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In this day and age, a credit card is almost indispensable. Owning one benefits you in countless ways, which include boosting your credit score, protecting you from scams, allowing you to spend more, and rewarding you for spending. However, not all credit cards are alike, and you should find one that best fits your lifestyle. 

There are several factors to take into account when choosing the right credit card. One crucial thing you’ll need to remember to do is compare credit card rewards. It’s also important to consider factors like interest rates, flat fees, cashback opportunities, and more. 

If you’d like to apply for a credit card but feel overwhelmed by all the options out there, this article will help answer some of your questions. In this article, we’ll go through six factors to consider when signing up for a credit card. 

#1 - Interest Rates

When you make a payment with a credit card, you’re essentially borrowing money you’ll need to pay back at a later date, usually with interest. Find a card that lets you pay the least amount of interest in the long run. 

Some cards don’t charge you interest for a set period, or if you make your repayments within a certain timeframe. While these cards might charge higher fees elsewhere, they are an option, especially if you have a steady income and regular stable spending habits. Make sure you’re confident in being able to pay off your debt, and don’t take any unnecessary risks.

#2 - Fixed Fees

Besides interest rates, credit cards also charge fixed fees, either on an annual or a monthly basis. It’s also important to look out for any unexpected fees your card might charge you. 

Often, lower fixed fees mean higher interest rates, and vice versa. You’ll need to sit down and calculate what sort of payment plan benefits you the most given your spending habits and financial situation. Especially with credit card companies advertising low or zero fixed fees for some time, make sure you check the offer isn’t too good to be true by finding out the full picture.

#3 - Rewards

Most credit cards offer rewards for certain types of purchases. As you go through your options, you’ll want to find one that offers rewards that will be useful in exchange for the sort of purchases you make anyway. 

There’s a huge range of potential programs your card provider might offer, including aeroplane tickets, discounts at certain establishments and gift cards. What purchases qualify for reward points often depends on the establishments your card provider has a partnership with. For instance, spending at specific restaurants or clothing stores might earn you points. 

#4 - Cashback Opportunities

Cashbacks are a specific sort of reward your credit card might offer. As the name suggests, cashback allows you to earn some of your money back when you make a purchase. It’s not the same, but similar to a discount. 

Credit cards will differ in the type of cashback opportunities they offer. For instance, one card might offer you 5% back on groceries and 3% back on furniture, while another might offer 4% back on gas and 2% on pharmacies. 

#5 - Credit Limit

Most credit cards include a credit limit, which is the maximum amount of money you can spend using your card in a given amount of time. Generally, most people will want to pick a card that lets you spend more money. 

How much credit limit you get depends largely on your credit history. If you’ve built up a good track record of paying your debts off on time, providers are more likely to trust you with a higher limit. On the other hand, you might be offered a lower limit if this is your first card since you won’t have much of a credit history yet. 

#6 - Customer Service

When you sign up for a credit card, you become a client of whatever financial institution issued the card. As with any provider-client relationship, it makes sense to find a company with a level of service that matches your needs. 

While you might not think you’ll ever need expert customer service with your card, you’re almost certain to run into situations where you’ll need assistance, and where a helpful provider is a lifesaver. For instance, you might want to ask about unexpected charges you discover on your card bill, or quickly cancel your card in case of loss. During times of financial worry, or stressful situations such as if you’ve been robbed, the last thing you want is to struggle to get the appropriate help, as fast as possible.

Conclusion

We’ve just listed some of the most important factors to consider when signing up for a credit card. As you go through your options, choose the card that best aligns with your lifestyle. You may also need to whip out a calculator to determine which one saves you the most money long-term. 

Of course, it’s entirely possible to own more than one credit card, and this may be the best option for you if you want to spend money as efficiently as possible. Still, it’s important to choose carefully, as signing up can sometimes take a while, and is a significant commitment.

If you don’t yet have a credit card or are searching for a new one, we hope this article will give you the push you need to do your research and make the best decision given your financial situation. 

Staying informed isn’t a choice, but a strategic option when it comes to investment management. The financial sector is dynamic and heavily relies on other factors, majorly economic indicators and political events. The success of your investments hinges on your ability to navigate these factors.

Generally, investors should be knowledgeable, adaptable, and proactive. As such, staying informed remains the cornerstone of successful investment management. It empowers you to make informed decisions and seize available opportunities. Below are a few tried and tested tips for managing your investments.

#1 - Seek Professional Advice

Not seeking professional advice is a common mistake made by even successful investors. Unknown to them, professional advisors provide great insights, especially for those who are uncertain about their investment strategies. You should also consult experts like Avidian Wealth Solutions if you don’t have time to manage your investments effectively.

