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Am I Paying too Much Insurance?

Most of us will have some sorts of insurance. If we drive then we have to have car insurance, if we have a home, we might want contents insurance and if we have a mortgage we will need buildings and life insurance. However, there are all sorts of other insurances that we might have as well such as health, pet, accidental cover and insurance on specific items that we own. It is a good idea to think about the cost of all of this insurance though. If you add up the cost of all of the premiums, it can come to a large amount and you might want to make sure that you are not paying more than necessary for insurance in general.

Do I have too many policies?

It is a good idea to start by thinking about whether you have too many insurance policies. Consider whether you really need all of the insurance that you have. The idea of insurance is to pay out when you need it so that you do not have to find a large sum of money yourself. Some insurance you must have and so you will not be able to get rid of those policies but there is some insurance which is optional and it is these policies that you need to think about.

It is good to think about what the insurance actually covers you for. Think about whether it is worth paying the amount that you do each month. Consider the risk that you are insuring and how great it is and whether you think that the insurance is offering good value for money. For example, take a look at the figures If you are paying £10 insurance a month for a phone worth £100 you will have paid for the phone completely in less than a year so it might be better to save the money instead and then if the phone gets stolen or broken you will have the money saved up to replace it. Of course, there is a risk that you might need the money before you have saved up enough.  If you are insuring a car then it might be much more worthwhile to insure it because replacing a car can be really expensive, particularly if it is a fairly new one and an expensive model.

So, look through each insurance that you have and think about whether that risk is really worth insuring or whether you would be better off saving the money.

Can I pay less for what I want?

Once you have decided which insurance policies you are going to keep, you need to think about the amount that you are paying for them. Insurance is a very competitive business and there are a lot of insurers available. This means that there is a high chance that you will be able to find an insurer that will offer you cover for less than you are currently paying. Make sure that you have a look and do price comparison on a regular basis. By switching insurers you could save a significant amount of money and might find that even with paying less you are getting the same or better cover than with your current one.

If you want to compare then it is quick and easy to use a comparison website. This will provide you with quotes form lots of insurers and you will be able to decide whether you think that you are paying too much and it is worth you switching. Do remember that not all insurers appear on these sites so you should do some additional research yourself.

Is it Safe to Have a Credit Card?

Whether we have a credit card or not we may sometimes wonder whether it is safe to have a credit card or not. It is actually well worth thinking about this as we might find that if it is not safe for us to have one then it might be a good idea for us to stop having one. It is good to understand the answers for and against having a credit card.

Problems with credit card safety

There are a few potential problems that we might have with regards to whether it is safe to use a credit card. The first is that we might end up using it to spend more money than we can afford to repay and we might find that we miss repayments.

Having a credit card means that we have the opportunity to spend the amount of money that we have as our credit limit. This could be hundreds or even thousands of pounds. It is nice to spend money, treat ourselves to things or experiences and have fun with it and there are some people, that when they first get a credit card, they will spend lots of money using it as if the money is a gift for them to spend. This is the first area where things might get out of hand. Spending on all sorts of things, which we might otherwise not really need or perhaps even want will mean that you will have all the money that you need to repay. It might be that you will not be able to afford to pay for them all when you get your credit card bill. This means that you will just have to repay a smaller amount and pay interest on the remaining balance which means that you will start to accumulate charges. It can be easy to forget about these charges and not calculate how much they add up and therefore how much they will cost you. As you are charged monthly and you repay that charge, you will not see it adding up and how much the loan is costing you.

It is also possible that you might miss repayments. If you miss the minimum repayment, which is usually quite small, then you will have additional charges to pay. This can make the credit card even more expensive. 

Solving these problems

You need to make sure that you do not see the credit card as a savings account where you can just spend your money, but similar to a short term loan. Remember that you are spending money that does not belong to you. Some people use the cards and pay the full balance off each month. You can set up a direct debit to do this and it will mean that you will not pay anything for the card. You will need to keep track of what you are spending though and make sure that you will only spend a low enough amount of money that you will be able to repay it. It can be wise to even set yourself a budget or spending limit so that you are sure that you will be able to manage the repayment.

Missing repayments can be avoided if you set up a direct debit to pay them off automatically. It can be a good idea to try to set up the direct debit so that it goes out of your account just after you are paid. Hopefully this will mean that there will be plenty of money available in the account to be able to cover it as you should still have some salary in there.