ISA savings accounts were introduced by the government in the UK in 1999 in an attempt to encourage Britons to start saving. There is a limit to the amount of cash that can be deposited into a cash ISA each fiscal year due to the benefit of tax relief – currently £5,340.

UK interest rates on ISA savings accounts are traditionally quite high, yet there has been a lot of controversy surrounding the interest rates that consumers are actually receiving. The economic downturn has not helped matters, as between October 2008 and March 2010 the average cash ISA savings rates fell from 4.99% to 2.09%.

In March 2011, it was established that 39 of the cash ISAs on the market included an introductory bonus offer advertising some of the best savings rates in the country. This number has increased dramatically compared to previous years, 27 in March 2010 and just 21 in March 2009 .

Is this increasing number of bonus introductory offer fooling consumers into believing that ISA savings accounts have some of the best savings rates, when in fact, these rates only apply for a short term period?

Research has shown that the average cash ISA rate was at a two year high in February and March this year, but is the real interest rate on cash ISAs actually getting worse?

A Consumer Focus super-complaint report (opens as a .pdf) on cash ISAs from 2010 suggests that once the initial bonus period of 12 months is over, the products offers poor value.

For example, at the time of writing the report, Consumer Focus found that the best UK interest rate on a cash ISA (excluding fixed rates) was 3.75% with the Stroud and Swindon Regular Saver Issue 1 ISA. However, after the first year this rate automatically drops to 1.0%. It was also established that only 12% of customers switch their cash ISA providers, suggesting that the majority of Britons are only earning these low (and even lower) interest rates on their savings.

The biggest problem with the introductory offers is that consumers are completely unaware of them, so once the rate drops after the specified period, savers are unknowingly earning a pittance on their savings.

When you receive your annual ISA statement, it is so important that you read it carefully and find out exactly how much you are earning on your savings. If you are unsure of the UK interest rates right now, you should be able to contact your provider and request the information.

Consumer Focus not only believes that British consumers are losing out on a potential £3bn per year because of being unaware of the banks’ bonus offers, but that the reason so few people switch ISA savings accounts is because it is either difficult to switch providers or there is no clarity on the matter.

The watchdog has found that almost 25% of ISA holders have no idea whether they have a bonus interest rate, and 33% don’t know when, or if, it has expired. In addition, over a third of people have held the same ISA for more than five years, implying that they could be earning a lot more interest should they consider switching their ISA.

Chief Executive of Consumer Focus, Mike O’Connor, said: “Unless you check your rates each year you’re likely to end up a poor return on your savings.

He continued: “It is not enough to switch account once and assume your savings are working hard for you.”

If you do have a cash ISA account, it is important that you compare the market regularly to ensure that you are getting the best savings rates. With a significant boost in the number of bonus offers, the ISA you signed up to a few years ago could potentially only be earning you 0.5% to 1.0% per year.

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If you have never had your own bank account before there are few things you should know before jumping in to the finance sector head first. Opening your first bank account is a big step and forms the basis of your credit history so you need to ensure you do everything right.

What will you use your first bank account for?

You need to ask yourself why you need a bank account and what you will use it for. Perhaps you have just started your first major job and you need somewhere for your wages to be paid, or you are looking to pay your bills via direct debit. There are numerous banks and accounts so finding the best UK bank account for you will depend on your needs.

Choose a bank

The British banking sector is dominated by the ‘big four’ banks: Lloyds, RBS, Barclays and HSBC but these do not necessarily provide the best UK bank accounts. There are some smaller high street lenders that you might find more appropriate for your needs, such as the relatively new Metro Bank.

When searching for your first bank account it is essential that you compare current accounts and make an informed decision, rather than plucking one at random. Here are a few things to consider when opening your first bank account:

• Do you need to visit a branch or do you only need internet banking?
• Are there any offers available that you are eligible for e.g. student?
• Who do your family bank with and why?

