Should You Pay for a new baby with a Loan?

Everyone knows that a baby can be really expensive. Your first baby is likely to be more expensive as you will have to buy lots of new things, such as cot, bedding, moses basket, stair gate, playpen, toys, car seat, highchair, clothing, pram, pushchair and possibly bottles, sterilizer, washable nappies etc. A lot of these things would be able to be used for a second baby so the cost may not be as high. However, there will still be costs with a second baby such as food and drinks. Childcare is more expensive once you have a second child and you may need to buy a double pushchair if their ages are similar and perhaps a second cot and a car seat.

With all of these expenses it can be tempting to get a loan to cover some of the costs. Some people do manage to save up to be able to pay for the things that they need and others may not be able to. It may be possible to ask relatives, who want to buy you gifts, to help out with some things, but you may still find that you do not have enough to pay for everything that you need. It can be quite a shock when you do add up the prices of things.

Before you consider taking out a loan it is worth making sure that you really do need everything that you intend to buy. There are many things which shops try to sell us, which are not perhaps necessary. Things such as changing tables, prams (when a pushchair will do and last longer), disposable nappies (when washable are much cheaper) and many other things which are not necessary to buy. It can be lovely to have a decorated nursery with pretty matching furniture, but borrowing money to pay for it may not be a wise idea. You may also be able to buy some of the items second hand or even get them free. Take a look online and see what is available. It is always recommended that you buy new mattresses and car seats for babies and children, but other items should be fine bought second hand.

Getting a loan can be a big commitment. Even if it is borrowing on a credit card, it still counts as a loan and can be difficult to pay back. Before borrowing any money, it is always important to think about how you will be able to pay it back. With a baby, it is likely that there may be at least one member of the family not working or child care to pay for. So this could mean that there is either less income coming in or more expenses and it could be a lot more difficult to make ends meet. If there are debt repayments to be made as well, it could make things even more tricky. It is also wise to consider the future. You may plan on returning to work quickly and increasing the income again and you may even have a grandparent will to help out for free, but you may change your mind. You may just feel that you would rather be with your child while you can and not work, but if you have debts to pay, you may not have a choice.

You may be at a stage where you are paying a mortgage or want to buy a family home and having debts can make this very hard. If interest rates rise, you could suddenly find it much harder to manage but once you have debt you are committed to paying it back. Make sure that you do think about the future and the consequences of getting into debt before you make your final decision.

Therefore borrowing at this time of your life could be a big risk. You may find that you will struggle with repayments and may regret borrowing the money. It is therefore really wise to make sure that you do not buy more than necessary and therefore do not borrow too much and regret that decision. Think it through really hard and make sure that you are confident that it is the right choice for you.


Is a Cashback Credit Card Worth Having?

A cashback credit card can seem like a really good idea. Each time that you make a purchase, you will be able to get a percentage of that back, credited to your card the following month for you to spend. This sound great, the company paying you to use the card and it can be, but there are a few things to be aware of.

Firstly, you will find that the percentage of cashback is extremely small. You will only get a very small amount of money, even if you use the card a lot. It is worth comparing different cards though as this will vary. Some may pay out in loyalty points or shop vouchers or even air miles and so you should consider which might be most useful to you, considering where you shop. Check regularly as well as you may find that different cards become available or change the percentage cashback that they offer. You may also change your shopping habits and so you may find that a pay out in loyalty points, for example, may become less useful to you. It should be often enough to check this every six months, when you should really be checking all of your finances anyway to check you are paying competitive rates.

One thing to be very careful of is how much you spend. The fact that you get cashback on spending could mean that you are tempted to spend extra money so that you can get the cashback. It is a good idea to use the card as often as possible to buy items that you need and would have bought anyway. However, if you are buying more than normal just to get the cashback then this is not wise. The amount that you save is very small and it is just not worth it. If you find that you are tempted to do this, then it could be wise to not have a card like this as you could end up spending a lot more money that you can actually afford and you may even find that you start to find it hard to afford to pay it all back in one go.

