Unexpected Bills, what are you financial options?
Written by: MariaLex
When you are on a tight budget, and an unexpected bill arrives, it might be challenging to decide what action to take next. Unexpected expenses such as a medical bill, a house repair, relocation, or a car repair can put a substantial financial burden on you and your family. There are two things you should do when faced with these unexpected bills. First, figure out how to deal with the unexpected expense. Second, take steps to prepare yourself in case a similar situation happens in the future. Here is what to do when you are hit with an unexpected bill.
- Do Not Ignore the Problem
If you are broke and a surprise bill lands on your door, you might be tempted to ignore it and hope that everything will be fine. This can never be the answer. For instance, the lender or company you owe will keep on sending more reminders, and if they don’t get a response, they will continue demanding for the money until you sort them out. They might also add extra charges such as interest, which will lead you owing more than your original bill, meaning you will worsen the situation. As a last option, they may even end up taking you to court or instruct a debt collection agency to demand or collect the debt. That is why it is advisable to tackle the situation head-on.
Assess Your Savings
If you don’t have emergency savings to cover the expense, try checking your other savings. If you have this kind of savings, this may be the best time to use those funds. However, if your funds are tied up in an investment or retirement account, there might be extra charges for withdrawing those funds.
Rethink Your Budget
Do you have funds in your account that are dedicated to something else? If yes, the unexpected bill should become your first priority since it could have serious repercussions. For instance, your electricity or gas bill can be switched off as a result of not paying. This should be paid before something like a magazine subscription or gym membership. Additionally, if you have got a think money Current Account, an Account Manager can help you go through your account and look to free up some funds that are being held for bills. Also, spend some time checking how you spend your money and see if there are things you are overspending on. Maybe you might switch and save on your broadband deals, TV packages, gas, and electricity.
Get A Personal Loan
The unexpected bill might not fall under a specific category, but you still need quick cash. Some people may opt to borrow an interest-free loan from family or friends, but not everybody has kin with money to spare. You can also borrow money from your bank or an emergency lending app, but keep in mind that it will cost you more in the long run if you do not pay off the balance in full before the deadline. Direct lenders such as luckyloans.co.uk provide loan options for individuals that have been hit with an unexpected bill.
If you have failed to get money in all the above solutions, try speaking to your lender or the company sent you the bill, and explain to them that you are struggling financially. Try contacting them as soon as possible. They might be a lot more kind than you would think and are legitimately obliged to treat you fairly. Offer to provide them with a breakdown of your income and expenses, plus a copy of your budget. They may give you a grace period with a deadline on when to complete your payment, instead of demanding full payment, making it more affordable for you.
Try to save
Although this won’t solve the current problem, it could prepare you if the situation ever happens again in the future. When your budget is tight, the idea of saving money may be the last thing on your mind, but if you can manage to save even a couple of pounds a week, it can help in case of an emergency bill. It is advisable to build up some savings that you can rely on when an unexpected bill arrives or in case of an emergency in the future. It might be as simple as having a savings pot on your bedroom where you can drop extra coins whenever you can.
By setting aside a few pounds every month, you can turn a surprise emergency expense into just another bill that you have already dealt with, not a new monster that comes to interrupt your life.
Getting a new bike, opening a new bank account and getting a credit card can be exciting moments in an individual’s life. But one must also understand that everything comes at a cost which relatively decides a considerable part of your life. In this scenario, let us discuss the things you need to be aware of before you get your very own credit card.
The name credit means a whole different thing, and you must understand that. Unlike the debit card, your credit card should not be used extensively, and if you do so, you will face significant repercussions. Utilising such cards technically means that you are creating short term loan which you will end up paying. Hence keep a count on your terms of usage.
The Necessity and Limit on Borrowing
Regardless of the modes and methods of payments, credit cards remain a viable option during times of emergencies. Unlike other methods, credit cards can dispense cash within a matter of no time, providing you with the comfort of time and effort. On the other hand, before making any transactions, you must also consider the limit of borrowings which you can make. Although situations are unpredictable and at times unavoidable, reality treats every individual differently.
The Importance of the Grace Period
Credit card companies or banks provide you with sufficient time to repay the amount. It is essential that you pay accordingly as these payments predict your credit score. A credit score is that factor which decides your credit availability and performance. So, it is essential that you maintain an excellent rating in order to avail better options for credit and receive rewards in the future.
The Interest Rates
After taking a considerable amount as credit, the next step is to repay them back through instalments. These instalments also include a suitable amount as interests which will be clearly mentioned in the terms and conditions. If you are an individual who ignores the terms and conditions on websites, then do not follow the same procedure when it comes to credit cards. You must keep their interest rates in mind and consider it a part of your financial plan.
After all these points, it is quite understandable that there are significant chances and scope for debt to arise. Debt is an essential factor which can affect your financial stability and also ruin you forever if the amount is too high. So while using your credit card, you must keep a tab on all the transactions as they decide your credit score and the amount of debt. Hence credit card is something which you need to utilise accordingly.
High rates of return and fees are terms which are directly related to credit cards. If not used in the appropriate manner, they can lead to a bunch of problems like leaving you in total and complete debt. But one cannot predict life as they tend to be uncertain at times. Hence for these emergencies, you need money, and you need them instantly. So here are things you need to ensure before taking a cash advance from your credit card.