Choosing an account

There are two main ways to choose your first bank account, you could first choose a bank and then pick an account from their product range, or you could compare current accounts across the board and pick the best one suited to you.

Standard Features

For your first bank account you will want access to a cash card which will allow you to make ATM withdrawals, but nowadays a debit card will be more appropriate as this also allows you to make payments in store and online. Some bank accounts come with a cheque book but, as their popularity decreases, this is becoming less common.

Credit Facilities

You might be interested in the credit facilities available to you, such as an overdraft. If you have no credit history, it is unlikely that these facilities will be offered to you until you have proven yourself as a reliable lender. For your first bank account, it is probably best not to concentrate on this, and simply get used to using a current account on a regular basis.

Royalties/Packaged Accounts

When choosing your first bank account take a look at any fees attached to the account as some accounts do have a monthly charge, you will usually be offered extra goodies such as free cinema tickets. If this is something you are interested in make sure that you weigh up the cost of the account to the benefits you receive.

Opening an account

When you open your first bank account you will need identification to prove that you are a genuine person. The documents required will be similar wherever you decide to open an account but double check the bank’s requirements. You should expect to have to provide original copies of a few of the following:

• a current signed Passport
• UK photocard Driving Licence
• student identification (if opening a student account)
• utility bill
• Council Tax bill
• Birth Certificate
• other photo or address identification

The bank may you require to visit a branch to produce the originals of these documents, or in some cases send them via recorded delivery in the post. All original documents will be returned to you as soon as possible.

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Short term loans are usually portrayed as having extremely high interest rates, costing consumers a small fortune, but is this really the case? I am sure you have seen advertisements on the television for payday loans, or how to ‘get your hands on cash quick’. These are examples of short term loans, which if you pay back within the time frame, (usually between 7 and 30 days) won’t leave you too much out of pocket.

It is almost impossible to find genuine low interest short term loans because you are paying a premium for the privilege of accessing cash fast, and often without a credit check. In recent years there has been a surge in the number of short term loan suppliers, for example wonga.com. These companies can take advantage of your difficult financial situation by pushing boundaries with interest rates, which are often between 994% and 2,000% representative APR. This is not to say that short term loans are a bad product, because if you willing to pay the interest, and have the ability to repay the loan in full on time, you will probably benefit from this type of loan.

The problem arises when costs spiral out of control as each time the repayment can’t be made, consumers are hit with huge charges and the interest rates come hammering down on them. This means that the customer is then unable to pay again because of the high fees, and the spiral continues until a £100 loan turns into thousands of pounds.

If you are looking to obtain money, you need to consider where you are going to search for short term loans, and what you class ‘short term’ to mean.

Payday loans or tide-over loans are usually designed to have a loan period of no more than 30 days, whereas a personal loan from the bank could last for 3 years.

Your local bank can probably offer you something, particularly if you have a good credit history. However, they may be more inclined to lock you into a low interest personal loan for a longer term. This may not have been the product you were initially searching for but it could offer you a much better deal in the long run.

Personal loans also have the benefit of being unsecured, which means that the lender is unable to repossess your home or car. You will also have the opportunity to choose the terms of the loan such as the repayment amount and loan period.

Low interest personal loans are usually taken out over a few years and can offer competitive interest rates to consumers, making it easier for you to manage your finances. It is important to compare personal loans before applying for one as there are so many different suppliers on the market that it is beneficial to shop around.

If low interest personal loans don’t interest you and you need to access cash relatively quickly, or just for the short term, you could look at getting a credit card. Although credit cards can have higher interest rates than loans, they do have an interest free period which means that if you can pay the full balance off immediately, you won’t have to pay a penny for your borrowing.

Just as it is necessary compare personal loans you need to shop around for credit cards too. There are so many different types of credit card that not searching the entire market could mean you end up paying more than you needed to. Taking the time to compare products means that you have a general overview of the market, and can choose the option best suited to your personal circumstances.