Financial advisors are beneficial in many ways. For starters, they bring forth expertise and knowledge in this field. Investment professionals deeply understand all investment facets, be it investment management, estate planning, or retirement planning. You can rely on their guidance on all your financial issues and goals.

That aside, you can be sure of personalized recommendations. These experts offer personalized recommendations that fit your unique objectives. They assess your financial goals and other factors to create a personalized investment strategy.

You will also benefit from behavioural coaching offered by financial advisors. While other factors come into play, most businesses fail due to emotional biases from entrepreneurs. Greed and overconfidence often lead to irrational decisions that can hurt your business. Professionals offer guidance on how to remain objective to achieve your goals.

You should also seek their advice on goal setting. These experts can help you set clear financial goals. Whether you want to fund your education or have a retirement plan, they will give you a perfect strategy for attaining them.

#2 - Rebalance your Investments

Rebalancing your portfolio is also crucial to investment management. This essentially involves adjusting your asset allocation to maintain a balanced risk-return level. Unfortunately, rebalancing a portfolio is easier said than done, and most entrepreneurs can’t hack it successfully.

Here, you should begin by settling rebalancing thresholds. Identify triggers that indicate the right time to rebalance your portfolio. You should have a clear guide to avoid making unnecessary adjustments.

Rebalancing your portfolio should also be dependent on the market conditions. Always assess the prevailing market conditions and economic factors before making adjustments. Interest rates, inflation, and other financial factors should be your key rebalancing principles. You should rebalance when the market is undergoing extreme volatility.

While at it, you should consider the tax consequences of rebalancing your investment portfolio. This is especially important if you have taxable investment accounts. Your financial advisor can recommend using strategies that minimize the impact of your actions on your taxes.

Lastly, document all your rebalancing decisions. Having a record of all the changes and adjustments you’ve made over time and the outcomes makes it easier to track progress. You also get to evaluate the effectiveness of this strategy.

#3 - Review Fees and Expenses

Reviewing operational fees and expenses of running your investments is also important, especially if you want to maximize returns within a given period. However, understanding fees and expenses comprehensively isn’t easy. For starters, you should understand the fee structures. Investments have varying fee arrangements. For instance, how much you incur for your mutual funds won’t be the same as managed accounts or exchange-traded funds.

You should understand the common and unique fees of every investment. Review the total costs of running your investments before making any adjustments. This should include all the fees and other associated costs for every investment. You should then compare the costs of various investment products.

Doing this will help you know if you are getting value for your money. Finding low-cost investment options compared to their alternatives is prudent. For instance, you can opt for index funds instead of managed funds.

Some investment options allow for the negotiation of applicable fees. You should do so where possible. You can negotiate the fees with investment providers. Check out and take advantage of fee discounts and waivers available. However, ensure that you remain updated about recent regulatory changes on applicable fees.

Endnote

Managing your investments incorrectly requires that you adopt a multi-faceted approach. Besides monitoring them regularly, you should rebalance strategically, diversify, and review operating costs. Seeking professional advice is also important, especially if you aren’t an expert in investment management.

As per reporting by the ONS (The Office for National Statistics) for the second quarter in a row, the GDP (Gross Domestic Product) of the UK has declined, meaning that for Q3 & Q4, GDP in the UK shrank by 0.5%.

This was the mildest start to a recession since the 1970s, with the last five in the UK seeing the economy shrink by more than 1%, and in further promising news, forecasters believe this will only be a short-term recession.

What caused the recession?

The BoE (Bank of England) has set interest rates at 5.25% (the highest rate in 16 years) to combat inflation, which has indeed shrunk from the 11.1% high in October 2022 to 4% as of February 2024. And whilst this is promising news, it does mean that the cost of borrowing is high. Furthermore, the inflation rate is still double the BoE's targeted 2%, so interest rates are unlikely to fall until the summer of 2024 at the very earliest.

Why raise the rates?

Increasing the rates forces people to stop spending as freely as the interest on borrowing for products such as mortgages, credit cards, and personal loans is higher.

By raising the rates, disposable income is lower, and it encourages people to save instead of spend which impacts services such as retail and despite Christmas, December retail sales fell by 3.2%. ONS figures show that all major sectors - services (by 0.2%), production (1%) and construction (1.3%) contracted in the final three months of 2023. 

What does this mean?

The promising news is that it's thought to be a short-term recession and despite this recession at the back end of 2023, the economy did grow by 0.1% in 2023, while not inspiring, does mean that there is a platform for growth in 2024. 

Interest rates will likely come down this year, which should help ease the burden of the ongoing cost of living crisis. And lead to a stronger end of year for the UK. As these interest rates come down, and if inflation remains low, this should have a corresponding impact on growth for the UK as it will free up capital for investment.

