New research from credit card provider Vanquis shows the hospitality industry is starting to recover. Spending increased by just under 20% on everything related to travel, while restaurants saw their numbers increase by 11%.
“It’s great to see the optimism slowly come back and people take the opportunity to take advantage of the things they’ve missed over the past year,” said Thomas Allder, Director of Customer Relations at Vanquis. But as we get back to normal, it’s important to keep a few things in mind to make sure we don’t end up overloading our credit cards.
1. Reassess your budget
With things closed for so long, there’s a good chance your spending has naturally gone down. Now that it’s possible to socialize, get a haircut, or go back to the gym, suddenly you’ll have a lot of new expenses popping up back in your budget. Before you get too excited about it, take a look at your budget. Make sure that all of your credit cards and other debt will always be covered. Then see how much money is left for the fun days.
2. Make these debts a priority
This is especially important if you have accumulated additional debt during the foreclosure. Vanquis recommends trying to pay off some of your higher interest debt before you start spending freely. You’ll feel more comfortable and won’t earn a lot of interest or risk late fees.
If you have significant debt, you’ll need a more detailed plan to get out of it. Prioritize high-interest debt to begin with. Anything that could put you on the street (bailiff actions, rent arrears, tax debts) must be paid first.
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3. See what you can give up
Did you learn any new spending habits while in lockdown? Maybe you’re spending more on music and TV subscriptions to replace your outings. Vanquis suggests thinking about what you are likely to use the most in the future and eliminating the ones you don’t use as much. Also, don’t forget about “hidden” subscriptions, such as fitness apps you thought you’d use (but didn’t) or other music apps you’ll need.
4. find ways to reduce your daily expenses
Take a look at your expenses before containment. Did you buy coffee every day? How about going out for lunch regularly instead of bringing your meals to work? Was shopping something you did for fun when you didn’t need anything?
While these expenses may have been regular expenses before, look for ways to cut them down and save your money instead. You can also find cheaper ways to do the things you love. For example, if you like to eat out, meet friends for lunch or tea and cake instead of dinner.
5. Take a closer look at your credit score
Spending more than you can afford could potentially ruin your credit score. To better understand your current financial situation, check your credit report. If the numbers aren’t looking great, there are things you can do to improve your credit score, including applying for a credit card and correcting any errors you might notice in your report.
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