Although it is very rare to find low interest short term loans, you can visit online comparison tools to help you compare personal loans and credit cards, enabling you to find the best deal. These tables and tools provide consumers with an impartial view of the market, including interest rates, loan periods, any fees or charges and a guide to eligibility.

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Finding the best deals on gas and electricity doesn’t have to be that hard. Although the big six energy companies are hiking prices through the roof, it is still possible to seek out some great deals. EDF is currently the only remaining major supplier not to increase its prices and no doubt it will at some point in the near future, but it is probably holding out as long as possible to take advantage of people looking to switch.

There are so many different energy suppliers on the market now, with a wide variety of plans, but all it takes is a little time and effort and you could find yourself saving money almost immediately. Follow these money saving tips to find the best deals on gas and electricity.

1. Compare gas and electric

The first thing you need to do is compare the gas and electric packages that are available –  how are you going to be able to judge whether what you currently have is good value without knowing what else is available? Head on over to an online comparison tool which should provide you with a completely independent overview of the market. Our tool allows you to tailor the results to suit your personal circumstances.

2. Online tariffs

If you have access to the internet and are looking for money saving tips, one of the best pieces of advice is to completely ignore all standard gas and electricity tariffs. The best deals on gas and electricity are always the online tariffs as they are usually a lot cheaper than standard ones because managing your account online means less work for the energy company. The only difference you will have with an online tariff is that your bill will be emailed rather than posted, but you could save around 10% on your energy bills.

3. Dual fuel

If you have the same energy supplier for your gas and electricity, the chances are that you are on a dual fuel package. This usually means that consumers are offered a slight discount for ordering more than one fuel. However, don’t fall into the trap of thinking that dual fuel is automatically cheaper than single packages. You need to compare dual fuel packages and single fuel packages as there’s a small chance you could end up losing out and actually paying more.

4. Switching

No doubt you have heard a lot of talk about switching suppliers over the past few years, particularly as the economic downturn hit and everyone starting looking for the best gas and electricity deals. However, at this point in time it might not be your best bet. If you are on a standard tariff, compare gas and electric, and switch to a cheaper online tariff as soon as possible. If you have not or cannot fix your prices, hold fire on the switching as not all the big suppliers have hiked their prices yet. If you switch at the wrong time you could lock yourself into something and still have to suffer the huge price hike heading in your direction.

5.  Fixed tariffs

A fixed tariff means that the prices you are paying are locked in for a set period of time, usually around 12 or 18 months. This is great if you have managed to get a suitable fixed price, but if this is still an option open to you, you will need to act fast. The price hikes are leading to cheap fixes being snatched away and only more expensive ones being offered. Although you will be protected from any potential further price increases you could end up paying too much. Make sure you thoroughly compare gas and electricity tariffs before taking any action.

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As you are probably aware, in order to have access to the best credit card deals on the market you need to have a good or excellent credit score. However, the reality is that most of us do not have the best credit ratings due to missed bill payments or applying for too many credit cards, etc. Although not ideal, this is not the end of the world because there are ways to improve your credit score and get access to better credit card deals.

Starting from scratch

Lenders use your previous information (credit history) to help them judge your character and your behaviour towards money and borrowing. If you do not have any credit history because you have never accessed credit, you will have a poor credit rating. It’s a bit of a ‘catch-22’ really (in the sense that you need access to credit but find it harder to get a credit account because you haven’t had one before) so you need to find ways that your credit rating will be improved, and there are a few ways to do this.

However, whatever you do, it is absolutely essential that you keep to the payment terms, never miss a payment and try to pay off the balance in full to avoid interest charges.

Fixing what is broken

If you have a poor credit rating because of past problems it is never too late to start trying to fix it.

