It still has to be paid back, probably with interest. But as a child of the war years I'm sure you are aware of this.
Full marks to your son for opting to contribute to society rather than expect it to keep him, but I think you could advise he go the extra mile, as it were, and take a responsible attitude to his finances too. After all if he rewards himself week after week that debt is just going to pile up, and once used to treating himself it'll seem like some kind of punishment to have to forgo it later when the consequences become apparent.
Point out that if he stopped paying heavily for the times he's going over the overdraft limit, because he stayed in credit instead, he'd be more likely to save a bit with which he could treat himself without additional cost.
Full marks to your son for opting to contribute to society rather than expect it to keep him, but I think you could advise he go the extra mile, as it were, and take a responsible attitude to his finances too. After all if he rewards himself week after week that debt is just going to pile up, and once used to treating himself it'll seem like some kind of punishment to have to forgo it later when the consequences become apparent.
Point out that if he stopped paying heavily for the times he's going over the overdraft limit, because he stayed in credit instead, he'd be more likely to save a bit with which he could treat himself without additional cost.
Scary! If he can't keep within his overdraft limits he has no chance of keeping on top of a credit card.
It would just put him in even more debt.
He is in an ever decreasing circle already and he needs to get a grip NOW.
He needs to learn that if he can't have the lifestyle he wants with one part time job, he needs to get another or stop spending. Just giving him more opportunity to get in to debt will not help him one iota.
He may moan about it, but get him to sort out his budget so he can see what he has coming in each week and what he must pay out each week and how much he has left to spend on non-essentials. This is a skill that will help him all his life and everybody should be expert at budgeting.
Now is the time to set a target - get his overdraft paid off before Christmas. Then he will have a fresh start in the new year and will hopefully be more in control of his finances.
You need to shock him in to reality. Make a list of all your household outgoings - mortgage/rent; council tax; water; gas; electricy; phone, broadband, tv; tv licence; house insurance; car insurance. He should be contributing but even if he isn't, he needs to know just how it costs to exist before you start living.
It would just put him in even more debt.
He is in an ever decreasing circle already and he needs to get a grip NOW.
He needs to learn that if he can't have the lifestyle he wants with one part time job, he needs to get another or stop spending. Just giving him more opportunity to get in to debt will not help him one iota.
He may moan about it, but get him to sort out his budget so he can see what he has coming in each week and what he must pay out each week and how much he has left to spend on non-essentials. This is a skill that will help him all his life and everybody should be expert at budgeting.
Now is the time to set a target - get his overdraft paid off before Christmas. Then he will have a fresh start in the new year and will hopefully be more in control of his finances.
You need to shock him in to reality. Make a list of all your household outgoings - mortgage/rent; council tax; water; gas; electricy; phone, broadband, tv; tv licence; house insurance; car insurance. He should be contributing but even if he isn't, he needs to know just how it costs to exist before you start living.
LyndaB, it is too easy to get carried away with a credit card, but if they are used properly - paid off in full each month so no interest to pay - they can be profitable (cashback etc) and a safeguard when buying goods and services over £100. I wouldn't be without mine, but then I don't need to borrow money.
For someone in Bluebird's son position it has be - NO! STAY AWAY.
For someone in Bluebird's son position it has be - NO! STAY AWAY.
Credit cards - the work of the devil? Very much depends on the owner....
I've had one for more years than I care to remember and have NEVER paid any interest on it. I've always used it as a convenience and always paid the full balance off each month. As I say...depends on the owner and their financial acumen.
I've had one for more years than I care to remember and have NEVER paid any interest on it. I've always used it as a convenience and always paid the full balance off each month. As I say...depends on the owner and their financial acumen.
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My credit card has paid me about £120 each year since I got it 6 years ago.
I get 1% cash back and pay my monthly balance off every month by DD.
Credit cards are not evil but they can get people into financial trouble if that person is not careful about their spending. After all, it's not the CC company who are spending the money.
People just need to remember that it is not their money and that they need to pay it back. Sadly many just see it as free money and don't think about repayment until it is too late.
I get 1% cash back and pay my monthly balance off every month by DD.
Credit cards are not evil but they can get people into financial trouble if that person is not careful about their spending. After all, it's not the CC company who are spending the money.
People just need to remember that it is not their money and that they need to pay it back. Sadly many just see it as free money and don't think about repayment until it is too late.
why don't you suggest that he goes to see the bank, and lays his situation on the line to them? - they may well have something to suggest which can help. I was in a tight spot a couple of years back and the bank were very helpful. If he doesn't keep them informed, they won't know his situation - and constant going over the agreed overdraft isn't going to do his future credit rating any good (You might like to point that out to him).
Given his spending record I imagine that he might only be accepted by the credit cards who offer to people with poor records, e.g. Capital One, and their interest rates are often more than 33% - plus you usually only get a low borrowing limit to start off with. I'd opt for going to see the bank.
Given his spending record I imagine that he might only be accepted by the credit cards who offer to people with poor records, e.g. Capital One, and their interest rates are often more than 33% - plus you usually only get a low borrowing limit to start off with. I'd opt for going to see the bank.
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