Thursday, 18 September 2014

Credit Card Tricks

This morning was interesting. I woke up and checked my emails and saw that CC2 was increasing my credit limit from £6,800 to £11,800 from November. That is a £5,000 increase! 

This made me think, I started to aggressively pay off my debt in February 2014. Since then all three of my credit cards have increased my limits. CC1 limit is now £12,000 and CC3 limit is now £4,200, come November (based on today's debt), I will have £17,767.99 of available credit. This is potentially a problem for a spendthrift like myself. That is a lot of money to spend......

I've learnt my lesson - I promise. 

Now I know credit card companies will often increase limits on a yearly basis, however, CC3 had not increased my limit in 3 years. I suspect it was because I did not use that card during those 3 years. However, within weeks of me transferring a balance to that card, my limit increased. Surely the credit card provider should be thinking that if I have transferred a balance that I may be in financial difficulty and the last thing I need is access to more credit? Or is the prospect of me spending that money and paying interest just too much of an incentive to increase my limit?


Credit card balances seem to be a double edged sword. My understanding is that because I have had each of my credit cards for a long time (two for over 10 years), and have always made my minimum repayments (even, if at times, late) I am rewarded for this by an increase of my credit limit. The high balances I have in turn now result in me having a good credit record (apparently if I have decent limits, I must be 'good for it'). I find this rather bizarre. Now I know I am the one who spent the money and only I am responsible for my spending, but, my credit limits have continually been increased despite the fact that I have consistently had substantial balances. 

This has encouraged my spending as the money was there available to me. 

To put this into perspective CC1 initial limit in 2001 was £500, it is now £12,000. My highest balance on this card was £9,775.08 in December 2013 with a limit of £11,000. Yet my limit has still been increased. 


I do have a bit of a bug bear with CC1. Since I started paying off my debt (I have concentrated on this card as it had the highest balance and had the highest interest) my credit limit has increased and I am continually being bombarded with letters, emails and text messages about transferring balances to it and transferring money to my bank account. I had never been offered these 'opportunities' until I started paying off my debt. 

As it transpires, the increase to CC2 is somewhat useful to me. I need to transfer the balance of CC1 to keep the 0% interest and I was not especially keen on opening a new card and will now be able to transfer it to CC2. When CC3's 0% interest period expires in February I can then transfer it to CC1 or CC2. But long term, I only want one card so two of these will go eventually. 

Has your credit limit increased once you started paying off debt? Has the increases encouraged your spending? What do you think?

* Photo courtesy of www.freedigitalphotos.net 

This post is part of Financially Savvy Saturdays. Check it out!!


brokeGIRLrich

Friday, 12 September 2014

Fixed Repayment

If you are reading my blog then I expect in general that you are either in the same boat or have been in the same boat.

It seems to be common when reading other debt blogs that paying debt is something which preoccupies bloggers. I certainly notice that I am much stricter with my spending when I am blogging regularly and whilst reading other personal finance and debt blogs. During the summer and my RSI episode my spendthrift habits began to creep up on me again (particularly buying magazines and lunch/coffees). I am taking steps to try and nip this in the bud and am slowly getting there.

On a positive note I am finding that making a fixed repayment to my credit card each month is assisting in paying off my debt. I have three credit cards and due to the amounts I have already paid off, and the fact that all my credit cards are on 0% interest rates, my minimum repayments are now roughly £50, £50 and £80 each month. However, I always pay £280 per month for the £80 card (aka CC1) so at a minimum I am over paying by £200 (more than double of my minimum repayment). I like this method and I recommend it. It is funny how when I work my budget out every month I automatically allocate £280 to my debt repayment. I don’t have to but my mentality is that that £200 is for debt and nothing else.

The other advantage to me with making a fixed overpayment is that if, like last month, I need some extra money, I have a spare £200. It isn’t the same as an emergency fund, but it is reassuring in knowing that I can allocate that £200 to other things if I absolutely have to.


How do you/did you manage and prepare your debt repayments? What method do you use?

Friday, 5 September 2014

September Debt Repayment


I can't believe I am writing my September debt repayment update already. August absolutely flew by! 

My debt figures are as follows:- 

CC1    £3,351.11
CC2    £4,912.02
CC3    £1,970.88

TOTAL: £10,234.01

Which is £541.94 paid off this month.

I am really pleased with my repayments this month although a little disappointed that I am not under £10k as I hoped I would be this month. However, I will be in next months update. Having a single figure credit card balance will be chuffing brilliant! 

I need to be more frugal with money and stop the frivolous spending. The odd £3.00 here and there for magazines and bars of chocolates are starting to add up and I am disappointed with myself that I have gone back to that (especially magazines). The mistake I have made the last couple of months is starting to use my debit card again instead of using cash. From Monday I am back to withdrawing £20 a week out of the bank and that has to last the week for any odds and ends I need. 

This month I have a trip planned to Alton Towers. I obtained 2 free tickets by saving up tickets from The Sun (I promise I don't normally read that paper - I only bought it for the tickets!). However, because of the long journey we are going to stay in a hotel overnight so it has actually cost me £35. But hey, I have never been before and I love a roller coaster! 

Christmas

It is now September and the Co-Op has got its Christmas chocolates out! I hate this, it is far too early. That said, I am planning on starting to purchase Christmas presents with this months salary. I want to spread the cost and most of all, I want to avoid the December crowds in the shops. Normally I am quite generous with buying presents and I know my family expect me to buy them something expensive given that I have a career which has people expect to pay well. However, this year I am being cheap. My plan is to purchase gift sets from Boots as they always have their 3 for 2 deals on. With my family I need to buy 9 presents, so I get 3 presents 'free'. I will buy my boyfriend a present from elsewhere; he's the exception. 

Have you started planning for Christmas yet?