The first thing you need to do is contact a Credit Reference Agency, such as Experian, Equifax or Callcredit, to view your credit report. A credit report allows you to see what lenders see and so you can work out what you need to do to improve your credit score. The actions that need to be taken to fix a bad credit rating due to previous problems are pretty much the same as starting from scratch. You need to open a variety of different credit accounts and use them as a vehicle to improve your credit score. This will help you get access to better credit card deals in the future, but it is a waiting game.

Cancelling unused accounts

If you have a number of unused accounts in your name, which have a history of bad payments on them, you need to close these as soon as possible as they will have a negative impact on your credit rating.

WARNING: If you have a bad mark (e.g. missed a payment or gone over your credit limit) from within the past 3 years on the account you are going to close, wait until it has dropped off your file before closing the account, or it’ll stay on your credit file for a further 6 years.

However, if you have had a bank account for many years and you have used it regularly, but perhaps more recently favoured an alternative account, it could be beneficial to keep this open. If you have outstanding balances on any of these accounts, find the cheapest way to pay them off and close the accounts.

Using savings

Using savings you have built up over a long period of time to pay off debt is often a horrible thought and a difficult pill to swallow. However, reducing the amount of outstanding debt you have against your name is key to improving your credit score. You will be better off both financially and in the eyes of the lenders if you pay off expensive debts with your savings. Also, you will more than likely be paying out more on interest on your debt than you will be making on your savings anyway. Plus, the current economic climate is making it particularly hard for people who still have a huge mortgage, so putting your savings into your house could prove to be the best way forward.

Keep up with payments

It is absolutely essential that you never miss payments on credit cards, store cards, utility bills or any other type of credit account. In order to improve your credit score you need to ensure that you prove yourself to be the perfect borrower. It is always better if you can pay off large amounts of the outstanding balance or the full balance, but if you are struggling at least stick to the minimum repayment.

Other things that will help to improve your credit rating:

1.    Open a Credit Builder Credit Card
2.    Register on the electoral roll
3.    Start a mobile phone contract
4.    Open a Prepaid Card with a ‘Credit Builder’ facility

Finding credit card deals

Once you have managed to improve your credit score you should have access to some of the best credit card deals on the market. Although it may be exciting, this isn’t a time to lose your head, make sure you examine the market and use your options wisely.

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Prepaid cards are a relatively new payment method but have become increasingly popular as an alternative to cash and cheques. Unlike credit or debit cards you are not required to have a bank account, nor is there any link back to your personal identity, making them great for added security. However, all this does come at a slight cost, so here are some tips to keep prepaid credit card costs to a minimum.

Compare prepaid cards

The most important thing to do before opening up any prepaid card is to compare what is available on the market. There are so many different types of prepaid credit cards that you could end up paying too much for a card not suited to your needs. The best way to ensure you are getting the best deal is to compare prepaid cards. Here are a few of the fees and charges that you should be looking at when running a comparison:

•    Reload fees
•    Monthly fees
•    Purchase fee
•    ATM fee
•    Foreign transaction fee
•    Card issue fee

Use a card designed for your needs

The great thing about prepaid cards is that there are so many available, each being best for a specific need. Prepaid travel cards will have different fees associated with them than let’s say a prepaid business card. It is essential that you do choose a card suited to you because card providers do amend the fees accordingly.

Reloading

Many prepaid credit cards have reload fees associated with them, and these can often be the most expensive outgoing. To try and keep costs down you could request that your employer pay your wages directly onto your prepaid card, avoiding reload fees altogether. You can then use the prepaid card as if it was a debit card, without the worry of paying out lots of reload fees. If paying your wages direct is not a feasible option for you, another great way to avoid the reload fee is by transferring cash from your bank account via BACS credit. If you can’t take advantage of either of these options, make sure you take into consideration the cheapest way to load your card before doing so.

Purchases

If the prepaid credit cards you choose do incur a purchase or transaction fee, it is important to think about how you shop. Try and ensure that you are able to buy as many goods as possible in the one transaction rather than several smaller transactions as this will keep the costs to a minimum. Making several different purchases will incur a transaction fee each time, increasing the cost of using your prepaid card.

