Planning future purchases

  • In the future you may want to apply for a credit or store card, although you will have to be over 18 before you can apply. Store cards will limit the use of the card to a specific store or group of stores whereas credit cards are accepted at most outlets. They allow you to buy items on credit without using cash and spread out of the cost of a more expensive purchase by making repayments each month. You must keep up your monthly payments though otherwise you may incur late payment fees and other charges. It’s easy to spend using a credit or store card but make sure you are able to afford the repayments so you don’t get into financial difficulty.

    Please remember if you don't pay the balance in full at the end of each month, you will be charged interest on the remaining amount, therefore the item will cost you more than you purchased it for, it will also take you longer to pay back.

  • A credit limit is the amount of money you are able to borrow on a credit or store card. The lender will set a credit limit to help ensure they are lending responsibly by making sure you can’t spend more than you can afford to pay back.

    Credit limits are there to protect the consumer and the lender, as it reduces the risk of the consumer getting into debt and the risk of the money not being paid back. When you take out a credit or store card, the lender will let you know what your credit limit is.

  • You may want to apply for an overdraft on your current account when you are 18. An overdraft is when a bank agrees to let a customer borrow from the bank by allowing them to spend more money than the customer has in their account. The overdraft amount will have a limit on it which is set by the bank. Some overdrafts are provided free of charge; however it can be expensive if you exceed your agreed overdraft limit as it’s likely your bank will add charges to your account. This means that overdrafts can be an expensive way of borrowing money. 

    When a customer is using their overdraft, they may be charged interest on the amount of the overdraft they are using. Some student or graduate accounts may offer overdrafts for free or that do not charge interest. Remember an overdraft is a form of borrowing which will need to be repaid at some time in the future.  

  • Without money life would be impossible which is why it’s good to start managing your money from an early age. If you can start to understand how money works and how you can manage it before you start your first paid employment, you will be in a good place to keep track of your finances. Having a good understanding of your finances will help you better prepare for the future.