It is really important to make sure that when you have a cashback credit card, theta you pay off the full balance each month and avoid paying any interest on the card. This is because the cost of interest on cashback credit cards is often high compared to some other cards. It is worth comparing the rates and you will probably find that the cashback card is not worth having if you do not pay off all of the outstanding balance each month. The amount of cashback you get is very little compared to the interest that you pay on the card and you would be better off getting a cheaper card than receiving the cashback. It is worth doing the calculations and working it out. Just take the interest amount and take away the cashback amount and compare that to the interest amount on other cards and you will be able to compare. It is very likely that you will find it cheaper to have a card without a cashback facility if you are not intending on paying it back in full each month.

Of course, if you pay back your card in full each month, then you will find that a cashback card can be really advantageous. Make sure that you have a direct debit set up so that you know that the full amount will be paid when it is due and there is no chance of you making a mistake and forgetting to pay it off. You do need to be confident that you will always have the money to pay it back. More people do pay back the full balance than do not and so you may very well fall into that category. However, it is worth thinking hard and making sure that you are confident that you will be able to pay it all back, every single month. It can be hard to predict what might happen in the future but do think about what may change and whether having a card like this is a sensible idea for you.


Is it Always Best to go to Your Bank for a Loan?

If you are looking for a loan then you may just look at the bank that you currently bank with. There are plenty of reasons why this might be a good idea, but there may also be some good reasons for looking elsewhere as well.

It is likely that you will trust your current bank or else you would not still bank with them. You obviously feel that their fees are good compared with other banks and so may feel that if you get a loan from them, then you will also get good rates. However, you will need to check this as you could find that there are other lenders out there that are cheaper and you could save significant amounts of money on a long term loan if it is cheaper. You may like the fact that you have a local branch or a good relationship with the bank or perhaps both and would feel that you would miss this if you were with someone else.

You may feel that you can get more chance of having a loan approved with a bank that knows you. This could be the case, particularly if you have a good credit record and have shown them that you can be trusted. However, if you do have a good credit record then there is no reason why other banks will not lend to you as well as they will be able to see that you can be trusted. It may just take them a little bit longer to check you out and find out about your history.

It may be that you think your bank will give you better rates than others. It is hard to know whether this is true until you speak to them. The advertised rate of a loan is not always the rate that you will be able to get. It can depend a lot on your credit record. Find out what rate you can borrow at and compare that with other lenders, making sure you speak to them about the rate you will personally get rather than their advertised rate. You will then be able to do a proper comparison between them.
You may feel that the loan can be arranged more quickly with your bank. They will not need to do ID checks, as they already have you as customers, but this does not take that long. It could speed things up a bit, but unless you need the money in a real emergency then it may be worth waiting a little bit longer to get a loan which is more suitable for your needs or cheaper.

It is well worth looking around to see what rates are available though. You will be able to look on lenders websites and there are also comparison sites where you will be able to compare the different rates on offer from a selection of lenders. If you want to get an even better idea of rates you could use a financial advisor. An independent one will charge you but they could find you a much better deal than you can find for yourself and so it could be well worth doing.

It is good to realise that the interest rate is not the only thing that you should consider when you are comparing lenders on price. They may also have admin fees or other charges and you need to consider those as well. Some may have to be paid and there may also be charges for not making payments on time, getting statements or other things and it is worth just looking into this as well, not just looking at the interest rate.

So although there may be some great reasons for using your bank for a loan, such a trust, speed and likelihood of being approved, it is worth looking elsewhere. You need to consider what factors are important to you when you are choosing a loan. It is likely that the cost will be a really big consideration particularly if the loan is a large one as a small difference in interest rates can make a significant difference to the overall cost of the loan. Therefore if your lender is not the cheapest then you may be better choosing a different one.