Politically it could have a large impact on current Prime Minister Rishi Sunak, who pledged last year to halve inflation and grow the economy. Whilst the inflation rates coming down will be a sign of promise, the recession will come as a large blow to Mr Sunak & the Conservatives with an election looming.

 

They’ve gone up from 3% to 3.5%. This is the ninth time in a row they’ve been hiked.

This increase will result in higher mortgage payments for property owners and people who’ve taken out loans. It comes at a time when everyone across the country is faced with the cost-of-living crisis – right before the Christmas holidays.

Inflation is currently sitting at 10.7% in the country – or over 5 times higher than the 2% target. However, it has slightly eased since November.

Andrew Bailey, Bank of England Governor, said it was the "first glimmer" that soaring price rises were starting to come down but there was still "a long way to go".

It is raising its key interest rate by 0.75 percentage points, taking the bank's benchmark lending rate to 3.75% - 4%. It now sits at its highest rate since January 2008.

The bank's hopes are that the hike will bring down price inflation but critics are worried about the 'serious downturn' that will come with it.

Further increases are expected asFederal Reserve Chairman Jerome Powell said: "We still have some ways to go."

Similar announcement is expected in the UK today, as countries across the globe continue to raise their own interest rates in an attempt to solve their inflation problems.

Despite previous predictions that the economy might grow between July and September, the central bank now estimates that it will shrink by 0.1%.

This is the Bank’s seventh in a row interest rate increase as it attempts to tackle soaring prices.

The Bank of England said today: "Should the outlook suggest more persistent inflationary pressures, including from stronger demand, the [rate-setting] committee will respond forcefully, as necessary."

Paul Dales, chief UK economist at Capital Economics, commented: "That new 'stronger demand' bit seems like a not-so-subtle reference to the loosening in fiscal policy that's expected to be announced tomorrow.

"In short, the Bank has indicated it will raise rates further to offset some of the boost to demand from the government's fiscal plans."

It's pointed out that the rise in rates has been done by central banks "with a degree of synchronicity not seen over the past five decades" to tackle soaring prices,

This warning comes ahead of monetary policy meetings by the US Federal Reserve and Bank of England next week, which are expected to increase key interest rates.

On Thursday, the World Bank said the economy on a global level was in its steepest slowdown following a post-recession recovery since 1970.

According to a study "the world's three largest economies - the US, China and the euro area - have been slowing sharply," it said.

"Under the circumstances, even a moderate hit to the global economy over the next year could tip it into recession."

The World Bank also urged central banks to coordinate their actions and "communicate policy decisions clearly" to "reduce the degree of tightening needed".

The ECB has increased its key deposit rate – or how much interest it pays on deposits - to 0.75% from 0% and lifted its key refinancing rate – or how much banks have to pay when they borrow from the ECB - to 1.25% from 0.5%.

"Price pressures have continued to strengthen and broaden across the economy," said the ECB.

"I cannot reduce the price of energy," said the president of ECB Christine Lagarde.

"I cannot convince the big players of this world to reduce gas prices. I cannot reform the electricity market. And I am very pleased to see that the European Commission is considering steps to that effect because monetary policy is not going to reduce the price of energy," she continued.

Lagarde added that if gas prices continue to "skyrocket", a recession would be on the horizon. If Russia were to fully cut gas supplies to the European Union and it becomes impossible to secure alternative gas supplies from the US, Asia or Norway, the ECB expects gas rationing across the Euro area and a recession in 2023.

When looking at how to budget for a personal loan, tools such as a loan payment calculator can be a great first step to checking loan affordability, but that's not the only factor to consider. 

Personal loans can be a great way to borrow a large sum of money, but you need to make sure that the repayment plan fits your budget for it to be a good financial decision.

How much do you need to borrow?

Personal loans can be taken out for a variety of reasons, but generally speaking, they are used to pay for and spread the cost of a specific event, such as a wedding, or an expense, such as an unexpected medical bill that you wouldn't otherwise be able to afford at that moment. 

Before applying for a loan, you should have a figure in mind for the amount you need to borrow; that way, you can easily compare different interest rates and terms to see which offers you the best value.

How much can you afford to pay back? 

The overall amount of money you pay back will be that initial sum borrowed plus interest. This is why it's important to only borrow what you need; anything more could result in higher monthly repayments or taking it over a longer-term, meaning more paid in interest.

You need to look at your personal budget and come up with a realistic amount that you can easily afford each month as a repayment. It may be tempting to opt for a higher repayment amount so that the loan is repaid quicker, but if it’s not easily manageable, you could run the risk of defaulting on a payment which could then incur fees or hurt your credit.

