The truth about debt and how to win
A credit card is a card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. A credit card lets you spend money on credit. You can spend up to a pre-set credit limit, which might be a few hundred or several thousands of pounds. It depends on how confident your card provider is that you’ll pay it back. It is essentially a type of loan, where the money you spend on your card is borrowed from a lender, such as a…
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A loan is a formal arrangement, usually for a fixed period of time (which you agree at the start). A loan is a debt provided by an entity (organization or individual) to another entity at an interest rate, and evidenced by a promissory note which specifies, among other things, the principal amount of money borrowed, the interest rate the lender is charging, and date of repayment. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay…
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An overdraft is a type of borrowing facility, it lets you borrow money through your bank account. It’s typically used for an unexpected bill or an essential repair. It’s a convenient way of accessing extra money when you need it quickly. This option of borrowing is usually offered by banks to customers who have more money going out of their accounts than they have coming in. It’s widely seen as a short-term fix and should not be used for long term borrowing. If you are in debt or your income…
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