Never borrow on loans or expensive credit cards for consumer goods or things that decrease in value

Welcome to Money Tips Daily this is Money Kelly bringing you money tips to help you save and make more money!

As the weekend kicks in, you may be planning to go shopping for an expensive item or something for the house. The Money Tips Daily tip for today is:

Never borrow on loans or expensive credit cards for consumer goods or things that decrease in value.

I’m  not saying don’t use a credit card, which gives you additional consumer protection in the event of a problem or the company going out of business before you receive ordered goods. Consumers who ordered beds on their credit cards from Warren Evans, which went bust in the last week, should receive a refund from the card company, whilst those who paid with a debit card or in cash have little chance of seeing their money again.  

Using a credit card is fine provided you pay off the balance before interest is charged. If not, the effects of high interest rates on credit cards and personal loans will hold you back financially for years and even the rest of your life as long as you keep practising this form borrowing.

Paying the minimum amount back each month will also take years to pay off the balance in full, so make higher payments via you bank or pay off lump sums to clear the debt. 

Consumer goods borrowing is not the same as borrowing to buy assets, such as a rental or buy-to-let property, which can produce cash flow to pay the mortgage interest and gives you an ongoing residual income, as well as a potential increase in value over time. You may be able refinance and pull out all of your money and enjoy perpetual unlimited returns on your investment for years to come!

I would recommend having a plan to clear off the balance on your cards. However, if you cannot pay off your balance immediately and need more time, you could consider an interest free balance transfer, although keep an eye on the upfront fees, which can be as high as 3%. 

If you do need to borrow, look for cheaper options such as credit unions.

That’s all for now, have a great weekend and happy shopping! Watch those signs saying “Fast Credit”, which should say: “Fast DEBT”!

Check out my episode "Money Tip Review you Mortgage" on Anchor! https://anchor.fm/charles-kelly/episodes/Money-Tip-Review-you-Mortgage-e12g2i

See also: 

How to Make Money Online Without a Website or Inventing Your Own Product

2 Tips to Save and Make You Money

Model the Rich and Successful