MoneySENSE

I picked up a brochure on MoneySense from the POSBank.

It highlights key issues on what to consider before borrowing like taking a loan or using your credit card.

Before "borrowing", ask yourself the following:-

- Do I really need it? Or is it something that I merely want?

- Must I have it now?

- What will happen if I do not buy it today?

- How have I managed so long without it?

If you really decided that it is something that you really need, try to pay off in cash so as to avoid interest charges. If not, try to pay off the outstanding amount incurs in your bill when it arrives the next month.

Alternatively, take a smaller loan so that you do not overstretch yourself financially. Only borrow if you are certain that you can afford to pay them.

The brochure offers tips like:-

- Before you borrow, try saving an amount equal to your expected monthly loan instalments.

- Work out your monthly income and expenses to see if you have extra funds to pay for the loan instalments.

Knowing more about 0% interest free instalment plans:-

- Remember to pay your instalments promptly as these plans do come with conditions. You get to pay zero interest provided you settle it full each month. If not, you may be charged an interest rate as high as 24% a year on the sum that you roll over or you may also have to pay a late fee charge.

Other Tips :-

- Pay every instalment promptly.

- Your monthly long term debt commitments should not exceed 35% of your gross monthly income.

- Always keep track of the payment dates for your credit facilities and remember to pay them before due date.

- Pay your monthly outstanding credit in full so as to avoid incurring interest and penalty charges.

- Avoid multiple borrowing from different credit cards. It is easier to keep track of your payment if you have fewer cards.

- If you are not able to meet the payment deadlines, let your financial institution know and explain the reasons to them.

Most info extracted from the MoneySense brochure.