Before you borrow


Before you sign up for a credit card, bank loan or store card, or add to an existing card or loan it makes sense to think about whether you really need to borrow money. At times like this – with economic uncertainty and rising bills – many people are now choosing to pay back money they’ve already borrowed rather than borrow more.

Deciding whether you should be borrowing money

There are some very important questions you need to answer before you borrow money. You should ask yourself if:

  • You need to spend the money
  • You have other ways of financing the purchase
  • You can afford to pay back the money you’re planning to borrow.

Do you need to borrow money?

Some people who borrow money do so either without thinking if they can really afford it, because they feel they have no other option, but that often isn’t the case. It might be that you could put off making the purchase or not make it at all. Try asking yourself:

  • Could I wait until I can afford to buy the item without borrowing?
  • If there’s something I need, is there another way of getting it (for example, swapping it for something else, buying it second-hand or getting it for free from a free recycling website)?

Save before you borrow

Can you save up or use some savings instead of borrowing money? If you really don’t need to spend the money today, then you should seriously consider saving some money each month rather than getting into debt.

If you can wait and save up for a purchase, instead of using credit, it will cost you far less (unless you qualify for a 0% credit card deal), as you won’t have to pay any interest.

It might also have been reduced in a sale or if it’s technology, upgraded to a better model.