Prepaid cards are an excellent way to help you budget, avoid any high interest payments and credit checks, and are simple to use anywhere in the world. By using them sensibly and making sure you compare prepaid cards, you can make the most of this convenient, safe, and secure payment method.

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The introduction of smartphones and tablet computers has increased the demand for 3G mobile broadband, but it is still not very often used as a main internet connection. More often than not internet users consider the best broadband to be a fixed line at home, with mobile broadband as an optional extra.

However, switching from your fixed line broadband at home to a mobile internet connection can save you a packet, particularly if you are a very light user. So, what are the pros and cons of getting mobile broadband from your network provider?

Mobile broadband – the pros

Line rental: The major plus side to mobile broadband is that you do not have to pay for line rental like you do with some fixed line broadband deals. This can save you a significant amount as line rental from the main providers in the UK varies between £9 and £13 per month. Mobile broadband is becoming a popular choice for people who do not already have a telephone line, as the cost to install a fixed landline is in the region of £130.

Portability: Another pro for mobile broadband is that you can access the internet wherever you like, provided that there is a 3G signal. It is estimated that around 87% of the UK has 3G coverage so it shouldn’t pose too much of a problem.

Pay as you go: If you are a light internet user, or have separate fixed line broadband, you might benefit from taking out a pay-as-you-go deal because you might be spending more than you have to every month if you aren’t making full use of a fixed tariff. This also protects you from the long contracts associated with standard mobile broadband packages.

Provider flexibility: To get the best broadband speed you need to go with the right provider for you, rather than your current mobile phone provider. Research what is available and choose a provider which can offer you what you need. There are so many different mobile phone providers offering deals; you can choose from Orange broadband, O2 broadband, Vodafone broadband and many more.

Mobile broadband – the cons

Slow broadband speed: Mobile broadband speed is pretty slow as it can only reach a maximum of 7.2Mbps and has an average speed of around 3Mbps. This means you can check emails, log on to social networking sites and read the news, but it will struggle to meet the demands for rich media or media streaming (e.g. watching videos).

Usage limits: You will find that even the best broadband has a very low usage cap for uploading and downloading. For light users this would not be an issue, but if you use your mobile internet connection for other things, such as gaming or watching clips on YouTube, you might end up spending a small fortune if you exceed the limit.

Coverage: If you are in a rural area, you might find yourself to be one of the 13% that do not have access to a 3G connection. If this is the case you will struggle and the best broadband for you will be served via a fixed line. Make sure you check the coverage for your area with broadband providers before you purchase it.

Conclusion

The best broadband for you will depend on your personal circumstances and so it is important to remember that the deal that suits your friend might not benefit you at all. Don’t be scared of looking at other providers – what O2 broadband can offer you will be very different from Orange broadband packages. One of the most important things is to make sure you know what the coverage and broadband speed is like in your area, otherwise you might end up with a useless dongle.

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Prepaid cards have boomed in the UK in recent months after proving a huge success in the US and parts of Europe. They functionally work in a similar way to debit and credit cards, although they are topped up with cash in advance and do not provide a credit facility or have any association with your bank account.

There are many different types of prepaid card, with a wide variety of benefits and charges, so it is important that you compare prepaid cards before going ahead and applying. There are so many reasons for obtaining a prepaid card and they can benefit everyone, no matter how old you are or what your interests are.

Prepaid cards for teenagers

For the majority of prepaid cards you need to be 18 years old (the Orange Cash Card is available to over 16s), but there are some prepaid cards designed specifically for teenagers which can be accessed provided there is a joint account holder over the age of 18. These prepaid cards are perfect if you or your children are planning on carrying large amounts of cash.

More and more people are using the internet to make purchases nowadays, from music downloads to apps for smartphones, and these often require payment by a credit or debit card. Prepaid cards provide the perfect solution to this problem as they are accepted at any outlet that accepts MasterCard, Visa or Maestro (depending on your card issuer).

