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Get credit confidence this summer

When you are struggling to cover the cost of essentials like your food shop, you are looking after a family, and you are preparing for summer, it can be tempting turn to credit to cope.

However, depending on credit can make your financial situation worse in the long-term. Lenders can offer too much credit, and they can increase charges and fees.

If you are thinking about turning to credit, take a look at our five-step checklist:

1. Only borrow from trusted companies

Look for companies that are approved by the Financial Conduct Authority (FCA). Find the ‘FCA register’ online to search for authorised companies.

Firms that are not approved include illegal money lenders, also called ‘loan sharks’. They seem friendly when you need cash, but they are not as friendly when you owe them money.

2. Watch out for interest and fees

There might be interest to pay, and sometimes a fee too. Check the small print to find what the ‘Annual Percentage Rate’ (APR) is. This is a rate that helps you understand the total cost of borrowing, and it takes into account the interest rate and charges. For example, a personal loan with a 10% APR should be cheaper than one with 15% APR.

For example, you borrow £10,000 to buy a car and the loan has an APR of 5.5%. Over three years, you could be asked to make 36 payments of around £302. In total that comes to around £10,870. This includes the £10,000 you borrowed and £870 in interest and fees.

Avoid credit cards and loans with high interest rates as the amount you need to pay back can rise quickly.

3. Make a budget to repay the debt

Paying back what you owe each month can help to build up a good credit history, showing you are a low risk to lend to. To help with this, make a monthly budget so you can see what you can afford to pay back. Make sure you are covering your priorities, like your mortgage, rent, energy bills and council tax.

Avoid making just the minimum payments on your loans. If you do this for a long time your lender will send you letters saying you are in ‘persistent debt’. They will then need you to pay them more.

4. Keep tabs on Buy Now Pay Later

Online shops use Buy Now Pay Later (BNPL) because shoppers can spread the cost over a longer period. Usually there is no interest to pay, but BNPL is still a loan. If you have lots of BNPL purchases the repayments can stack up. You can also be charged high fees and interest if you fall behind.

5. Help is at hand

If you need to use credit to get by until payday, to cover essentials, if you are struggling to make repayments, or being charged for late repayments, they are signs you need help.

Don’t wait to get free and impartial support from our debt and money advisors.

 

Answer 5 quick questions to find out what you should do next.

Be honest – this will just be between us, and we will not record any of the answers you give.

Do you use credit, loans or an overdraft until your wages or benefits come in?

Have you been making minimum repayments on debts or even missing repayments on them?

Have you received any charges for late payments, or fees for your overdraft recently?

Are you currently using credit cards to cover your repayments?

Have you been using credit to pay your household bills? Or have you fallen behind on paying them?

Things are looking pretty good

No need to worry, things are looking pretty good

From what you have told us, you do not have a debt problem.

Make sure you keep on top of your money. You can use ourbudgeting guidesto get started. This will help if you are falling behind with payments.

If you′re worried about money, don′t wait to come back to us forfree and impartial debt advice. We are here to help you whenever you need us.

Get debt help now

You should act now to avoid bigger problems later

From what you have told us, you may have a debt problem. No need to worry, there is a lot you can do. And taking action now means you start to sort it out quicker.

You can get debt advice online at any time. We will not share your details with anyone.

Get debt help now

Or, if you are not ready to get help right now, use ourbudgeting guides.

It looks like you need help with your debts

From what you have told us, your debt has become a problem. You may be worried about this, but we can help you.

Get debt advice online at any time. We will not share your details with anyone.

We will help you to create a budget. This will show you how much you can afford to pay towards your debts. We will also help you deal with the people you owe. And we will recommend ways to start to sort out your debt.

We are here for you online 24/7. If you need to stop and come back later, that is fine.

Get debt help now

You need help with your debts

From what you have told us, your debt sounds a big problem. You are probably worried about this. We can help you.

Get debt advice online now. You can switch to the phone if you want to talk with someone. Either way, we will not share your details with anyone.

We will help you to create a budget, which will show you how much you can afford to pay towards your debts. We will also help you deal with the people you owe money to. And we recommend ways to start to sort out your debt.

We are here for you online 24/7. If you need to stop and come back later, that is fine.

Get debt help now

Sarah

"It didn't matter how many times I re-worked my finances - I would just keep overspending. I just kept telling myself that I had it all under control, but my debts were creeping up over time."Sarah′s story

Jamie

"I hid it from my friends because I didn't want to be judged. I didn't want to seem like that person who didn't know how to handle money."Jamie′s story

Carol

"When I found StepChange Debt Charity, they didn't want anything from me except the truth. When I spoke to the first advisor on the phone I was in a bit of a state, but she made me feel a lot better and that I wasn't being judged in any way, which made a huge difference."Carol′s story

John, Greater Manchester

"StepChange don't judge you. They're here to help. I feel a lot less stressed thanks to them."

Beth, Devon

"The service has been amazing, I feel a massive weight off my mind and no longer worry about my finances."

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