Getting a fixed interest rate

The interest rate on your loan is the periodic finance charge you pay to borrow the money. If you always pay on time, the monthly instalment is calculated to cover your accrued interest and pay down a small portion of your principal balance. When you are looking for a personal loan, it is good to find one with a fixed rate of interest, as this means that your repayments will stay the same for the entire term of the loan. 

You might see variable interest rate loans advertised with special offers such as having a ‘fixed low rate for x number of months’—often called an introductory or ‘teaser’ rate. While this might sound like a good idea initially, the monthly repayments can jump and change month to month as soon as the fixed-rate term runs out. This makes it more difficult to budget successfully and runs the risk of some months being more than you can afford.

The bottom line

The best way to budget for a personal loan is to look at your expenses and find a comfortable amount that you have readily available each month to put towards the repayments. Once you have this, you can use the tools provided by reputable lenders to run the numbers on the amount you need to borrow and see what term you would need to take the loan over to afford the repayments. 

Notice: Information provided in this article is for information purposes only and does not necessarily reflect the views of [publisher] or its employees. Please be sure to consult your financial advisor about your financial circumstances and options. This site may receive compensation from advertisers for links to third-party websites.

 

However, with that fun and thrilling feeling of searching for a home comes the inevitable worry of obtaining a decent mortgage loan. And while real estate brokerage firms like Compass will always advise buyers to work with a lender they feel appreciated, understood, and comfortable with, there are a lot of other variables that need to be considered too. 

To help you feel a little more confident when interest rates and other financial matters are discussed, here are some of the biggest factors that can impact your mortgage interest rates.

Your credit score

This is probably the most important factor that lenders are looking for when they calculate how reliable you’d be as a potential borrower. Determining your credit score includes various things like all of your debts, credit cards, other loans, and your repayment history on those debts. 

A credit score tends to be in the range of 300-850. The higher your score, the lower your interest rate will be. 

Your loan term

In general, the term of your loan has a lot of contributing factors to your interest rates. Short-term loans will inevitably have much lower rates of interest and costs, but of course, the monthly payments will increase significantly. 

If you’re concerned about these contributing factors, the majority of lenders will help you to find a mutually acceptable rate that’s within your budget.

The downpayment you’ve made

As you’d expect, the higher your down payment is, the lower your interest rate will probably be. The majority of lenders will see you as a low-risk borrower if you have more of your own money put into the place. 

If you can hang in there, save, and get a solid 25% or so of your own cash in a new place, then you’ll probably end up getting a better (in other words, lower) mortgage loan rate. 

Home price/loan amount ratio

Essentially, this is the price of your place, minus the down payment or borrowed mortgage loan amount. If you’re borrowing an unusually small or large amount for your mortgage, your interest rate will rise significantly. 

If you’re able to keep the amount you plan to borrow at the forefront of your housing search, you’ll be able to get a rough idea of how it could impact your mortgage rate. It’s important to calculate a ballpark figure that you’re comfortable with paying each month. 

The type of interest rate

Generally speaking, you’ll encounter two kinds of business rates - fixed rates and adjustable rates. As the name implies, a fixed rate doesn’t change over time, whereas adjustable rates will eventually rise or fall based on the real estate market. 

While adjustable loans tend to have lower interest rates, it’s important to understand how much they could increase due to fluctuations in the market.

Speaking to CNBC, Barkin said, “So we’re happy to see inflation start to move down [..] I’d like to see a period of sustained inflation under control, and until we do that I think we’re just going to have to continue to move rates into restrictive territory.”

According to the Bureau of Labor Statistics, headline consumer prices were flat in July while producer prices were down 0.5%.

However, this figure is just one month’s data, with CPI still up 8.5% on a year-over-year basis and the producer price index climbing 9.8%. Each of these figures is still notably over the Federal Reserve’s target of 2%, meaning the central bank must continue to push forward in order to meet this goal.

“You’d like to see inflation running at our target, which is 2% at the PCE, and I’d like to see it running at our target for a period of time,” Barkin commented.

The 50 basis points increase to 1.75% will be the largest interest rate in 27 years and will speed up a historic tightening of monetary policy to tackle the highest level of inflation experienced in four decades. 

In June, inflation reached 9.4%, with the BoE predicting it will rise again to 11% before the year ends. 

In a comment, BoE governor Andrew Bailey said, “The Committee will be particularly alert to indications of more persistent inflationary pressures, and will, if necessary, act forcefully in response. Bringing inflation back down to the 2% target sustainably is our job, no ifs or buts.”

The BoE has already raised interest rates on five occasions in the past seven months a record amount that is putting substantial pressure on people who have borrowed funds.

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Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
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