Prepaid cards for parents

When you start travelling on family holidays, you might wonder about what payment method is most appropriate. Traveller’s cheques and foreign currency are becoming less and less popular due to the inconvenience and security issues associated with them.

One popular and inexpensive way to take and spend money abroad is with prepaid travel cards. These cards will usually incur a small set up fee (although you can get free ones), and additional fees for withdrawing cash from ATM machines but are still much cheaper than paying commission on foreign currency, or foreign transaction fees. They are also much safer and secure than cash because if it is stolen, you can only lose the balance of the card (in the worst of scenarios because you can cancel your card and get the money left on the card put on a new card for a small replacement fee), and there is lower risk of identify fraud as the card is not attached to your personal information such as a bank account.

In addition, if you are on holiday with your family, you can take several prepaid travel cards and provide your teenagers with one, allowing them freedom to spend the way they want, to your budget, without fear of them losing cash.

Prepaid cards for the over 60s

Research from Age UK shows that 73% of older people use cheques as their preferred payment method. This could become a large problem as cheque acceptance is set to decline with the abolition of the guarantee card. More modern ways of using money such as digital banking and online payments are alien to the older generation so it is more likely that they will revert to using cash.

This is where prepaid cards come in as always carrying large amounts of cash is a serious security issue, as you could have it stolen or lose it. By using cash to top up a prepaid card, all you have to do is use the card like a credit or debit card. Prepaid cards are the perfect solution for the over 60s as cheques become less common.

There is also a more prominent reason that the over 60s should take advantage of prepaid cards, and that is to budget. Using cash can make it very hard to control your outgoings, whereas a prepaid card prevents you from over-spending your pension money, and keeps you on track.

Compare prepaid cards

There are so many options available, it is imperative that you compare prepaid cards before applying for one, however the prepaid Orange MasterCard known as the Orange Cash is a great solution for everyone. It costs £5 to buy, can be loaded with a maximum of £5,000, and can even be used around the world (although it would of course be better to use a prepaid card designed specifically for use abroad). This makes it ideal for students, adults and pensioners trying to budget and manage their money.

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Mobile broadband is sent to customers by mobile phone signals and can be accessed on numerous devices, including mobile phones, tablet computers, laptops, and PCs. You can usually get mobile broadband from network providers, such as Vodafone, Three, o2, etc, as a one-off service or as part of a bundled mobile phone tariff. If you need broadband on the move you will usually be given a USB ‘dongle’. A dongle is essentially a portable modem which can be used with any of the above devices, provided they have a USB port.

There has been a lot of attention on the cost of mobile broadband in recent months due to the changes within the EU. The roaming data charges from internet service providers were sending mobile phone bills through the roof as people were unaware of the true costs of using the internet abroad. The focus is now turning to the cost of mobile broadband here in the UK, and whether it is a suitable alternative to standard home broadband.

Mobile phone broadband tariffs

The way we use our mobile phones has significantly changed since the introduction of smartphones. Nearly every day most of us access the internet on our phones to check emails, download apps, read the news and use social networking sites such as Facebook and Twitter. This has led to the majority of phone tariffs including a data allowance or having it as an additional bolt-on to the standard package. This is often one of the easiest ways to save money and have access to mobile internet.

Mobile broadband dongle

Alternatively, you might be looking for a mobile broadband stick or dongle which can be inserted into any portable device with a USB connection. These prices can range from £5 per month right up to £50 per month, depending on the package you choose.

On Vodafone £5 per month can buy you a monthly 3GB data allowance but this would tie you into a 24 month contract and work out at an average of £1.66 per GB data. If you have a bigger budget, you could get better value for money – for example, Three offers a monthly 15GB data allowance on a 24 month contract for £15.99 per month, which means a cost of £1.06 per GB, saving you 60p per GB.