Availability and Information
Modern methods of banking do not force you to visit one regularly to satisfy a list of transactions. The availability of ATMs, online banking etc. has made life easier for individuals. In this scenario, the easy way to attain a cash advance is by approaching your nearest ATM. Information pertaining to your ATM pin and various other things are necessary. You must also check the availability of such options, as not all banks tend to provide you with this feature. Hence keep an eye on such things before you can move forward with your transaction.
Terms and Conditions
The most important aspect of taking a cash advance is the terms and conditions mentioned by the credit company or the bank. These conditions highlight the mode and return of payment options through which you need to pay them back. The part which you must focus on is the one talking about the rate of interest. Rates of interest can go a long way in having a grip over your finances and driving you towards debt. These measures also talk about the maximum extent of borrowing. Hence before taking any cash advance, please take a look through the terms and conditions.
The Mode of Receiving
As mentioned earlier, you can avail credit in several ways. Be it an ATM or a bank; you will receive the required amount of finance. For faster and better transactions, individuals always tend to go to an ATM. By doing so, you tend to save a lot of effort and time, as the ATM dispenses your cash within a matter of no time. Little and accurate information is all one requires to gain money through an ATM. On the other hand, visiting a bank might consume a lot of time, and they too need time to dispense it. Hence evaluate and choose the ideal option.
At the end of every transaction, you are provided with a receipt which indicates the details and information relating to your transactions. Hence you need to keep such documents safe and sound. These receipts will also help you keep track of your expenses and help reduce it to a suitable extent.
Credit cards can either make your life smooth or can damage your financial reputation forever. It all boils down to the way you use these cards and the type of transactions you get involved in. So you need to follow specific measures to prevent problems and mistakes from occurring. Hence, here are some mistakes to avoid with credit card cash advances.
1. Delay in Payment
Another important aspect of credit transactions is the credit score. The credit score defines your credit system and decides whether or not you will be receiving credit. So you need to keep a good credit score by making payments on time and in the right amounts. Matters such as delay in payments or missing a payment can go a long way in reducing your credit score altogether.
2. Insufficient Payments
Credit card companies might have specified the amount you require to pay every month depending upon the terms of the arrangement. Making payments which are lesser than the required amount can result in low credit scores and also you will end up paying more. Inadequate or insufficient payments can mean that you are about to enter a financial loss. Hence, make the appropriate payments on time.
3. Availing Cash Advances
This is a colossal mistake which one should never think of committing. Cash advances come with higher rates of interest, and individual credit card companies do not offer a grace period. So the moment you make a cash advance, you might receive notifications suggesting the amount of interest rates, which will begin to pile up one after the other. Hence avoid cash advances at any cost.
4. Uncalculated Usage
One should understand the importance and implications which arise from the usage of credit cards. One must draft out a plan every month regarding the number of times you will be using the credit card. Utilising the card for every other purpose in life will leave in debt as you will spend a long time paying up those rates of interest. Hence do not always rely on your credit card.
5. Avoiding Statements
Just like how nobody reads the terms and conditions for numerous websites, credit card statements are another thing which people avoid. These statements consist of all your transactions and suitable charges that may have arisen through such usage. Fraudulent transactions and errors may appear, and the only way to avoid them is by reading your statement.
6. Ignoring Rewards
Although we do not understand why one would do such a thing, it is quite common for people to ignore various benefits and rewards provided by credit card companies. Rewards can be in the form of credit score, travelling benefits and other such benefits. Hence utilise such rewards.
Money is something which everyone requires at the moment. From home bills to even your favourite jacket, everything needs a transaction involving money. Through the years, the mode payments have changed, as people tend to rely on credit card advances. But one fails to understand the various limitations and disadvantages associated with the credit card system. The amount of interest and different other amounts sum up, leaving in a lot of problems. Hence here are some other alternatives you can rely on.
A personal loan from a bank or an alternative lender such as Payday Pixie might be extremely beneficial for a borrower with a sound credit system. The number of installments is not small and hence does not accumulate a lot of interests when compared to credit cards. As they can be paid sooner, they help you increase the amount of savings so that you need not depend on credit for all your transactions.
Family or Friends
Isn’t it better to borrow money from your close ones like family and friends instead of relying on strangers? Well, you know the answer. Requesting payment from your loved ones can seem to be a bit embarrassing, but, they will help you if the need is essential and urgent. At times making promises like giving it back with a little interest might also seem like a good idea. Hence leave those cards aside and call your loved ones.
You might have heard of such loans before. They are nothing but loans provided by banks which are secured based on real assets. They have very fewer requirements when compared to all the other types of loans offered by banks. They are safe, secure and entirely far from all fraudulent activities.
Money Against your Salary
Emergencies call for an immediate mode of payment like asking your employer. Yes, that’s right. Many employees seek advances in their pay and certain bosses, having a human side in them does provide this feature considering the importance of the situation. You need not hesitate to seek such measures because this is a safer mode when compared to the rest.
You know exactly what we are talking about. A thorough search of your home will bring numerous things which you haven’t even used for an extended period. Such items have a resale value, and you are reducing that value by keeping it and not using it.
Apart from selling items which you don’t use, there are other items such as newspapers and magazines which you recycle. By recycling, you not only earn money but are providing for material which can be further used for other purposes. Hence leave the card and search the house.