Home broadband comparison

If you spend most of your time at home, you might not need mobile broadband, or perhaps when you are home you use the internet a lot to watch movies or download music. If this is the case, mobile broadband would not suit you as it usually has tight download limits and lower speeds. However, it can come in handy if you can’t access any other type of internet connection but get a good mobile phone signal.

For example, for £6.50 per month Talk Talk offers a home broadband package including a free wireless router, 40GB monthly download limit, and completely free evening and weekend landline calls. This would work out at around £0.16 per GB of data plus all the added extras – a significant saving on the mobile broadband prices.

Value for money

When you break it down, the cost of mobile broadband per GB, even for the cheapest packages, is far higher than that of home broadband. One thing that consumers need to consider is how much data they actually use. It seems ridiculous to have home broadband installed with huge 40GB download limits if you only access the internet to check a few emails each day. Sometimes, the best value for money is not the best option, and consumers need to think about what they use. For example, it might be better for you to opt for a £5 package because you only consume 500MB data per month, making anything more expensive a waste of money. Mobile broadband is far more expensive per MB or GB than home broadband, but based on the luxury and flexibility it offers, it is not too expensive.

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What are credit building credit cards?

The credit crunch has made it incredibly difficult for people without perfect credit reports to obtain the best credit card deals available. However, there are now plenty of alternative sources of credit on the market, one of the best being credit building credit cards (aka credit cards for people with bad credit).

These cards will have higher interest rates and lower credit limits than standard cards but don’t let this concern you too much when you are using them to build your credit rating because they will serve you well if you use them right.

The idea behind them is that consumers can use them to pay for stuff they would usually buy anyway (which is why the low credit limit isn’t a problem because it’s not the money you are after) and pay off the balance to prove to lenders that they can manage their credit responsibly.

Due to the high interest rates, consumers should not use these cards to spend, spend, spend, and then get into high monthly repayments. Instead, spend a reasonable amount, put the money you would have normally used aside, and then use the money you saved to pay the balance in full every month.

Over time, using credit builder credit cards will show lenders that you can handle money and a credit card, and you may then become eligible for the best credit card deals, including 0% credit card offers. This improved access to the credit card market will mean that you can pick and choose the top deals to make the best use of what credit cards can offer you.

What to spend it on…

What you choose to spend your money on is up to you. For example, you might decide to do your weekly shop on the card, fill up your car with a full tank of fuel, or even pay the gas and electricity bills. However, the most important thing to remember is that this type of credit card is not designed to give you extra money.

Using credit builder credit cards

Consumers looking to improve their credit rating should only be spending money they have in their bank account, not money they do not have. What we mean by this is that you buy whatever things you were going to buy with the money in your bank, but you use the card instead, you then use the cash you have to pay off the card.

It is also a good idea not to use the whole amount on the card – try to stick at around 60% usage. So, if you have a £1,000 credit limit, try spending around £500 to £600 every month on your everyday purchases, but repay the amount immediately.

Consumers should never look to obtain credit builder credit cards to use them like a regular card as this will only cause further troubles. The high interest rates are usually on a par with store cards, and this could cause your debt to further spiral. Borrowing for a long time, or for large amounts of money, should always be avoided with this type of card. Once you qualify for the best credit card offers, you can start using credit cards normally if you wish. ALWAYS remember that you will have to pay the money back.

The future

After around six months of sticking to a strict “buy and pay” routine with your credit building card, you should be at a point where you can apply for a standard card. This is fantastic news because it will have a dramatically-reduced interest rate and will mean you have access to some of the best credit card deals. The 30% APR will be long gone, and you may even be able to take advantage of some of the 0% purchase and balance transfer credit card offers.

Once you have your shiny new credit card, close the old account as you will no longer have any need for it. Don’t go wild with spending on the new card, use it wisely still. The purchases you make with your credit card will continue to influence your credit score, so be responsible.

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